4 - Globalization stalled?

Summary

The 2008 financial crisis and the long, slow recovery set off a sequential chain, particularly when taken together with the growing electoral strength of nationalist and populist parties that reconfigured political processes. The emergence of new parties, the changing character of established parties, Brexit and the election of Trump in the 2016 US presidential election can all be understood within this context.

Populism and nationalism were, however, not the only element within the processes unleashed by the financial crisis. There were other economic shifts. Some of these were visible whereas others were subterranean. Some were the result of policy measures pursued by governments whereas others had a more unplanned and unforeseen character. Some extended the process of globalization whereas others held it in check or countered it. This chapter offers a balance sheet by assessing the extent to which the globalizing processes of the 1990s and the first decade of the new century were in overall terms stalled or perhaps even reversed in the decade or so that followed the financial crisis. On this basis, we should ask whether terms such as “deglobalization” or “deglobalizing processes” can be legitimately used or if some other descriptor should be found.

The “great trade collapse”

The financial crisis quickly found its way from the USA to other countries and just as quickly hit the wider “real” economy. Real GDP growth, the most common measure of a country's economic health, crashed in the second half of 2008. As demand slumped and production seized up across much of the developed world, there were inevitably consequences for the flow of world trade that contracted sharply between the third quarter of 2008 and the second quarter of 2009.

It has been dubbed the “great trade collapse” because, although there had been drops amid the oil shocks of 1974–5, again in the early 1980s and then at the end of the dotcom boom at the turn of the new century, it was “the steepest fall of world trade in recorded history and the deepest fall since the Great Depression” (Baldwin 2009). Whereas global GDP dropped by 2 per cent between the third quarter of 2008 and the second quarter of 2009, world trade fell by about 15 per cent over the same period (European Central Bank 2010: 16).