A Defence of Globalisation and the International Rules-Based Order

Watching what can only be described as the collapse of the international rules-based order and disintegration of globalisation, many are scratching their heads wondering what went wrong. I too, as a both a public affairs executive and as a former policy adviser on international trade who (in a

small way) contributed to the building of that system over the past 40-ish years, have to ask why so many people, particularly in the more economically developed nations of Western Europe and North America have failed to see the benefits that have obviously flowed from the system built after World War II.

Put simply, why are populist, protectionist and xenophobic political parties on the rise in EU nations, the US, the UK, and Australia?

And, more importantly, what can be done to curtail what looks like a relentless march of many nation states over an economic precipice?

Winners, Losers and Populism

Picking themselves up from the ruins of World War II, the nations of Western Europe and Japan benefitted the most from the shift to globalisation and an international rules-based order. Thanks to various rounds of negotiations of the GATT (General Agreement on Trade and Tariffs) and its successor the WTO (World Trade Organisation), the volume of global trade expanded more than 30 times from 1950 until today (see “Trade and Globalisation” in Our World in Data.)

Boom, baby, boom

For example, Japan experienced one of the biggest growth surges in world history from 1950 to 1990. Its GDP grew by 300% from 1950 until 2024, while living standards increased 20 times. For its part, Western Europe (which now forms the core membership of the European Union) saw four-fold economic growth from the end of World War II to today, resulting in a more than six times increase in people’s living standards. Consider that today many Central and Eastern European countries are seeking admission to the EU for its economic promise.

Enter the tigers

During the 1980s and 1990s the benefits of globalisation and its rules spread to what became known as the Tiger Economies of East Asia – South Korea, Taiwan, Hong Kong and Singapore. They industrialised quickly to establish export economies to service growing demand for consumer goods in the advanced economies of the EU, North America, Australia and New Zealand. Their success soon spurred on what became known as the Tiger Cub Economies of Indonesia, Malaysia, Thailand and Vietnam.

And the dragon

Underpinning all of this was the international rules-based order governed by the GATT-WTO. Not surprisingly, as China put itself on its own economic trajectory it too sought admission to this club, which was ultimately granted in 2001. I was fortunate to be based in China from 2000 to 2013 – a period I like to call “China’s Golden Years” because of the economic boom it was experiencing but also because of the tangible sense of hope, opportunity and freedom of the people there.

Not the stragglers

Unfortunately, there were also losers during these years of expansion global economic expansion. The countriesof Latin America and Sub-Saharan Africa did not fare as well as the nations mentioned above.  Their economic growth was moderate due to economic instability, weaker political institutions and widespread corruption, which in turn impacted investment flows that would have supported the type of value-chain advancement experienced in the Asian Tiger and Tiger Cub economies. Ironically, many of these countries that missed out on the benefits of globalisation and the institutions that support it want to stay in the clubs that underpin it - the United Nations and the World Trade Organisation - and continue to support the application of their rules.

And certainly not the forgotten

Of course, there were also losers within the advanced economies who benefited most from globalisation. It is important to consider them because those who have missed out on the benefits in the advanced economies are the people driving the shift to popularism and protectionism (and even xenophobia) that can be seen in countries like the UK, US, and among some EU member states. They view international trade as a zero-sum game and they want to see their countries made great again, whatever that means. They are the low skilled workers whose jobs were lost when manufacturing shifted overseas or who have been replaced by automation at home. For many reasons, they failed to re-skill to meet the employment needs of advanced technological services economies. No doubt, one reason for that was the failure of their own governments to develop and implement economic readjustment policies as their economies evolved.

But they make easy prey for populist politicians whose pithy slogans worn on t-shirts and hats pass for economic policy and real solutions. Don’t blame the have nots, blame the politicians and their advisers who should know better but who choose the low road to victory.

So, What Went Wrong?

Ultimately what went wrong was a failure of the governments of the countries that benefitted from globalisation and the international rules-based order to communicate the benefits to voters.

While governments promoted the benefits of each round of trade and tariff negotiations of the GATT and WTO or of membership of the EU or NAFTA (the North American Free Trade Agreement), they failed to continue to boast about the benefits as they came to fruition. While the good news stories may have appeared in the pages of business and financial newspapers read by elites, there were few, if any, nightly segments on television to promote the latest trade successes. Unemployed and unable to keep up with the world around you, you might find yourself eating your TV dinner while watching the six o’clock news filled with car crashes, home invasions, drug busts and gang violence. In such a scenario, your pessimism and anger are understandable, as is your search for scapegoats and that saviour who echoes your sentiments.

History's lessons

What is not forgivable is the opportunist politicians prepared to take advantage of this. The 1920s and 30s saw many such politicians rise, particularly in Germany, Italy and Japan, who preyed on the disgruntled with promises of making their nations (and them) great again. In the worst cases they covered themselves in the pigs swill of disgusting racist theories.

History should be instructive. But somehow it is not. We seem to make the same mistakes time and again. And, most sadly, those who are promised the world by populist leaders always end up suffering the most.

Give peace a chance

This time around, given the nuclear and chemical arsenals at the disposal of too many nation states, talk of total devastation is not hyperbole. If the benefits of globalisation, free trade, and international institutions are not explained the populists may just lead us over that precipice.

Globalisation and the institutions that have underpinned its rules-based order have provided 80 years of world peace and economic growth and stability for the most part. The UN and WTO may not be perfect, but they are still better than the alternatives, better than the zero-sum game of nation states seeking to dominate one another in a world where might is right and where the weak must suffer the capriciousness of the powerful.