Financial Deglobalization Must Come Next
The ongoing fragmentation of the world economy marks the likely end of an era characterized by increasing integration through trade and finance. Faced with a debt crisis that is partly the result of unregulated and volatile portfolio flows, low- and middle-income countries must impose more effective capital controls.
NEW DELHI – After four decades of fostering integration through trade and finance, the global economy has begun a painful process of fragmentation. Initially driven by wealthy countries – namely, the United States under former President Donald Trump and the United Kingdom following the Brexit referendum – several geopolitical forces have combined to accelerate the shift toward deglobalization.