![]() ![]() imports of computer services are now sourced from India. Bilateral trade flows have risen tenfold, from $11 billion in 1995 to almost $110 billion in 2015. Rising economic integration is also very evident when we examine the trade relationship between India and the United States. 3 This growth has provided much-needed support to world economic activity, as advanced economies have recovered slowly from the crisis. As an illustration, emerging market economies have accounted for 70 percent of global output growth since the crisis-double their share from two decades ago. These trends have enabled the development of complex global supply chains that allow companies to manage their production more efficiently.Įmerging market economies now make up a much larger share of global trade, the global economy and global growth. This rapid growth in trade reflects falling trade barriers, declining transport costs, and improved information and communication technology. Ultimately, economies have become more integrated and interdependent. Over the same period, the stock of foreign direct investment has increased from roughly 10 percent of global GDP to 34 percent. Trade, for example, has grown from nearly 40 percent of global GDP in 1990 to 57 percent in 2015. Global economic integration has increased dramatically in recent decades. To begin, let me briefly describe the pace of globalization as a reminder of what is at stake. Our focus should be on further strengthening an open trade regime, and, as appropriate, amending and improving these agreements. But, in addressing these issues, we should take care to preserve the vital benefits of trade to higher standards of living in both advanced and emerging market economies. firms to some foreign markets and the protection of intellectual property rights are issues that deserve close attention. And, important trade barriers still remain and should be addressed. Some may not adequately address recent changes in the global economy-such as the rise of digital trade-and may need to be refreshed. ![]() I have no doubt some trade agreements could be enhanced or updated. While considerable effort has gone into liberalizing trade and developing the existing set of trade agreements, that does not mean they cannot be improved upon. If support for liberalized trade and an integrated global economy were to suffer a significant setback, the consequence could be slower economic growth and lower living standards around the world. But, just as important have been longer-term trends, such as growing income inequality, the loss of middle-income jobs, and the rise of large emerging market economies such as China and India.Īlthough the debate about globalization is not new, I believe we are at a particularly important juncture. Undoubtedly, the global financial crisis and subsequent slow recovery have been significant. The debate around globalization, particularly in advanced economies, reflects a range of factors. These issues are important to me as a central banker, as they affect the long-term health and productivity of the economy, and the economic opportunities available to our people. We need to do better in preparing workers to deal with the challenges of globalization and technological change. Instead, we need to provide greater support to displaced workers so they can obtain the skills needed to find new well-paying jobs. Third, the answer to those challenges is not greater protectionism. We have not adequately considered and remedied the very large costs this can impose on certain communities and households. Second, how changes in trade can create challenges for industries that become less competitive. I will highlight three themes:įirst, the important role that trade plays in promoting higher standards of living globally. In my remarks today, I will focus on the role of globalization as a force for international economic integration and economic development. Globalization means different things to different people. This debate is important to all of us, and I think it is particularly relevant to India given its growing role in the global economy. Although the debate about the benefits and challenges of globalization is not new, it has recently come into sharper focus. It is a pleasure to have the opportunity today to talk about the issue of globalization. As always, what I have to say reflects my views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. Thanks, Ashish, and thanks to the U.S.-India Business Council, the Confederation of Indian Industry, and the Bombay Stock Exchange for organizing this event. ![]()
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