The global economy faces a complex challenge: geopolitics rather than protectionism is emerging as its true adversary. Traditional debates often cast free trade and protectionism in opposition, but this binary fails to capture the nuances of today’s interconnected markets.
Professor Dani Rodrik of Harvard Kennedy School highlights that the notion of free trade is misleading. Markets operate within a framework of rules and regulations set by governments, encompassing everything from product standards to consumer protections. These regulations are crucial for maintaining stability and fairness in global trade.
Hyper-globalization, spanning from the early 1990s until the COVID-19 pandemic, wasn’t about unrestricted free trade. Instead, it involved creating complex regulatory standards that favored large multinational corporations, such as international banks and pharmaceutical companies. These entities gained unprecedented access to global markets and benefited from international arbitration that often bypassed national regulations intended to protect public interests.
Tighter intellectual property (IP) rules, pushed under the guise of free trade, allowed tech and pharma giants to maintain their monopolies, stifling competition and innovation. Furthermore, while capital flows were liberalized, critical areas like labor, climate change, and public health suffered from inadequate attention, as corporate interests took precedence.
In recent years, a backlash against these policies has emerged. What some label as protectionism is, in reality, a necessary recalibration to address pressing national concerns such as labor displacement, environmental sustainability, and public health. This shift aims to mend the social and environmental fractures caused by hyper-globalization and to pave the way for a more balanced and sustainable form of globalization.
As the world navigates this transition, it becomes clear that prioritizing geopolitical stability and equitable economic policies is essential for fostering a healthy global economy. Moving beyond the simplistic free trade vs. protectionism debate allows for a more nuanced understanding of the forces shaping our economic future.
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The global economy's real enemy is geopolitics, not protectionism
cgtn.com
