Sunday, October 13, 2013

Globalization has been on hold since 2008

The forward march of globalisation has paused since the financial crisis, giving way to a more conditional, interventionist and nationalist model. Greg Ip examines the consequences.

From The Economist:
Globalisation has clearly paused. A simple measure of trade intensity, world exports as a share of world GDP, rose steadily from 1986 to 2008 but has been flat since. Global capital flows, which in 2007 topped $11 trillion, amounted to barely a third of that figure last year. Cross-border direct investment is also well down on its 2007 peak.
That brown stain over the United States indicates that capital inflows have dropped precipitously. I hope the suicide caucus in the House of Representatives realize that making the United States default by blocking an increase in the national debt limit will cause real economic damage, and not only to the United States but to the entire international economic system.

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