Donald Trump and the future of globalization (2023)

The election of Donald Trump demands a reevaluation of the future of globalization and our earlier optimism that the open global economic order will endure. It is time to consider the possibility that a single politician could reverse decades of global trends.

We published a short paper a month ago assessing the claim that globalization was on the verge of a retreat. Our conclusion was relatively sanguine. Based on an assessment of the movement of goods, money, and people across international borders, we found little evidence that globalization is already receding—see Figure 1. We also showed that the global economy is more integrated today than during the peak of the early 20th century, which we interpreted as a repudiation of the claim that globalization had reached unsustainable levels; we are skeptical that such levels exist in a literal sense. Looking to the future, we speculated that the years immediately ahead will be characterized either by stabilization in the level of globalization, or further integration but occurring at a more modest pace than in the past.

Figure 1: Globalization trends, 1870-2015

Authors’ calculations based on IMF 2015, Lane and Milesi-Ferretti 2013, Maddison 2001, the Maddison Project 2015, McKeown 2004, McKeown 2010, Riley 2009, U.N. 1999, U.N. 2015a, U.N. 2015b, UNCTAD 2015, U.S. Census Bureau 1975, World Bank 2015, World Bank 2016, and WTO 2016. Merchandise exports and foreign capital stock are expressed in market dollars as a share of global income expressed in international dollars, and will therefore differ with those cited elsewhere. Full description of sources and methodology are available in this report.

How, if at all, does the election of Donald Trump alter our views?

It is worth emphasizing that a resistance to globalization was arguably the foremost policy theme in Trump’s election campaign. In the speech announcing his presidential bid, Trump railed against the United States’ existing trade agreements, threatened to slap taxes on U.S. companies investing overseas, and pledged to build a wall to keep out migrants, whom he accused of being rapists. Trump’s plan for his first 100 days in office reaffirms the centrality of this theme, with a commitment to renegotiate or withdraw from NAFTA, abandon support for the Trans-Pacific Partnership (TPP), label China a currency manipulator, establish tariffs to discourage companies from off-shoring production and jobs, expel more than two million migrants, suspend immigration from terror-prone regions, and build the wall.

Brina Seidel

Former Research Analyst - Global Economy and Development, The Brookings Institution

(Video) Donald Trump tells UN 'future belongs to patriots not globalists'
(Video) President Trump: The future does not belong to globalists

Let’s assume President-elect Trump succeeds in implementing this agenda. We see its effects on globalization playing out at three levels.

The first is the direct effect of the U.S. turning inward. The U.S. is the world’s largest economy, measured in market dollars, and its third most populated. A partial withdrawal from the global economy by the U.S. is therefore likely to register in measures of globalized stocks and flows, simply by virtue of the country’s size.

Indeed, America holds the largest share of global trade, foreign capital stocks, and migrants. Yet, relative to its size, America is not as globally integrated as many other countries. It is those areas where the U.S. is most globally intertwined, as measured by the vertical axes of Figure 2, that the direct impact of a Trump presidency on globalization could theoretically be greatest.

Figure 2: Global shares of trade, capital markets, and migration

Authors’ calculations based on Lane and Milesi-Ferretti 2014, U.N. 2015a, and World Bank 2016. Capital stock assets include estimates of external debt, foreign direct investment (FDI), and portfolio equity stocks. Full description of sources and methodology are available in this report.

For instance, despite the prominence of trade during the election campaign, the U.S. is a relatively closed economy. It accounts for only 11 percent of global trade volumes—far below its 24 percent share of global GDP. That said, this likely understates the country’s footprint in global trade given that the U.S. imports many final goods whose production occurs along international supply chains. By contrast, the U.S. plays a fuller role in global capital markets. Within those markets, the area that may be most directly vulnerable to Trump’s policies is outward foreign direct investment (FDI). The U.S. lays claim to 18 percent of global FDI assets. However, the U.S. is most globalized, relative to other countries, in terms of its openness towards migrants. The country is home to 19 percent of the world’s migrant stock, while accounting for only 4 percent of the world’s population. In fact, the U.S. is the top destination for migrants from 60 countries. The expulsion of large numbers of migrants and greater restrictions on the number of future entrants would directly alter this aspect of the global economy.

While the direct effects of the U.S. turning inward on global economic integration are important, they are still likely to be relatively small in terms of the three series presented in Figure 1. Much larger effects are possible in terms of the impact Trump’s policies could have by changing the behavior of other countries. This is the second level at which we see Trump’s effect on globalization unfolding.

(Video) Professor Miles Kahler: Trump, Brexit and the future of globalisation.

We may see countries retaliate against U.S. protectionist policies. This is the basis for concerns that Trump could precipitate a trade war.

We may see countries retaliate against U.S. protectionist policies. This is the basis for concerns that Trump could precipitate a trade war. The threat has already been made explicit by the state-sponsored Chinese tabloid, Global Times, which proposed that China respond to aggressive trade policies by cancelling contracts with U.S. suppliers, imposing tariffs on U.S. imports, and limiting the number of Chinese students studying in American universities, and by French presidential candidate Nicolas Sarkozy who has suggested that the Europe Union impose a tax on U.S. products and limit the participation of foreign companies in EU public contracts if Trump withdraws from the Paris climate accord.

Countries and their leaders may instead imitate Trump’s policy agenda, whether in pursuit of similar electoral success or on the basis that his election gives his anti-globalization agenda legitimacy. In the past week, politicians from Italy, Hungary, Greece, and elsewhere have invoked Trump’s victory as justification for policies that reverse the pattern of globalization.

Alternatively, countries may repudiate global norms and institutions that underpin the globalized economy, if they feel that the U.S. is no longer committed to upholding the liberal economic order. This reflects the widely held belief that the stability of the existing economic order hinges on the example set by the U.S., as the longstanding global economic hegemon. Such an outcome foreshadows chaos, but with the era of U.S. global economic pre-eminence coming to a close, those norms and institutions, from World Trade Organization membership and rules, to the various U.N. conventions concerning the treatment of migrants and refugees, were always likely to be tested soon. Trump’s election may usher a more rushed transition as emerging markets that have benefited most from the open global economy come to its defense. There is already some evidence of this kind of realignment, as members of the TPP seek to patch together the deal without the U.S., and China makes the case for its alternative regional trade deals.

The third and final way in which we interpret the effect of Trump’s election on the future of globalization is the injection of a huge amount of uncertainty.

The breaking of globalization’s first wave a century ago is proof that the forces of global economic integration are neither irresistible nor irreversible.

The breaking of globalization’s first wave a century ago is proof that the forces of global economic integration are neither irresistible nor irreversible. Trump’s ascent to the White House adds to the evidence, representing the biggest shift in the U.S.’s orientation vis-à-vis the global economic system in the post-war period. This policy discontinuity is a source of uncertainty in and of itself. We have assumed that Trump will deliver on his anti-globalization agenda, yet for now it remains unclear whether he will pursue it in full and what constraints to its implementation will arise. Perhaps the most important risk concerns how he will respond to unanticipated events over the period of his presidency, through the prism of his anti-globalist perspective. This uncertainty alters the way we view the direct and indirect effects of Trump’s policies described earlier by reducing our confidence in them and expanding the range of possible outcomes.

(Video) Trump tells U.N.: "The future does not belong to globalists"

Taking these considerations together, our view on globalization’s future has indeed changed. We are much less assured that the open global economic order will endure.

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FAQs

What are the current views regarding the future of globalization? ›

The bottom line is that globalization will have to evolve with a more comprehensive concept of national interest, defined in broader terms than economic efficiency to include pressing social and environmental challenges confronting both rich and poor countries.

What are some arguments against globalization? ›

Arguments Against Globalization
  • Widening Gap Between the Haves and the Have-Nots. ...
  • Loss of Domestic Companies and Jobs. ...
  • Unequal Power and the Rise of the Multinational Corporations. ...
  • Loss of Cultural Identity. ...
  • Unpredictable Markets. ...
  • Balance of Payments Problems.
23 Aug 2022

Who are the winners and losers of globalization? ›

According to the corporate power narrative, economic globalization produces many losers—workers, communities, citizens, even governments—but only one winner: corporations.

What is your opinion about globalization? ›

Globalization has benefits that cover many different areas. It reciprocally developed economies all over the world and increased cultural exchanges. It also allowed financial exchanges between companies, changing the paradigm of work. Many people are nowadays citizens of the world.

What is the future of globalization 2022? ›

Trade is expected to grow slightly faster in 2022 and 2023 than it did over the previous decade, according to a new report from DHL and the NYU Stern School of Business.

How does globalization affect us today? ›

In general, globalization decreases the cost of manufacturing. This means that companies can offer goods at a lower price to consumers. The average cost of goods is a key aspect that contributes to increases in the standard of living. Consumers also have access to a wider variety of goods.

Is globalization good or bad Explain your answer? ›

Globalization has increased awareness among global consumers of different opportunities for investment, economic trends, and new products. Socially, globalization provides populations around the world with better interconnectedness. Culturally, it promotes the increase in the exchange of values and ideas.

Is globalization positive or negative? ›

Globalization has allowed society to enjoy many benefits, including increased global cooperation, reduced risk of global conflict, and lower prices for goods and commodities. Unfortunately, it's also led to serious negative effects on the environment.

What is the biggest issue with globalization? ›

Job Loss. One of the most debated negative effects of globalization is the loss of jobs. This is particularly the case in developed countries, such as the US, from where many services and unskilled labor have been outsourced to developing countries.

How can we solve globalization? ›

By providing better education, apprenticeships, career training and less rigid labour markets, policy-makers in developed economies can help their societies to adapt to the pressures of globalization and technological advance.

Who has benefited the most from globalization? ›

Developed industrialized countries continue to benefit most from globalisation because increasing globalization generates the largest GDP per capita gains for them in absolute terms.

How has globalization benefited the world? ›

Globalization allows companies to find lower-cost ways to produce their products. It also increases global competition, which drives prices down and creates a larger variety of choices for consumers. Lowered costs help people in both developing and already-developed countries live better on less money.

What is globalization essay in your own words? ›

Globalization refers to integration between people, companies, and governments. Most noteworthy, this integration occurs on a global scale. Furthermore, it is the process of expanding the business all over the world. In Globalization, many businesses expand globally and assume an international image.

What is globalization in your own words? ›

Globalization is the word used to describe the growing interdependence of the world's economies, cultures, and populations, brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information.

Why globalization is important in your own words? ›

Why is globalization important? Globalization changes the way nations, businesses and people interact. Specifically, it changes the nature of economic activity among nations, expanding trade, opening global supply chains and providing access to natural resources and labor markets.

What are the new trends for future globalization? ›

In addition, the United Nations identified three mega-trends related to globalization: shifts in production and labor markets, rapid advances in technology, and climate change.

What world would be after 20 years from now if globalization continues in future? ›

After twenty years, the world would undergo a positive change which will possess the following features— healthy competition, improved productive efficiency, increased volume of output, income and employment, better living standards, greater availability of information and modern technology.

How we can make future generations ready to face globalization? ›

But here are some practical priorities we can focus on today to prepare for tomorrow.
  1. Invest in strengthening local and regional economies. ...
  2. Innovate educational institutions and aggressively close the skills gap. ...
  3. Focus on the most vulnerable populations. ...
  4. Stop climate change. ...
  5. Build a movement focused on equity.
5 Nov 2018

How did globalization change some people's lives? ›

For many developing nations, globalization has led to an improvement in standard of living through improved roads and transportation, improved health care, and improved education due to the global expansion of corporations.

How globalization affects our daily life as a student? ›

– Globalization enhances the student's ability to acquire and utilize knowledge. Globalization enhances the ability of learners to access, assess, adopt, and apply knowledge, to think independently to exercise appropriate judgment and to collaborate with others to make sense of new situations.

What are two positive and negative effects of globalization? ›

The mixing of people and cultures from all over the world enables the sharing of ideas and lifestyles, creating vibrant cultural diversity. People can take holidays in far off locations. Consumers enjoy a greater choice of goods and services at cheaper prices. Migration of people can fill labour and skill shortages.

How does globalization affect our society? ›

Globalization is associated with rapid and significant human changes. The movements of people from rural to urban areas has accelerated, and the growth of cities in the developing world especially is linked to substandard living for many. Family disruption and social and domestic violence are increasing.

What is the examples of globalization? ›

Example 1 – Cultural Globalization

Cultures are also being spread without confining to political boundaries. Like, the Greek culture is being spread over Africa, Asia, and Europe which can be seen in the cities having the name of Alexander in Africa, Turkey, and Egypt.

What are some examples of globalization in everyday life? ›

Here are some examples:
  • Multinational corporations operate on a global scale, with satellite offices and branches in numerous locations. ...
  • Outsourcing can add to the economic development of a struggling country, bringing much needed jobs. ...
  • Some automobiles use parts from other countries.

How will you respond to the challenges of globalization? ›

Five ways to adapt to globalisation and the changing workforce
  • BE CLOSE TO THE CUSTOMER. Create a diverse and inclusive workforce that mirrors your customers. ...
  • WORK AS ONE. A connected workforce is the glue keeping this new virtual and global world together. ...
  • INCLUSIVE LEADERSHIP. ...
  • AGILE MINDSET. ...
  • FUTURE READY.
17 Feb 2016

What is the biggest problem facing the world today? ›

Our list of the most pressing world problems
  1. Risks from artificial intelligence. ...
  2. Catastrophic pandemics. ...
  3. Building effective altruism. ...
  4. Global priorities research. ...
  5. Nuclear war. ...
  6. Epistemics and institutional decision-making. ...
  7. Climate change. ...
  8. Great power conflict.
24 Sept 2022

Who are the biggest winners of globalization? ›

Globalization allows low cost producers and very high-quality producers to do well. That makes the world's consumers (like us) the big winner! Everyone benefits from lower priced products as production shifts to lower cost countries.

What are the benefits of globalization essay? ›

People around the world are more connected to each other than ever before. Information and money flow quicker than ever. Products produced in one part of a country are available to the rest of the world. It is much easier for people to travel, communicate and do business internationally.

How does globalization affect the economy of developing countries? ›

Globalization helps developing countries to deal with rest of the world increase their economic growth, solving the poverty problems in their country. In the past, developing countries were not able to tap on the world economy due to trade barriers.

Is globalization a positive or negative trend Why? ›

Globalization has brought benefits in developed countries as well as negative effects. The positive effects include a number of factors which are education, trade, technology, competition, investments and capital flows, employment, culture and organization structure.

Do you agree that globalization is important give reasons essay? ›

Globalization involves the increasing interconnection of local and nationalistic economies across the world. It increases border movement of goods, people, technologies, ideas and services throughout the world. It lets other countries to join the rest of the world and become part of worldwide interrelatedness.

How do you explain globalization to students? ›

Explain to students that globalization, in its simplest form, means a more connected world. Globalization is the movement and integration of goods and people among different countries. Globalization is driven by international trade and aided by information technology.

What is the conclusion of globalization? ›

According to the foregoing analysis, globalization is not merely an intensification of global interconnectedness brought about by market forces and technological change. Rather, it is a worldview shaped by capital and hegemonic power that aspires to establish a global system in line with the interests of capital.

What is globalization in a sentence? ›

Globalization sentence example. Christmas is seen as more of a Western custom that has been introduced to Korea due to globalization. Today, we are living in the era of economic globalization. The most significant impact of the growth of the global auto industry was the influence of globalization after the 1980s.

What globalization means to me 100 words? ›

1) The process of spreading goods, services, ideas, information, etc around the globe is termed globalization. 2) Globalization is a major contributor to the country's economy. 3) It refers interaction of business and trade beyond the borders. 4) Globalization enhances the living standard of the people of the country.

What are the current trends in globalization? ›

In addition, the United Nations identified three mega-trends related to globalization: shifts in production and labor markets, rapid advances in technology, and climate change.

What are the three major views on globalization? ›

This article will present three major stances in globalisation theory: the hyperglobalist, the skeptical and the transformational.

What is the condition of the globalization in the current situation of the Philippines? ›

In the Philippines, globalization worsens the already poor situation of the masses. It sends millions of Filipinos to work on a global stage where there is shortage of laborers, skilled, domestic and professional workers.

What is the impact of globalization to society? ›

Globalization has allowed society to enjoy many benefits, including increased global cooperation, reduced risk of global conflict, and lower prices for goods and commodities. Unfortunately, it's also led to serious negative effects on the environment.

What is the importance of globalization essay? ›

Globalization involves the increasing interconnection of local and nationalistic economies across the world. It increases border movement of goods, people, technologies, ideas and services throughout the world. It lets other countries to join the rest of the world and become part of worldwide interrelatedness.

What are the impacts of globalization? ›

Globalization has positive effects such as increase in national income, access to global capital, emergence of new business opportunities, increase in loans and investments, technology transfer, development of energy and communication sub- structures, improvement of labor quality and working conditions and ...

How does globalization affect me as a student essay? ›

– Globalization enhances the student's ability to acquire and utilize knowledge. Globalization enhances the ability of learners to access, assess, adopt, and apply knowledge, to think independently to exercise appropriate judgment and to collaborate with others to make sense of new situations.

What causes globalization? ›

The world economy has become increasingly interdependent for a long time. However, in recent decades the process of globalisation has accelerated; this is due to a variety of factors, but important ones include improved trade, increased labour and capital mobility and improved technology.

What are the advantages and disadvantages of globalization? ›

Comparison Table for Advantages and Disadvantages of Globalization
AdvantagesDisadvantages
Globalization has helped provide better services to people worldwide and increased the GDP rate.Globalization can increase the unemployment rate since it demands higher-skilled work at a lower price.
4 more rows
17 Jan 2022

How globalization affects Philippine society and its economy today? ›

Evidence suggests that globalisation has a positive effect on the country's economic growth and employment. In particular, trade openness and foreign portfolio flows have contributed to higher per capita GDP growth in the Philippines, following the implementation of FX liberalisation reforms.

How does globalization affect Philippines as a whole? ›

Globalization has been very effective in the Philippines. There have been major changes in the economy since 1995 when the Philippines took part in signing agreements with World Trade Organization. There have been changes in the country such as more labor and more companies that have emerged to help the economy.

How can the Philippines benefit from the new globalization? ›

The Philippines' services sector will likely be among the gainers in the new round of globalization where digital transformation plays a key role, Ms. Park said. She noted Filipino workers may take on services-related jobs abroad, while the local business process outsourcing (BPO) sector remains intact.

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