What Is Globalization?
The Peterson Institute has launched its first microsite, titled « What Is Globalization? » This interactive feature explains a term that has become toxic, especially in today’s political environment. The goal is to educate the public and clarify misconceptions about globalization’s impact. Understanding the relative costs and benefits can pave the way for alleviating problems while sustaining the advantages.
Why Historical Context Is Important
After World War II, the United States helped build a global economic order governed by mutually accepted rules and overseen by multilateral institutions. The idea was to create a better world with countries seeking to cooperate with one another to promote prosperity and peace. Free trade and the rule of law were mainstays of the system.
How Trade Helps Each Side
Globalization encourages each country to specialize in what it produces best using the least amount of resources, promoting economic growth for all sides. A video explains this concept using easy-to-count pizzas and cakes to represent productivity and trade.
Demystifying Job Effects
Globalization changes the types of jobs available but has little effect on the overall number of jobs in the US labor market. Some workers have directly benefited, while others have not. The biggest factor in declining US manufacturing employment is labor-saving technology.
Not enough is being done to assist displaced workers from trade competition. Domestic policies like wage insurance and training can help workers find new jobs more easily.
Measuring the Benefits vs. Costs
An infographic summarizes Gary Clyde Hufbauer and Zhiyao (Lucy) Lu’s Policy Brief, The Payoff to America from Globalization, showing the relative economic effects of US trade expansion.
The Difficulties Facing US-China Trade
China is not playing fairly on trade, but disrupting global supply chains—as the Trump administration’s tariffs and other barriers are doing—could backfire and damage economic growth and national security alliances. Includes links to other PIIE material offering less destructive solutions.
How to Sustain Globalization Through Policymaking
The best way to address trade abuses and disputes is through negotiation and coordination with trading partners—applying due process—in order to prevent costly trade wars, where more and more barriers end up hurting all sides. In addition, domestic policies are recommended to support those left behind because of trade competition, technology, and other factors, while ensuring inclusive growth and strengthening multilateral systems that have served the United States—and the world—well.
|View the microsite: What Is Globalization?|