Executive summary

• Author: Zumer, Klemen; Navarra, Cecilia; Titievskaia, Jana; Stamegna, Carla; Kononenko, Vadim
• Pages: 1-1

Slowing down or changing track?

I

Executive summary

The period from the fall of the Berlin Wall to the global financial crisis of 2007 marked an era of fast-

growing interdependence between different economies and cultures, brought about by cross-

border movements of people, goods, services, capital and data. Far from being the first

'globalisation' wave, it is considered to be a period of 'hyperglobalisation'. The decade which

followed the financial crisis of 2007-2008 was marked by a slowdown in global interconnectedness.

In 2019, the term 'slowbalisation' spread, to signify the waning of globalisation as we know it. For

instance, international trade and investment relative to gross domestic product (GDP) started to

decline. Supply chains began to contract after years of global outsourcing and offshoring. In terms

of international cooperation and multilateralism, the pace of the world's economic integration

waned. For some governments, notably the Trump administration in the United States of America

(USA), it is no longer evident that i nternational institutions such as the World Trade Organization or

the World Health Organization are fit for purpose. Rising nationalist and populist leaders in several

parts of the world began questioning the ideological doxas of globalism and, in some cases,

neoliberalism. Nevertheless, globalisation in other areas, such as international data flows, migration

and tourism, continued to expand, indicating that perhaps globalisation was merely changing

shape. In 2020, the coronavirus pandemic dealt a profound shock to global trade, investment and

travel. The disruption to the physical movement of people, goods and services brought about by

the pandemic has been so severe that the thesis of 'slowbalisation' merits thorough analysis.

Globalisation has been evolving over time, becoming increasingly complex and multi-faceted. In

this paper, five pathways of globalisation have been selected to illustrate the contrasting ways in

which global integration has been slowing down, accelerating or continuing. Each exh ibits a

different development pattern:

Cross-border trade in goods and services slowed in terms of volume and relative to

GDP, in spite of record low average tariffs. This slowdown can be traced to variation in

supply chains, accounting principles, escalating protectionism , and most recently

Covid-19.

Global financial openness slowed after the financial crisis in terms of cross-border

capital flows and bank lending. However, international regulatory cooperation in the

realm of global finance continued to increase, only recently showing a trend towards

some reversal.

Deepening inequality has been a by-product of hyperglobalisation, has continued

during the slowbalisation phase, and is likely to continue after Covid-19. The causes are

rooted in government policies affecting income distribution, including taxation and the

strength of multinational corporations.

Globalisation of social interactions, reflected in rates of tourism and migration, did not

slow until the sudden arrival of the Covid-19 pandemic.

International digital exchanges, measured by cross-border data flows, have continued

expanding throughout the 'slowbalisation' period. Social distancing and restrictions on

international travel are likely to accelerate globalisation in the digital realm.

As a result of the Covid-19 crisis, the future could be one of patchy globalisation, characterised by

more immaterial exchanges, and posing further challenges to the future of global governance and

international cooperation. The EU co uld lead the way towards a more sustainable and considered

form of globalisation in each of these realms.