Regressing Globalization?

The Economist article, International Trade Boxed In, presents a relatively pessimistic view towards global trade in contrast to the mindset we have taken in IPE of a globalizing world.

The article reveals that global exports have declined between 4-8% in the second quarter of 2012, implying that a detrimental effect will soon come on global import-hubs of the world. Some place their faith in the global economy, assuming that global trade will soon rise again as the global economy increases its buying power, regardless of the policies or institutions set in place. Wolf does supports this ideology by claiming that “dynamic market economics” explain successful economics (Wolf, 45). He puts his full trust in the liberal market place, something that both the article and I are hesitant of.

While Wolf states that capitalism generates its own opposition, including those who believe a governmental framework is needed for the success of globalization, that by no means dismisses the opposition as irrelevant. While free markets are essential to globalizing, the international trade level will continue to shrink without international regulations to help control for fluctuation.

However, Wolf’s ideologies counter that exports have even decreased as much as the OECD claims because goods have actually increased in exports, but they are less of a percentage of GDP than services, so they do not appear to be a large percentage of the global economy. “Trade has thus grown…where prices have fallen most and so shares in GDP, in current prices, have failed to increase as much as shares in constant prices” (Wolf, 112). Because increased communications, technology, and cheaper labor, among other factors, have made the exportation of goods less costly and more efficient, the claim that global trade is shrinking is faulty, according to Wolf.

The article claims that nations are now turning more nationalistic, enforcing barriers to international trade that Wolf has proclaimed are a thing of the past. He claims that global trade has increased as previous protectionist nations either failed or opened their markets to the global sphere, but if industrialized countries are indeed recoiling from this international action and raising tariffs, he may need to rethink his explanation for why globalization works and pair up with Stiglitz to find a solution to these new problems involving specific states. If Wolf continues to place his entire trust in the market and ignores the potential for international regulations, he will soon find that the nationalism of states will lead them place less emphasis on the volatile international market.

 The article presents that if protectionism can be avoided and trade facilitation can be enacted, the global economy may rise up, a point of view similar to Stiglitz.

While the triumphant political systems of the late 20^th century involved liberal trade policies, the current global economic crisis does not have the capacity to correct for itself in the foreseeable future. Economies are integrated at unforeseen rates, but they need adequate facilitation on the international level to be maintained. The market forces, although powerful, are not powerful enough to compensate for an inefficient international sector. The World Bank, IMF, and other global actors must act in the interest of both developed and developing countries, of both importers and exporters, to retain successful international trade.