Two Sides Of The Same Coin?

Reacting to the Brexit vote, the former Chancellor of the Exchequer George Osborne recently said, “Let’s make sure that we go on doing trade with our biggest export market, otherwise withdrawing from the single market would be the biggest single act of protectionism in the history of United Kingdom and no amount of trade deals with New Zealand are going to replace the amount of trade we do with our European neighbours”.*

True, our economies are too intertwined to stay aloof for long. Globalization and protectionism come in cyclic patterns—it is within you to leverage the opportunities.

- Morgen Witzel

In 2001, the late Professor Alan Rugman predicted that the long groundswell towards greater global integration of world economies would come to an end. His book, The End of Globalization, made the point that the pressures for and against global integration were cyclical. Over the course of history, there have been times when economic entities cooperated with each other and lowered trade barriers, and times when they put up fences.

Professor Rugman was not the only one making this point. A few years later, Paul Laudicina, then chairman of consultancy firm A.T. Kearney, speculated in his book World Out of Balance that globalization could go one of several ways. The trend towards greater integration, exemplified by the GATT negotiations and establishment of the World Trade Organization, might continue, leading to ever lower tariffs and open borders; but Laudicina thought it equally possible that this trend could reverse. His most likely scenario, however, was a rather muddy mixture of the two, with some countries banding together to create regional free trade zones, while others put up protectionist walls.

Building on Rugman’s work, too, management scholar Karl Moore and historian David Lewis noted how throughout history there have been ‘waves of globalization’; in other words, some periods of time when popular sentiment and government policy favored free trade, and others when protectionism was the rule. The Roman Empire was highly protectionist, encouraging trade within its borders but establishing high tariffs and restrictions on imports. The Chinese Empire had very similar policies. The Mongolian and early Islamic polities, on the other hand, favored free trade.