Working Paper 23-11: Trade hyperglobalization is dead. Long live…?

It is possible that this posi ve correla on is s ll consistent with the view of Klein and Pe s (2020) that the par al effect of mercan lism is defla onary and that the opposite correla on in the data relates to the underlying drivers of growth—not just mercan lism but also the macroeconomic policies of China and advanced economies. [...] around 40 percent of the decrease in trade as a share of global GDP.8 Figure B.3, in the appendix, which decomposes the country equivalents metric by country, suggests that China’s growth explains much of the decline in country equivalents a er the GFC. [...] Trade policy Explana ons of the post-war reglobaliza on and even the era of hyperglobaliza on tended to follow the 80-20 rule: 80 percent of increased trade reflected technology (declines in shipping and transporta on costs ini ally, followed by declines in informa on costs); the remaining 20 percent reflected trade policy (unilateral, regional, or mul lateral under the auspices of the WTO). [...] China, India, and the incorpora on of dynamic economies into the global trading system Another explana on of deglobaliza on relates to China, India, and the incorpora on of dynamic economies into the global trading system. [...] The value of the intermediates used in produc on is subtracted from the value of the final good.