What happened to globalisation then?
The 1990’s and into 2000’s saw a period of extensive globalisation, some would argue at the cost of development of the domestic economy and nation state. Nations were concerned with how they could position themselves best on the world stage; and what structural changes were needed to cement their position. Deregulation, liberalisation or investments in education and infrastructure were all levers that could be pulled to achieve this.
The natural progression towards regional trade agreements followed and this was all implemented with national economic policy playing second fiddle to internationalism. Unfortunately not everybody benefitted from this and disenfranchisement followed and over the last five years we have seen a knock on rise in populist policy and frustration with regional and multinational organisations such as the WTO, EU, etc.
Is increasing protectionism the next logical step?
Not necessarily. Balancing trade policy decisions is a strategic priority for national capitals. International policies and agreements which facilitate smooth market access need to be weighed up with the demands of the individual nation state. Critics have long argued that the pursuit of internationalism has been a convenient camouflage for failing to address domestic imbalances and issues.
Today the electorate won’t stand for this and there is a greater emphasis on domestic support; prioritising jobs, health & social care and infrastructure, much of which has stemmed from the pandemic. This requires national governments to mix their policy choices focusing on domestic policy whilst leveraging the international economy to grow.
Whilst regionalism and globalisation are less of a priority in the current climate, there are pressing issues which can only be effectively tackled on the world stage. Climate and Green policies such as a potential carbon tax would need to be broadly explained in the context of the important issues they are trying to address. This would help mitigate concerns that a policy is not being used as a domestic protectionist measure; it is in fact part of a regional or global strategy.
What does this mean for the outlook for trade?
Initially, a swift bounce back and resurgence in global trade from the downturn linked to the COVID pandemic looks likely. Trade growth will support projected GDP resurgence across the Nordics in 2021 and 2022, and the contraction and shift in orders witnessed during 2020 and the early stages of 2021 are likely to give way to a period of increased business and consumer demand.