: Globalization is not dead, but it is facing a big tail-risk, expert says

by | Jan 8, 2023 | Stock Market

Reports that globalization is dead are overstated, a top economist said. Conventional wisdom has it that globalization will suffer in the aftermath of the pandemic and Russia’s war in Ukraine. The Biden White House’s move to reshore manufacturing and to deny China access to advanced technologies are seen as further steps away from a robust global trade system.

However, Barry Eichengreen, an economic professor at the University of California Berkeley said that that all this remains a theory not a reality on the ground. “Global value chains evolve slowly and gradually,” Eichengreen said in a talk at the American Economics Association meeting in New Orleans, where he received a distinguished fellow award. While Apple has moved some iPhone production to Vietnam and India, it still relies mainly on China and hasn’t brought that manufacturing back to the United States, Eichengreen said. Any trend of reshoring of manufacturing is going to be followed by a trend to outshore service jobs, he said. The shift to globalization of services has been spurred by the move to work from home. Tension between Russia and the West is not leading to major changes in global trade. Countries trying to move out of the dollar-centric global trading system, in order to avoid the possibility of U.S. sanctions, will only throw “a few grains of sand in the wheels of the global economy,” Eichengreen said. The dollar continues to …

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