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Deconstructing deglobalization: the future of trade is in intermediate services

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  • Baldwin, Richard
  • Freeman, Rebecca
  • Theodorakopoulos, Angelos

Abstract

This article contests the idea that the world has entered a post-globalization era. It argues that rapid globalization has evolved rather than ended. Even though the global goods trade-to-GDP ratio reached its zenith 15 years ago, the rapid rise of services trade has persisted and now accounts for one-fifth of international commerce. The paper makes a statistical and logical case that the future of trade lies in services trade—especially trade in intermediate services.

Suggested Citation

  • Baldwin, Richard & Freeman, Rebecca & Theodorakopoulos, Angelos, 2024. "Deconstructing deglobalization: the future of trade is in intermediate services," LSE Research Online Documents on Economics 122847, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:122847
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    File URL: http://eprints.lse.ac.uk/122847/
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    References listed on IDEAS

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    4. Soo Hyun OH & Sangkyom KIM & Innwon Park & Soon Chan Park, 2020. "Trade Cost in Services in the Era of Digitalization," World Economy Brief 20-7, Korea Institute for International Economic Policy.
    5. Richard Baldwin & Rebecca Freeman, 2021. "Risks and global supply chains: what we know and what we need to know," Bank of England working papers 942, Bank of England.
    6. Ghani, Ejaz (ed.), 2010. "The Service Revolution in South Asia," OUP Catalogue, Oxford University Press, number 9780198065111, Decembrie.
    7. Benz, Sebastian & Jaax, Alexander, 2022. "The costs of regulatory barriers to trade in services: New estimates of ad valorem tariff equivalents," Economics Letters, Elsevier, vol. 212(C).
    8. Rebecca Freeman & Richard Baldwin, 2022. "Risks and Global Supply Chains: What We Know and What We Need to Know," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 153-180, August.
    9. Dani Rodrik, 2006. "What’s So Special about China’s Exports?," Working Papers id:410, eSocialSciences.
    10. Sébastien Miroudot & Rainer Lanz & Alexandros Ragoussis, 2009. "Trade in Intermediate Goods and Services," OECD Trade Policy Papers 93, OECD Publishing.
    11. Fukunari Kimura & Hyun-Hoon Lee, 2006. "The Gravity Equation in International Trade in Services," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(1), pages 92-121, April.
    12. Kaushik Basu, 2018. "A short history of India's economy: A chapter in the Asian drama," WIDER Working Paper Series wp-2018-124, World Institute for Development Economic Research (UNU-WIDER).
    13. Richard Baldwin, 2016. "The World Trade Organization and the Future of Multilateralism," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 95-116, Winter.
    14. Lucian Cernat & Zornitsa Kutlina-Dimitrova, 2014. "Thinking in a box: A ‘mode 5’ approach to service trade," DG TRADE Chief Economist Notes 2014-1, Directorate General for Trade, European Commission.
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    Cited by:

    1. Francesco Paolo Conteduca & Simona Giglioli & Claire Giordano & Michele Mancini & Ludovic Panon, 2024. "Trade fragmentation unveiled: five facts on the reconfiguration of global, US and EU trade," Questioni di Economia e Finanza (Occasional Papers) 881, Bank of Italy, Economic Research and International Relations Area.
    2. Prema‐chandra Athukorala, 2024. "Comment on “Deconstructing Deglobalization: The Future of Trade is in Intermediate Services”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 38-39, January.
    3. Eduardo Hernandez-Rodriguez, 2024. "Technological diversification through global value chains in European regions," Papers in Evolutionary Economic Geography (PEEG) 2429, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2024.
    4. Marius Faber & Kemal Kilic & Gleb Kozliakov & Dalia Marin, 2024. "Global Value Chains in a World of Uncertainty and Automation," CESifo Working Paper Series 11419, CESifo.
    5. R. Boschma & Eduardo Hernández-Rodríguez & A. Morrison & C. Pietrobelli, 2021. "Do global value chains and local capabilities matter for economic complexity in EU regions?," Papers in Evolutionary Economic Geography (PEEG) 2139, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2021.
    6. Reardon, Thomas & Awokuse, Titus & Belton, Ben & Liverpool-Tasie, Lenis Saweda O. & Minten, Bart & Nguyen, Genevieve & Qanti, Sara & Swinnen, Johan & Vos, Rob & Zilberman, David, 2024. "Emerging outsource agricultural services enable farmer adaptation in agrifood value chains: A product cycle perspective," Food Policy, Elsevier, vol. 127(C).
    7. Ayako Obashi, 2024. "Comment on “Deconstructing Deglobalization: The Future of Trade is in Intermediate Services”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 40-41, January.
    8. Takatoshi Ito & Kazumasa Iwata & Colin McKenzie & Shujiro Urata, 2024. "Deglobalization: Editors' Overview," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(1), pages 1-17, January.
    9. Steven A. Altman & Caroline R. Bastian & Davis Fattedad, 2024. "Challenging the deglobalization narrative: Global flows have remained resilient through successive shocks," Journal of International Business Policy, Palgrave Macmillan, vol. 7(4), pages 416-439, December.

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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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