By Samuel Taube
Transcript:
Samuel Taube: Joining us today is Matthew Benjamin, the Editorial Director of The Oxford Club and a former consultant at the World Bank. Matthew, thanks for joining us again.
Matthew Benjamin: Thanks for having me back, Sam.
ST: Today we are talking about globalization and the recent uptick in economic nationalism, especially in the context of the current NAFTA (North American Free Trade Agreement) renegotiations going on right now.
Now, globalization has been going on since at least World War II, and now it can kind of feel in some places like it’s slowing down or even reversing. So, first, let’s start with a very simple question: What do we mean by globalization?
MB: It’s a great question. You know, it’s a broad term. It generally means the process of lowering barriers between countries: barriers on trade of goods and services, on the movement of people, ideas and capital over borders.
And of course, it also entails cultural integration among nations, which we’ve seen happening at a rapid clip in recent decades.
So, you know, of course this process of globalization is nothing new. It’s been happening in fits and starts throughout human history, as people left caves and integrated their tribes and traveled over land and made contact with new societies.
But really it shifted into higher gear and kind of a new era right after World War II. In 1947, dozens of nations signed something called the General Agreement on Tariffs and Trade. They called it GATT. That set the stage for a new era of trade and globalization.
The GATT and its successor, which is called the World Trade Organization (WTO), basically demolished tariffs and other obstacles to trade between countries, and it came to encompass most of the world’s economies – not all, but most.
In addition to those global agreements, many regional trade agreements were launched. NAFTA is just one of them. That was launched in 1992, and it is the biggest to date.
There was something called Mercosur, a South American trade agreement with many countries – big-economy countries. And of course the European Union started with a coal and steel trade agreement between European countries at the Treaty of Paris in 1951.
That evolved into the European Common Market, the European Union and then the common currency, the euro, which started with 11 nations and has grown to 19 nations at last count.
And the pace of globalization was especially rapid from about 1995 to about 2007, when global trade grew twice as fast as global GDP according to the International Monetary Fund, so it’s quite rapid.
ST: Oh, wow, yeah. So what has happened since then? What has kind of precipitated this rollback of some of these free trade agreements and attitudes?
MB: Well, after the turn of the century, of course, we had the financial crisis and the Great Recession of 2007-2009. This sent trade volumes plummeting. Now, this is not an unnatural occurrence for a recession, and yet trade volumes have been very slow to recover.
Since 2012, they’ve been growing only at about …read more
Source:: Investment You
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