Why Does Globalization Fuel Populism? Economics, Culture, and the Rise of Right-Wing Populism



Dani Rodrik | Annual Review of Economics

Globalization figures prominently in discussions of populism. Especially in its post-1990s variant—which might be better called hyperglobalization—international economic integration seems to have produced domestic disintegration in many countries, deepening the divide between the winners and the losers of exposure to global competition. There is nothing particularly surprising about this from the standpoint of economic theory. Standard trade theory is quite clear about the sharp redistributive effects of free trade, and open economy macroeconomics has long grappled with the instability of global financial markets. Economic history is equally suggestive. The high points of globalization in previous eras have also been marked by a populist backlash.

However, there are still many open questions. First, what are the mechanisms through which globalization fuels populism? Answering this question requires a fully fleshed out model of political economy. Second, globalization is not just one thing: We can distinguish among international trade, international finance, and international labor flows, specifically. How does each one of these facets of globalization work its way through the political system? Third, globalization is clearly not the only economic shock that creates redistributive effects or economic anxiety—and it may not even be the most important one. Why does globalization appear to have an outsized effect on politics compared to, say, technological change or regular business cycles?

Fourth, the populist response so far seems to have taken a mostly right-wing form. On the face of it, this is surprising, since left-wing populist movements with their redistributive economic agendas could have been the more obvious beneficiary of economic dislocations. Why have nativist, ethno-nationalist populists been the ones to take advantage instead? Fifth, and related to the previous question, what are the roles of culture, values, and identities? Could it be that populism is rooted not in economics but in a cultural divide—social conservatives versus social liberals, traditionalists versus modernists, nationalists versus cosmopolitans, and ethnically homogenous dominant communities versus outsider minorities of various kinds?


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