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Local developments reflect global forces, and global forces are in turn
shaped by these local developments. Consider the Trump administration
that entered office in January 2017. It seems clear that Trump’s somewhat
surprising victory was due in part to support from workers in key Rust Belt
states who had seen their jobs disappear as a consequence of global
competition and trade. Trump’s promise to “make America great again”
held considerable appeal to these voters as the promise seemed to indicate
that Trump could revitalize manufacturing employment in the American
Midwest. Trump’s unlikely victory in the 2016 election is in turn shaping
and reshaping the global economy. Since entering office, Trump has been
a rather disruptive force for the international trade system. He almost
immediately withdrew the United States from the Trans-Pacific
Partnership trade agreement, he initiated a sweeping review of the World
Trade Organization, and he began to renegotiate the North American Free
Trade Agreement with Mexico and Canada. The outcomes from these
processes that Trump has initiated will shape the American economy and
in doing so will probably have an impact on the outcome of the 2020
presidential election.
More broadly, Trump’s election and the subsequent trade policy
initiatives he has embraced highlight the extent to which our ability to
understand the global economy requires knowledge of politics as well as
economics. For globalization is not a spontaneous economic process: it is
built on a political foundation. Governments share a broad consensus on
core principles; core principles inform the elaboration of specific rules.
Specific rules establish international institutions—the World Trade
Organization, the World Bank, and the International Monetary Fund.
These international institutions in turn facilitate a political process through
which governments reduce barriers to global exchange and create common
rules to regulate other elements of the global economy. This political
system—the foundation and the process—has enabled businesses to
construct the network of international economic linkages that constitute
the economic dimension of globalization. Understanding the global
economy, therefore, requires a political economy approach: we must study
its political as well as its economic dimensions. |
