The latest round of WTO negotiations, the Doha Trade Talks, have collapsed. This is no good thing, despite what green campaigners might think. As the Nobel Prize winning economist Joseph E. Stiglitz pointed out in his excellent book Making Globalization Work, globalisation can be a tremendous force for good if we can find a way to make it more equitable. In its current incarnation, it goes a long way towards perpetuating the massive inequalities in the world. The Doha were meant to try to redress the imbalance, but sadly they have failed.
Meanwhile, one of the fundamental prerequisites for globalisation, cheap global transportation of goods, is also under threat. In May, Jeff Rubin and Benjamin Tal’s paper Will Soaring Transport Costs Reverse Globalization? estimated that:
in tariff-equivalent terms, the explosion in global transport costs has effectively offset all the trade liberalization efforts of the last three decades.
Where does that leave the theory of comparative advantage?
IMHO, the big economic trends of the next decade are going to be re-localisation, rebuilding of local capacity, increasing self-sufficiency, and most importantly of all, energy and food security.