Working Paper No.: WP 161 Globalization and Growth in a Bipolar

† _____________________________________________________________ *Author email: eichengr@berkeley.edu Disclaimer: The findings, interpretations, and conclusions expressed in the paper are those of the authors and do not necessarily reflect the views of the Governing Body or Management of NCAER. [...] Implications for Trade and Growth Much has been made of the slowdown in the growth of global trade due to the “trade war” between the U. [...] Data from Global Trade Alert (2023) show that the number of harmful new trade policy interventions began rising already in 2012-13, which plausibly explains, at least in part, the end of the period when the global trade/GDP ratio was on an upward trajectory.2 Evidently, the dislocations of the GFC and the subsequent slowdown in advanced- country productivity growth (Erber, Fritsche and Harms 2017). [...] First, the post-GFC stagnation of the global trade/GDP ratio is less impressive when one considers not the value of trade but ton-kilometers of goods crossing borders (Ganapati and Wong 2023), where the difference reflects the evolution of global supply chains (that more countries are exporting parts and components as opposed to more expensive final products) and the growing importance of trade in. [...] Eichengreen and Saka (2022) examine bank- intermediated flows, specifically banks’ investments in the government bonds of other countries; they find that such investments are less, and less likely, when trust of residents of the initiating country in the destination country is less.7 The decline of foreign investment into China is not limited to the United States.