Implications of Covid-19 for Globalization

Policy Article

Kieler Beiträge zur Wirtschaftspolitik, 26; June 2020

World goods trade and its institution were in a deep crisis before the Corona crisis hit.
The crisis exacerbates this trend. Achieving “decoupling”, regaining “economic” or “technological sovereignty”, and of reshoring production has become an objective in many countries, including the EU.
At the same time, digital trade and trade in digital products (software, licenses, …) is more resilient and expected to grow after the crisis.
These trends are troubling for the EU and for Germany in particular, as their traditional comparative advantage industries will come increasingly under pressure.
The EU must do much more to defend an open multilateral trade order and to develop appropriate rules in the area of digital trade.