The coronavirus has emerged as the most serious challenge to the wave of globalisation which has been underway since the 1990s. The pandemic has led to calls for new restrictions on flows of trade, capital and people and has increased strains between the US and China.

This Key Theme collects research from across our services exploring the idea that globalisation is in reverse, including a special 6-part series prepared for our annual conference in 2019.

Top Reads

China Economics Focus

Estimating the size of US and China-led economic blocs

17 September 2021

Long Run Update

What deglobalisation will look like – and its economic implications.

16 March 2021

Global Economics Focus

What follows after the current wave of globalisation peaks.

22 September 2020

Emerging Asia Economics Update

9 November 2020

Global Economics Update

5 October 2020

Global Economics Update

29 October 2019

Global Economics Update

24 February 2020

Long Run Update

2 March 2020

Global Economics Update

9 December 2019

Our View

Globalisation had peaked even before the virus hit and would have been in retreat in many areas, even without the headwind from the pandemic. Technology drove this most recent wave of globalisation as it became easier to outsource production to places where the cost of labour was low. As production techniques have become more capital intensive, that driver of continued globalisation has faded.

Globalisation was a political development too, underpinned by a belief in the major powers that increasing integration served their strategic interests. That belief has been fractured by the emergence of an autocracy as an economic superpower and geopolitical competitor to the West.

As the chart shows, the first wave of globalisation ended in a period of de-globalisation, while the second wave was followed by a period of stasis. Are we now at the end of the third wave, and if so, will we see globalisation stall or actually be rolled back?

Globalisation may just stall over the next decade, but a period of de-globalisation – with cross-border flows of trade and capital falling as a share of GDP – is increasingly likely.

If this is driven by new technologies, it will not be bad for the world economy, though it would make it much harder for poor economies to sustain rapid growth.

But it could take a more malign and policy-driven form, exacerbated by the social, political and economic changes wrought by the coronavirus.

In particular, if we are right that growing bilateral tensions reflect China’s strategic threat to the US, then some form of decoupling is inevitable, and this will have an adverse effect on global GDP.

The 6 Part series

Emerging Markets Economics Focus

8 October 2019

Global Economics Focus

10 October 2019

Global Economics Focus

15 October 2019

China Economics Focus

17 October 2019

Global Economics Focus

22 October 2019

Asset Allocation Focus

24 October 2019