WASHINGTON, DC – Over the last few decades, globalization ushered in an unparalleled period of economic growth that helped reduce global inequality and create new opportunities for economic development. Nearly 1.1 billion people have been lifted out of extreme poverty since 1990, reducing their share of the global population from 35% to under 10%, according to recent estimates.
But the undeniable benefits of globalization have not been universally shared, leading to growing calls for protectionism in some countries. Erecting barriers and walling off countries, however, is not the way to help those left behind by globalization, including those affected by technological changes that are making the world more, not less, interconnected.
World leaders need to make a better case for globalization, developing policies to unlock fully its potential for advanced economies, while exploring new dimensions that could make the world safer and more equitable. One possible dimension is the expansion of cross-border infrastructure investment, especially in developing countries. Infrastructure investment – together with investments in human capital – is an effective way to promote inclusive growth and foster local resilience to global shocks.
Given slow growth in advanced economies – reflected in historically low interest rates and the tapering of trade – new global sources of dynamism are also needed. The decline in borrowing costs across all major advanced economies is largely a result of higher savings from aging populations and reductions in capital intensity brought about by technological change, both of which have lowered aggregate demand. The lack of meaningful investment opportunities weakens confidence in future growth and further depresses economic activity.