Without us realizing it, the world has changed and it did so even before the pandemic. In the aspect of global trade, since 2008 a process of change has been underway that is now a reality.
The stage in which hyperglobalization dominated everything has disappeared and we don’t notice it. Since 2008, an economic, financial and even geopolitical phenomenon has been underway, which the economists of the International Monetary Fund (IMF) have dubbed “Slowbalization”.
what is the slowbalization?
Slowbalization, also known as the “globalization slowdown”, originating from the first major global financial crisis in 2008, is characterized by a prolonged slowdown in the pace of reforms and trade opening, as well as by the weakening political support for free tradeamid growing geopolitical tensions.
In all these years phenomena have arisen that contributed to slowbalization. For example, the rounds of tariffs between the United States and China, the breakdown of several free trade agreements that were being negotiated, the war in Ukraine itself, and, of course, the unexpected Covid-19 pandemic, slowed down the process of accelerated globalization. .
“In this way, more than a reduction in global trade opening, there has been stagnation and, above all, greater regionalization. Globalization is ceasing to be global, to be regional. Trade loses weight between different regions, but gains it internally (between European countries, Latin America, certain areas of Asia, etc.)”, explain the economists Shekhar Aiyar and Anna Ilyina, authors of the analysis on behalf of the IMF.
According to economists, slowbalization began in 2008 and is the current global trade phenomenon to this daywhich means that it takes years for most human beings to realize this phenomenon because in this 2023 it will already be 15 years old, it is not new.
Slowbalization, or the slowing down of globalization, has been characterized by a prolonged slowdown in the pace of trade reforms and opennessas well as weakening political support for free trade, amid growing geopolitical tensions.
Mexico can benefit: Morgan Stanley
The existence of this phenomenon and its validity has also been detected by other experts, such as the economists from Morgan Stanley Research.
According to the experts of the institutiona much less global and less interconnected model has already emergedmore focused on trade between regional players and allies, characterized by a shift from a few global economic powers to multiple political and economic centers.
“However, the full effects of this “slowbalization” will take years to manifest, but the process is already underway and countries such as Mexico, India, Vietnam and Turkey could benefit, along with several key sectors including defense and cybersecurity“said Morgan Stanley experts in an analysis prepared for their clients.
According to Morgan Stanley experts, even before the Covid-19 pandemic there had been a combination of trends, such as changes in consumer preferences, greater purchasing power in emerging markets and the emergence of tariffs, in addition to growing doubts in foreign investment and greater sensitivity to national security in technology trading. These factors began to “conspire” to slow down globalization, and even reverse it.
“In case something was missing, the war between Russia and Ukraine, which will be one year old on February 24, with its effect on supply chains, revealed the ‘traps’ or the dangers of economic interdependence, which has given even more force to the discussions about the transfer of production to closer places or, at least, to allied economies or very close culturally”, said Morgan Stanley.
“We hope these forces will push governments and businesses to invest substantially in relocation within own countriesclose relocation and relocation to allied countries for value chains”, said the experts.
The fifth stage of globalization
For IMF experts, this phenomenon of slowbalization is actually one more stage in the five eras that international trade has experienced from 1870 to the present day.
The authors of the analysis divide the five stages of globalization of international trade recorded in the last 153 years as follows:
The first was recorded between 1870 and 1914 with the so-called Industrial Revolution; the second era was verified between 1914 and 1945, with the era of wars and protectionism); the next era, the third, took place between 1945 and 1980, with phenomena such as fixed exchange rates and the Bretton Woods; a fourth era was registered between 1980 and 2008, liberalization or hyperglobalization was the main hallmark, finally, what we live from the end of 2008 until today is slowbalization.
The IMF experts point out that, despite the fact that this last stage is not so new, it has already been present in the world for 15 years, surely there will still be much to write.
Above all, considering that the average duration of the other four stages in the history of global trade was 34 and a half years, which means that slowbalization has at least 15 to 19 years left before some factor modify history again.
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