trade and people to pass through. From humble  brick arches to mega concrete structures – they've  

all played a role in globalization.

Supporters of globalization argue  that improvements in communication  

and transportation have created a more  open, tolerant and peaceful world.

In the last 100 years, it has resulted in  huge growth for global trade as economies,  

people and cultures gradually integrated.

But globalization hasn't been without its  drawbacks. And Russia's invasion of Ukraine  

has helped to push international  relations to a breaking point. So,  

can globalization still bridge  the world's economies together?

I'm here at the International Monetary  Fund's headquarters in Washington,  

D.C. to speak to the institution's  chief economist on the topic.

The worst is yet to come, and for many people,  2023 will feel like a recession. Pierre Olivier  

Gourinchas' warning from the IMF's World Economic  Outlook in October 2022 underlined the significant  

slowdown in the global economy – and the reliance  on global trade to function. It's raised questions  

as to whether the many benefits of globalization  outweigh the geopolitical problems it's helped  create.

Globalization has delivered, that's  the first thing we should realize.

It's lifted hundreds of millions of people out  of poverty. It's allowed the rise of emerging  

markets. It's on the back of a process  of integration into the global economy.  

So, in many ways, it has succeeded.

The roots of that success, according  to historians, dates as far back as  

the 1st century BC to the Old Silk Road.  It transported luxury goods such as gold,  

silver and of course silk between China and Rome,  the two great civilizations at the time.
Then came  

the spice trade as Islamic merchants dominated  the Indian Ocean and Mediterranean Sea routes.

By the end of the 15th century, the Age of  Discovery had begun and with it the slave  

trade. The appalling exploitation  of African people helped European  

explorers conquer and integrate new  territories, such as the Americas,  

into their economies. But these new  trade links weren't truly global.

The first wave of globalization really began  at the end of the 18th century with the  

British industrial revolution, which through  improved manufacturing and transportation,  

saw huge growth in global exports. The two world wars ushered in a new  

era – dominated by the United States – with the  help of new technologies like the car and the  

plane. Then came the digital revolution which  turbo charged globalization to new frontiers,  

as China joined the U.S. as the two global powers.

But the latest wave of globalization has seen  a lot of pushback. As a result of technological  

advances, whole industries have been wiped out,  causing mass job losses. Worker exploitation  

and a rise in inequality have also been, at  least partly, attributed to globalization.

There are a number of people who have been  suffering as the economy is changing and how  

some local labour markets are facing competition  from overseas and things like that. So,  

these kinds of dislocations happened.   Has globalization gone too far? 

In some ways globalisation has gone too far. 

Kevin Gallagher is an economist and director of  

the Global Development Policy  Center at Boston University.

You know, how stock markets have  bubbles? And then there's a correction,  

I think there's been a globalization  bubble, and we're trying to correct it.  

 We've spent so much time

almost thinking about like the globalization  of markets and trade as an end, rather than  

a means to help us live in a more stable, more  equal and, and more environmentally sound way. 

  We have to find better ways in which we  

can make sure that everyone is going to be benefiting going forward. 

And that's part of the reason why there is so  much resentment is in a sense, a lot of people  

feel like this is a train that left them behind.  And so why should they vote for a process that has  

not benefited them?

Russia's invasion of Ukraine has, in Gourinchas'  opinion, revealed underlying 'geo-political  

tectonic plates.' Imagine the two countries are  tectonic plates that rub up against each other  

to create an earthquake. That earthquake has  had a ripple effect on other tectonic plates.  

 Think rising commodities prices, disrupted trade,  

a refugee crisis and weaker economies thanks  to central banks raising interest rates at  

a faster-than-expected pace – all rifts that  have helped push the world's economies apart.  

 Without intervention, these plates would become

'distinct economic blocs' with trade,  currency and political systems that could unravel  

our current global economic order.

And while the conflict between Russia and  Ukraine may be the epicenter of the earthquake,  

the geopolitical tectonic plates that make up the globalized economy had been drifting apart for years.

Major economies began to drop tariff rates  on imports, and many nations entered into  

free-trade agreements following a series  of events after the Second World War,  

including a meeting in 1944 between 44  countries and the fall of the Soviet Union. 

 But over the last ten years,

the backlash against globalization has fuelled  populist movements all around the world, which  

in many cases led to protectionist policies.  Protectionism is the economic policy of  

restricting imports to shield a country's  domestic industries from foreign competition. 

 Data from Global Trade Alert,  

show that protectionist trade policy interventions  have been growing faster than liberalizing ones. 

The rise of China and other emerging 

market economies came about largely thanks to  globalization. But this growing economic power may  

also be contributing to its fragmentation.   

China has been one of the largest beneficiaries of  globalization when it entered the WTO. It really,  

really grew an incredible amount and it really  allowed the rest of the world to grow because  

we had lower prices. But while China adhered to  the letter, most of the time of our international  

trade rules, they played a stronger role with  their state to make sure that they produced  

a lot of things at home and moved into the new  sectors of the future in ways that markets won't  

do on their own.

Back in 2018, President Donald Trump accused  China of unfair trading practices and intellectual  

property theft and began to slap tariffs on  China to encourage U.S. consumers to buy American

products. China hit back with its own tariffs  and accused the U.S. of trying to prevent it from  

becoming the world's dominant economic power.

Being a large economic power comes great  responsibilities and I think by and large,  

the Chinese authorities are very cognizant of  that. Global discussions are taking place. That  

needs to continue, that needs to be reinforced  and we need to get past sort of the tensions that  

might be arising.

There is a rebalancing of economic power  and governance that is taking place. We've  

had this slow process over the last 40 years the  rise of emerging markets as their economic power

increases, there is a need for an adjustment in  the way we address and deal with global problems.  

And so it was bound to happen that there will be  little rifts and you know, the plates will start  

moving apart.

According to Gourinchas, the rise in these  countries' economic might was not matched  

by a similar rise in their financial and global  institutional firepower.' That's in part down to  

the dominance of the U.S. dollar. But the U.S.'s  share of global output is likely to decline,  

due to the growth in emerging markets.' 

We're coming out from a period where we had very  strong dominance from one country and groups of  

countries, but we have to plan and organize  the transition to this multipolar world.

 A multipolar world is one where there are more  

than two centers of power. In theory, it would  allow emerging economies to better retain and  

protect the benefits of globalization. But whether  the U.S. and China, the world's superpowers,  

would agree to that transition is unclear.

This is complicated, this is difficult. There's  a new seat at the table. And so how we organize  

this in a way that is beneficial for everyone  is really the challenge that we're facing.  

 And as these hypothetical tectonic  

plates move away from each other, Gourinchas  argues we'll need more bridges between them,  

not less. Bridges like the IMF.

A core mission of the IMF is to guarantee that  we have global financial stability. And so it's  

really important to keep as many countries around  the table and to find ways to reach agreements,  

and a world that sort of what, you know, we don't  trade, we don't engage, we don't talk. We can't  

do any of this.  

But Gallagher begs to differ.

The IMF on some levels has really been a big part  of the problem when it comes to globalization.  

They say raise taxes, cut spending, raise the  interest rate, put the country into a short-term 

recession, and hope that the investment  community will see that you've tighten your  

belt and money will start to trickle  in. That doesn't pay off so well.   

 What are the key areas that need to be corrected  

for the global economy to move forward?

Number one is financial markets. The financial  system sort of feeds on itself, rather than  

fuels productive, equal and environmentally sound  development, we really need to regulate global  

finance, to make sure that it's aligned with  our broader societal goals. Number two, make  

sure that there are safety nets so that all the  benefits just don't accrue to a small amount of  

folks and the populism that comes with that that  makes folks want to close borders and go to war.