The rise of far-right parties in Europe, Brexit, and the Trump administration are seen by some as evidence that globalization is backsliding. However, Xue Li, researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences, writes these events are just part of the overarching process and are a result of a temporary need to compensate the victims of globalization.
While globalization has enhanced overall welfare, especially in developing countries, workers at the middle and bottom of the industrial chain in developed countries have watched their real pay growth slow down or stagnate. Many have even lost their jobs. They are the major force opposing globalization, Xue wrote in a piece for the journal World Affairs. Their ranks swelled after the financial crash in 2008 and waited to express their dissatisfaction at the ballot boxes. In Europe, that opportunity came during the refugee crisis in 2015. In the US, momentum was fueled by fears that Hillary Clinton would continue Barack Obama’s policies, Xue wrote.
Nevertheless, a major part of GDP in developed countries stems from the service sectors, advanced manufacturing, large-scale mining and agriculture, all of which support globalization. Also, major multinationals do not back trade protectionism and have a strong say in their countries’ actions. Their silence or support of globalization’s victims is a temporary tactic to soothe them, while benefiting the companies’ global expansion in the long run, the researcher claimed.
Besides, the combined economic output of developing countries has exceeded that of developed countries, with China the largest contributor to global economic growth. They benefit from globalization and intend to keep it going. Therefore it is reasonable to see Brexit and other similar reactions as black swan events in the process of globalization, Xue concluded.
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