Monday, December 5, 2016

Risk of Deglobalization Hangs Over World Economy

Name: Brittany Lopez
Title of Article: Risk of Deglobalization Hangs Over World Economy

Time published: October 5, 2016 at 12:37pm ET

At the moment, the global economy is slowing down at an alarming rate. Since 2012, the global growth rate has been only 3% per year, which is half the preceding three decades. This is not only affecting developing countries, but also hitting developed countries as well. Unfortunately, the growing global economy has been the reason for rising living standards (because citizens of developed countries benefitted from lower prices and those in emerging markets benefitted from increased wages), so its decrease is a definite cause for concern. This decrease in global growth is due to a collapse in investment rather than trade. The IMF adds that, what is not a part of the lack of investments, is “largely explained by a reduction in the pace of trade liberalization and rising protectionism” (Nixon). This train of thought lends itself to the conclusion that the world is moving away from globalization.

This trend towards deglobalization would have an adverse effect across all markets, since so many countries are now dependent upon each other for trade in goods and services. If countries start shutting their doors, companies will have to restructure their business models since a large swath of their consumers will no longer have access to their products/goods. I don’t feel that deglobalization is a viable option since so many companies are global all over the world. Untangling that might take longer than fixing the growth rate.

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