Emergence of Deglobalization: With A Changing Global Paradigm

Abstract

Since 2008, deglobalization has affected state-to-state economic integration and interdependence. Events like the 2008 financial crisis,and the COVID-19 pandemic may disrupt global trade and boost local consumption. Globalization 2.0 includes trade protectionism, cash flow restrictions, people movement restrictions, and information access. The US-China trade conflict has hastened deglobalization and distorted money and commerce. Country integration momentum leads to stronger economic openness but lower trade openness in emerging market economies (EMEs). The 2008 financial crisis slowed globalization, lowering trade as a proportion of GDP from 54.62% in 2004 to 52.47%. The maturing of global value chains and manufacturing dispersion have reduced global trade flexibility. Deleveraging and credit constraints caused by China's rising domestic value added in exports and insufficient trade finance have contributed to this drop. The US-China trade war has deglobalized the global commerce sector, with China's retaliation limited. This study discusses economic evidence of deglobalization. The study shows a reduction in goods, money, and people-to-people transfers. The paper also discusses how US-China strategic rivalry promotes deglobalization in trade.