The current widespread belief about globalization is that it has been in decline since the Trump era, as a result of rising tariffs, escalating global conflicts with China and Russia, and the disruption caused by the pandemic. . However, despite this perceived decline, the prevailing belief is that globalization remains an overwhelming force in both the U.S. economy and the world economy. Both of these beliefs are probably wrong. Steven A. Altman and Caroline R. Bastian provide evidence and discussion. DHL Global Connectedness Report 2024.
Altman and Bastian argue that globalization is fully understood, reached an all-time high in 2022, and remained near that level in 2023. They consider various globalization trends. For example, this diagram shows patterns of globalization in goods, investments, migration, travel, etc.
As you might imagine, the international growth in data flows has been impressive: “The amount of data that crosses borders on the internet has nearly tripled since 2019, driving a dramatic increase in international information flows.” ” However, as the report points out, the growth in domestic data flows is also very rapid, so it is not clear whether the international share of Internet traffic is increasing.
Part of the growth in Internet traffic is driven by global commerce in service industries. In the service industry, the work is done in one country and the results are transmitted digitally.
Information about science, intellectual property, and patents is also global.
The underlying theme here is that people sometimes talk about „globalization“ as if it were purely a policy choice and completely under the control of political actors. Of course, the rules around globalization bring about change, but globalization is also driven by economic forces. In particular, the digital revolution has made it easier to obtain information about products far away, manage far-flung supply chains, provide services elsewhere, and collaborate on issues of science and innovation. Now it's much easier. In some ways, the physical disruption of the pandemic has made these digital connections even more important.
However, it is paradoxically true that the extent of globalization is often exaggerated, even though globalization is growing at or near record levels. Especially in the world's largest economy, like the United States, what happens in the economy is overwhelmingly influenced by domestic factors. In the global economy as a whole, most financial flows are primarily domestic.
People may be happy or sad about the extent of globalization. That's a topic for another day. But in any case, it would be useful to have a clearer picture of the scope and trends of globalization.