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Managers go to work in the Central area in the financial center in Hong Kong Vincent Isore/IP3/Getty Images

The Globalization Backlash Paradox

Today, the very countries that have spent 70 years building multilateral institutions and establishing global trade rules are busy undermining them. In this context, the absence of even a whiff of protest against financial integration demands explanation.

NEW DELHI – Most economists wax eloquent about the benefits of “real” global integration – that is, virtually uninhibited cross-border flows of goods, labor, and technology. They are less certain when it comes to global financial integration, especially short-term flows of so-called hot money. Yet today’s anti-globalization backlash is focused largely on real integration – and almost entirely spares its financial counterpart.

The backlash against real integration has, most recently, spurred US President Donald Trump’s administration to resort to unilateral trade protectionism, targeting China in particular. In both the United States and Europe, barriers against migration are being raised. Many governments are moving to impose new taxes on technology companies deemed to be too large or influential.

In this context, the absence of even a whiff of protest against financial integration is strange. After all, financial flows have regularly wreaked havoc on rich and poor economies alike over the last 40 years. And that damage is no secret: institutions like the International Monetary Fund have highlighted it, adding caveats to their previously unfettered support for financial openness.

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