This is at least the fourth time in a few years that the death of globalization has been announced.
Many believed that it was there when, in its embarrassing collapse of 2008Wall Street dragged down international finance and much of the global economy.
Then there were those four years during which donald trump He shot at everything that moved in trade, that is, not only the great Chinese rival, but also the closest and most faithful economic partners of the United States, as well as the international rules of which his own country had been the main architect.
Then came the pandemic COVID-19during which various countries first went to great lengths to keep their vaccines and medical equipment, and after which it was the big global supply chains that started to derail.
And now, it is Russia’s invasion of Ukraine that is further breaking these chains, as well as raising the issue of security and economic independence.
We are obviously thinking of Europe, which would like to impose tougher sanctions on the Vladimir Putin if i wasn’t a prisoner of its dependence on Russian fossil fuels. But there are other regional powers — China, India, Brazil, Saudi Arabia, Nigeria — who see Western countries’ treatment of Russia and think they might be worth it, better off depending less financially on them to avoid suffering the same fate. a day, noted several observers in recent weeks.
These powers that be should not have been reassured when they heard on Wednesday that the US Treasury Secretary issued a warning to countries that continue to do business with Russia. Reinforcing this image of an economic world in which it will be increasingly necessary to take sides, Janet Yellen informed China in particular that its “integration into the world economy” would depend on factors such as its participation in the campaign against the Vladimir Putin, Agence France-Presse reported. “In the future, it will be increasingly difficult to separate economic issues from broader considerations of national interest, including national security,” she told several other countries, including India, without naming them.
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Calling for a “modernization” of major international economic institutions such as the International Monetary Fund (IMF) and the World Bank, which are due to hold their spring meetings next week, Janet Yellen called for Russia to be excluded from the G20 and wished for more.” amylocalization” (friendsin English).
We have known about “relocation” for a long time (offshoring, in English), that is, the movement of manufacturing jobs from developed countries to emerging economies, where wages are lower. Governments of affected countries have also often called for these jobs to be brought home: “relocation” (reshoring) — or, at least, a return as close as possible (offshoring).
Often predicted, these relocations rarely materializes. However, there would be several advantages to keeping our supply chains close, Investissement Québec argued Thursday during the launch of a new certification for products designed and manufactured in Quebec (“Quebec Product”). This would, among other things, reduce transportation costs, business risks and pollution, as well as promote local production and innovation.
With frindolocation, or withallied shoringit’s about at least bringing supply chains back to partner countries (friends or allies) that are more reliable, more stable and closer in value, he argued last summer two experts from the Brookings Institute, located in Washington. Replace autocratic regimes like China and Russia with liberal democracies like Canada, Mexico or Europe, for example.
It all sounds a lot like trade as it existed in the days of the Cold War, he said last month. The Economist. The difference is that at that time, the USSR and China were isolated from the rest of the world economy, while today the autocracies represent 31% of the world’s gross domestic product and the two worlds buy and sell goods and services worth of 15 billion. sold every day.
Best way to strengthen supply chains is not to shorten them or keep them in-house, IMF writes in a study published this week. Rather, it is about injecting as much diversity as possible into supply sources and providing for more flexible manufacturing methods.
“The fragmentation of the global economy into geopolitical blocs […] would entail terrible adjustment costs,” The managing director of the IMF said on Thursday, Kristalina Georgiava. “In a world where war in Europe leads to famine in Africa, where a pandemic can go around the world in days and have repercussions for years, where pollution, wherever it comes from, contributes to sea level rise by anywhere on the planet, the threat of a breakdown in global cooperation cannot be overstated: our collective prosperity depends on it. »
In the future, it will be increasingly difficult to separate economic issues from broader considerations of national interest, including national security.