February 06, 2017

Is the World Retreating from Globalisation?

By Vivek Dehejia, James W Dean

The past two centuries have witnessed growth in international trade along with a spread of liberal ideas and democracy across countries. This paper provides a brief history of the rise of Anglo-American liberal values and globalisation that coincided with the rise of Great Britain and then the United States as successive global hegemons. The paper suggests that elite support for and embrace of globalisation – including dimensions such as free movement of people, ideas, and technology – brought many benefits. However, it has also resulted in populist resentment against falling wages, stagnating middle class incomes, and immigration in western liberal democracies. This phenomenon can help explain the support for and victory of new US President Donald Trump, whose policy proposals in the campaign targeted illegal immigration and trade agreements such as the North American Free Trade Agreement (NAFTA). The paper discusses the likely cost and benefits of Trump’s unfolding policy agenda. It also examines Trump’s fiscal and monetary policies, highlighting similarities between Trump and former US President Ronald Reagan. The paper concludes on the optimistic note that a pragmatic Trump’s focus on infrastructure spending may provide a boost to growth and job creation.

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