The widespread current belief about globalization, I would say, is that it has been in decline since the Trump presidency, as a result of increased tariffs, a sharpening of global conflicts with China and Russia, and disruptions from the pandemic. But even with this perceived decline, a common belief is that globalization is an overwhelming force in both the US and global economy. Both of these beliefs are likely incorrect. Steven A. Altman and Caroline R. Bastian provide evidence and discussion in the DHL Global Connectedness Report 2024.
Altman and Bastian argue that globalization, fully understood, reached an all-time high in 2022 and remained near that level in 2023. They look at a variety of globalization trends. For example, this figure shows patterns of globalization n goods, investment, migration, and travel.
As you might expect, international growth in data flows has been remarkable: “The amount of data crossing national borders over the internet has nearly tripled since 2019, fueling dramatic increases in international information flows.” However, as the report points out, growth in data flows has also been very rapid within countries, so it’s not clear if the international share of internet traffic is rising.
Some of this growth in internet traffic is being driven by global commerce in service industries, where jobs are performed in one country and the work produce is transmitted digitally.
Information about science, intellectual property, and patents is globalizing as well.
An underlying theme here is that people sometimes talk about “globalization” as if it was purely a policy choice, and fully under the control of political actors. The rules about globalization make a difference, of course, but globalization is also driven by economic forces. In particular, the digital revolution has made it much easier to hear about distant products, to manage far-flung supply chains, to have services provided elsewhere, and to cooperate in matters of science and innovation. In some ways, the physical disruptions of the pandemic supercharged the importance of these digital connections.
But despite the growth of globalization to at or near all-time highs, it is paradoxically true that the extent of globalization is often overstated. Especially for the world’s largest economies, like the United States, what happens in the economy is overwhelmingly influenced by domestic factors. Even for the world economy as a whole, most flows are primarily domestic.
One might rejoice or lament in the extent of globalization. That’s a topic for another day. But either way, it’s useful to see the extent and trends of globalization more clearly.
