Keynote Address - Globalization Versus Nationalization: The Future of Trade. The Economic Forecast for Supply Chain 2030. Gita Gopinath will chart new insights to drive your supply chain strategy. Gita Gopinath, John Zwaanstra Professor of International Studies and of Economics at Harvard University From the 2017 Supply Chain Insights Global Summit

1. Gita Gopinath
Harvard University
John Zwaanstra Professor of International
Studies and Economics
Globalization Vs. Nationalization

2. 1. TRADE: RECENT PAST
2. TRADE: THE FUTURE
3. CHINA & INDIA
ROAD MAP

3. • TRADE: RECENT PAST
• TRADE: THE FUTURE
• CHINA & INDIA
ROAD MAP

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Major Developments for Global Supply Chains: 1990s
1. Information and Communication Technology Revolution
2. Falling Trade Costs
3. Favorable Political Developments

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Golden Age of Global Supply Chains
• Deepening Trade Liberalization and falling transport costs

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World Trade Intensity

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Changing Structure of Global Supply Chains: 1995
Source: OECD

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Changing Structure of Global Supply Chains: 2011
Source: OECD

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Global Supply Chains: Shift Eastwards
Source: OECD

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Rising Income Inequality (Top 1%)
Roine and Waldenstrom, (2015

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Trade Discontent (2014)
Source: Pew Research, 44 countries

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Ominous Signs for Trade
1. Information and Communication Technology Revolution
2. Falling Trade Costs
3. Favorable Political Developments

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World Trade Intensity

14. • TRADE: RECENT PAST
• TRADE: THE FUTURE
• CHINA & INDIA
ROAD MAP

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PROTECTIONISM: RHETORIC Vs. FACTS
• No Reversal in Permanent Tariffs
• Increase in Non-Tariff barriers: 2% of trade
• Slowing of trade intensity
– 80% explained by economic activity/investment
– 20% by slowing value added chains and protectionism

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LOOKING FORWARD
1. New Normal for Growth
2. New Normal for Trade Policy

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#1 New Normal For Growth
World Advanced Emerging
2005 4.9% 2.8% 7.2%
2016 3.1% 1.7% 4.1%
2018* 3.6% 1.9% 4.8%
• Emerging Europe and Asia doing better than Latin America and Africa
Source: IMF

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#1 New Normal For Growth: Weak Investment
Source: OECD

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#1 New Normal For Growth: Policy Uncertainty
• US fiscal and regulatory reform
• BREXIT negotiations outcome
• Financial Risks in China

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#2 New Normal For Trade Policy
• Trade Liberalization slowed since 2002
– Inconclusive Doha Round of WTO
• New Trade Agreements more contentious
– Intellectual Property Rights
– Harmonization of Standards
– Investment Dispute Settlement
– Agriculture
• Automation continue to scapegoat trade

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#2 New Normal For Trade Policy
• World is moving on: Trade Negotiations in the works
– JEEPA: Japan-EU Economic Partnership Agreement
– EU-Canada Trade Agreement
– Trans-Pacific Partnership (11)
– RCEP Regional Comprehensive Economic Partnership: Asia,
South Asia and South East Asian
– T-TIP: Transatlantic trade and investment partnership

22. • TRADE: RECENT PAST
• TRADE: THE FUTURE
• CHINA & INDIA
ROAD MAP

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China and India
CHINA INDIA
SIZE $11 trillion $2 trillion
GROWTH 6.6% 7.2%
DEMOGRAPHICS Ageing Young
FDI Rank #2 Rank #1
MAJOR DEVELOPMENTS
• China Belt and Road Initiative
• New Development Bank
• Chinese Infrastructure Investment Bank
• India Goods and Services Tax

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TAKEAWAYS
• Globalization is not yet in retreat
• New normal for growth in trade intensity: 1-2%
• Look Eastwards