International trade strengthens, not weakens, countries’ resilience

ATHENS – Leading economies have been afflicted with new problems over the past year. The United States is struggling with both supply-chain blockages and a critical shortage of baby formula. The European Union faces the threat of scarce energy supplies, owing to sanctions on Russian fossil-fuel exports. And almost all countries are experiencing high inflation.

Some have blamed these problems on excessive dependence on international trade, that is, globalisation. Deglobalisation, fragmentation, reshoring, friend-shoring, decoupling, and resilience have become now-familiar buzzwords. There is a widespread sentiment that individual countries would have been less exposed to recent shocks had they been more self-sufficient.

The argument goes beyond observing that supply chains generate diminishing returns for private firms. Government policies that economists label as protectionist have gained political support – beginning, notably, with then-US President Donald Trump’s trade war in 2018. The impression is that trade barriers could help protect us all.