What's Happening With Global Connectedness In The Pandemic?

The last few decades have been a time of economic globalization. But that trend has been faltering for a few years now, with rising political obstacles to trade and migration. Will the global pandemic recession be a force that separates the world economy, or perhaps reinforces some patterns of globalization while hindering others? Steven A. Altman and Phillip Bastian tackle these questions in the DHL Global Connectedness Index 2020, subtitled "The State of Globalization in a Distancing World" (December 2020).  

Here's are some long-run patterns of globalization. The first panel shows exports (as a measure of trade in goods) starting a sharp rise after World War II. The second panel shows the rise in foreign direct investment since about 1980. The third panel shows the rise in migration since about 1970. 

But although the long-run trend toward globalization is clear, Altman and Bastian point out that many people have heard so much about globalization that they tend to overestimate its prevalence. They write: 

[M]ost business and personal activity is still domestic rather than international. Roughly 21% of all goods and services end up in a different country from where they were produced. Companies buying, building, or reinvesting in foreign operations via FDI [foreign direct investment] accounted for only 7% of gross fixed capital formation last year. Just 7% of voice call minutes, including calls over the internet, were international. And a mere 3.5% of people lived outside of the countries where they were born. ...

If many of these global “depth” measures are lower than you expected, you are in good company. Surveys of managers, students, and the general public have consistently shown that most people think international flows are larger than they really are. This pattern shows up across countries, as well as respondent characteristics such as level of education, age, gender, and political leanings. ... In public policy, people who overestimate these types of measures tend to presume that globalization is a much bigger factor in joblessness, wage stagnation, and climate change than evidence suggests.

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