Globalization is more robust and stable than you think

That is the topic of my latest Bloomberg column, here is one bit from it:

The most surprising result from the research on trade and distance is that the ability of trade patterns to surmount barriers of distance has not in fact increased over time. You might think that with the internet, highly efficient ports and powerful multinationals, geographic distance would predict trade patterns less well over time, but that has not been the case. As one study noted, according to a meta-analysis, “trade decreases with distance by at least the same amount today than thirty years ago.”

Again, to put that into concrete form, the tendency of the U.S. to trade with Canada or Mexico, relative to trading with Australia or Turkey, is at least as pronounced as it used to be.

And this:

The pessimistic reading of trade clustering is that human beings simply have not spread their wings very far. But these days, I find the gravity equation to be a comfort. Given that our ability to trade across great distances has not outraced our ability to trade nearby, I am not expecting any kind of a major trade snapback or correction. The evolution of trade, rather than throwing out fragile, delicate spokes, has instead made some fairly hardy connections, sturdy enough it seems to survive Trump’s rhetoric.

Do read the whole thing.


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