Prof. Gabriel Felbermayr on Globalisation vs Protectionism
Saturday kicked off with a talk from Gabriel Felbermayr, Professor of Economics at the University of Munich and Director of the IFO center for International Economics. He addressed the main theme of global trade versus embargoes and how the quality and prices of products are universally affected by globalisation.
“We create winners and losers and that’s the problem that we have. This is why populism is so powerful”
Professor Felbermayr began his keynote speech by saying that he was a believer of free trade, as having access to cheap goods from abroad is a fantastic opportunity for consumers. However, he stated that this opportunity has been curbed by protectionism around the world and import tariffs, with states such as China presenting a threat to free trade due to its lack of a market economy.
Professor Felbermayr conceded that worries about losing local jobs and about the environment are valid, but that protecting these through import tariffs will only bring about negative consequences. For example, it lowers the margins of products sold, with products being sold at a mark-up which requires consumers to spend a higher amount of their wages on products, defeating the purpose of the wage-protecting import tariffs. Essentially, Professor Felbermayr stated that tariffs distort the way the industry should work in regards to supply and demand, with the free market and globalisation allowing firms to take advantage of larger worldwide markets and enjoy bigger turnover and profits, which the workers share in.
Despite this, we have seen rising protectionism ever since the Financial Crisis of 2008 with 3.5% of the worlds trade being affected by tariffs, curbing foreign imports. As a result, we have seen ‘the global trade slowdown’ as Professor Felbermayr called it, which has entailed the halt of globalisation from 2008. The desire for this has been fuelled by growing populism with the term ‘free and fair trade’ often being used by proponents of protectionism. Professor Felbermayr finished his keynote speech warning that these trade defences are often not used for levelling the playing field for local companies, but to defend countries from legitimate competition.
Written by Chris Tynemouth.
Warwick Congress Blog
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