Grzegorz W. Kołodko explains why the political backlash against economic openness in many countries will not doom it.
Business – a natural ally of economic globalization, and thus an enemy of political deglobalization – should work harder to support these processes. Paradoxically, reducing the probability of an all-out catastrophe requires that we learn to accept a certain degree of risk and uncertainty. The EU will be critical here; it does not have to take sides in the Sino-American rivalry, and could thus play a central role in both blocs. After this period of turbulence – and the difficult social, cultural, demographic, and technological adjustments it entails – greater openness will win out. The Economist Intelligence Unit predicts that these blocs “will cement themselves into the geopolitical landscape and use economic and military levers to court countries that are not aligned with either side.” The key is a more effective form of political globalization. It is also true that these shocks have caused severe economic disruptions; they have hampered the production and distribution of goods and services, obstructed technology transfer, tested international financial arrangements, and undermined multilateral cooperation. Though the pandemic and the Ukraine war are affecting these flows, the world is big enough to absorb liquid savings. But the process will be hindered as long as political globalization fails to keep up. A political backlash against “globalism” in many countries seems set to unravel three decades of economic integration. WARSAW – Just over three decades ago, the Cold War ended, and former Soviet-bloc countries began their transitions to market economies, which enabled them to engage with the rest of the global economy. The world’s division into three segments – advanced capitalist economies, centrally planned socialist economies, and the “Third World” – appeared increasingly outdated.