DP14990 Globalization and Nationalism: Retrospect and Prospect

Author(s): Maurice Obstfeld
Publication Date: July 2020
Keyword(s): deglobalization, Globalization, multilateralism, Nationalism, populism
JEL(s): F52, F53, F60, N20, N40
Programme Areas: International Trade and Regional Economics, Economic History, International Macroeconomics and Finance
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14990

Recent events have highlighted areas of conflict between economic integration with the outside world and the demands of domestic electorates. Historically, the tradeoffs have always become sharper in periods of crisis, such as the present. After reviewing the U-shaped progress of globalization since the nineteenth century, this essay reconsiders John Maynard Keynes's views on "national self-sufficiency" in the early 1930s. I argue that the postwar Bretton Woods system he helped to create evolved from those views as a balanced middle ground between market forces and governments' desires for domestic economic stability. The gradual erosion of that balance in favor of the market has helped produce discontent over globalization and more nationalism in politics. Enhanced multilateral cooperation in key areas offers the hope of supporting globalization while better meeting voters' aspirations. Despite daunting political obstacles to global cooperation these days, collective action challenges in areas like climate, cybersecurity, and health â?? alongside economic policy â?? are only becoming more pressing over time.