Globalization and Trade: An Unfortunate Tangle

Abstract

Globalization disrupted the seemingly solid construction emerged in the aftermath of WW II, called the international trade system. For over fifty years, the system grew constantly thanks to the increasing number of countries that joint it as well as to its ubiquitously-accepted rules. For better and for worse the system has worked according to traditional theory principles, whose core credo was that all participating countries would gain more if engaged in trade than if in autarchy. Globalization has muddied the waters. The contemporary order in which multinational companies make the rules has made these predictions look elusive. One serious implication is today’s unorthodox approach of trade policy, free trade being sacrificed in favor of managed trade, with the whole string of good and bad consequences that derive from states’ intervention.

Keywords

• globalization
• conventional theory
• free trade
• managed trade