97 Foreign Aff. 130 (2018)
Globalization Is Not in Retreat: Digital Technology and the Future of Trade

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Globalization Is Not

in Retreat


Digital Technology and the Future of Trade

Susan Lund and Laura Tyson

By many standard measures, globalization is in retreat. The

       2008 financial crisis and the ensuing recession brought an end
       to three decades of rapid growth in the trade of goods and
services. Cross-border financial flows have fallen by two-thirds. In many
countries that have traditionally championed globalization, including
the United States and the United Kingdom, the political conversation
about trade has shifted from a focus on economic benefits to concerns
about job loss, dislocation, deindustrialization, and inequality. A once
solid consensus that trade is a win-win proposition has given way to
zero-sum thinking and calls for higher barriers. Since November 2008,
according to the research group Global Trade Alert, the G-20 countries
have implemented more than 6,600 protectionist measures.
   But that's only part of the story. Even as its detractors erect new
impediments and walk away from free-trade agreements, globalization
is in fact continuing its forward march-but along new paths. In its
previous incarnation, it was trade-based and Western-led. Today,
globalization is being driven by digital technology and is increasingly
led by China and other emerging economies. While trade predicated
on global supply chains that take advantage of cheap labor is slowing,
new digital technologies mean that more actors can participate in
cross-border transactions than ever before, from small businesses to
multinational corporations. And economic leadership is shifting east

SUSAN LUND is a Partner at McKinsey & Company and a leader of the McKinsey Global
Institute.
LAURA TYSON is Distinguished Professor of the Graduate School at the Haas School of
Business at the University of California, Berkeley. She served as Chair of the White House
Council of Economic Advisers during the Clinton administration.


130 FOREIGN AFFAIRS

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