David Rubin In This Article Positive Effects of Globalization

Protectionism Through Tariffs

The 2008 economic crisis led many politicians to question the merits of globalization. In 2007, worldwide capital inflows accounted for more than 20% of the world's GDP. By 2019, this figure fell to less than 5%.¹¹
The U.S. and Europe introduced new banking regulations that limited capital flows. Many countries put in place tariffs to protect vital industries at home. In the 1990s, the U.S. placed a 127% tariff on Chinese paper clips.¹² And Japan has levied tariffs on imported rice as high as 778%.¹³

Future Outlook

Some economists suggest that businesses are not investing across borders to build capital infrastructure. They argue that companies seek countries with low taxes. Some form of globalization may be inevitable in the long run, but the historic bumps spurred by economic crises suggest that change is the only constant.
Revenues from U.S. tariffs on Chinese imports increased from $32.9 billion in 2017 to $85 billion in 2021.¹⁴ American farmers hurt by China moving crop purchases to other countries were promised $28 billion in federal compensation.¹⁵

Frequently Asked Questions (FAQs)

When did globalization begin?

Economists differ on when globalization began. Some point to people like Christopher Columbus as an early force of globalization in the 15th century. Others point back thousands of years to the founding of the Silk Road. Both the World Economic Forum and the National Bureau of Economic Research argue that the technological advancements of the 19th century allowed it to become the first true era of globalization.¹⁶¹⁷

Which countries are the least affected by globalization?

Some countries rely more or less on global trade than others. The KOF Swiss Economic Institute scores countries on a globalization index. Afghanistan and Somalia were among the lowest-scoring countries on that index. More isolated countries, like North Korea, didn't score on the index at all.