While the second wave was primarily led by advanced economies (AEs), emerging markets (EMs) вЂ“ such as China and India вЂ“ were the drivers behind the third wave. The creation of new multilateral institutions such as the General Agreement on Tariffs and Trade (GATT) - the World Trade OrganizationвЂ™s (WTO) predecessor - in the aftermath of the war allowed countries to open their economies to more trade. The second wave originated from the ashes of World War II and lasted for more than four decades. 3 There are uncanny similarities between the early 20th century and the direction we are moving in today. These incidents include the Spanish flu pandemic withdrawal of Russia from world trade monetary instability the Great Depression and increased protectionism. This period (1914-1945) was peppered with several incidents that contributed to the collapse of economic and financial integration. Globalization stalled at the outbreak of the first world war in 1914 until the end of the second world war in 1945. These advances вЂ“ such as the steam ship вЂ“ allowed goods to be moved more freely and cheaply between countries. The first wave saw economic integration increase due to several technological advances. Modern globalization can be divided into three waves first wave (1870 вЂ“ 1914), second wave (1945 вЂ“ 1989) and third wave (1989 вЂ“ 2008). Understanding globalizationвЂ™s history is imperative in understanding where we may go from here. Much like the rise and fall of empires, globalization comes and goes in cycles (Chart 1). If the deglobalization process continues uninterrupted, it will be slow and painful, leading to lower short-term and long-term economic growth. Weakening economic interdependency among countries may also increase the likelihood of economic, political and military conflict. While necessary in some instances such as health security, inward looking policies applied across the board will weaken the recovery and create economic and geopolitical instability. and China, the pandemic has politicized international cooperation and has prompted countries to lean more towards self-reliance. All of this is happening at a time when U.S.-China relations were already at their lowest.ДЄlthough many countries had previously criticized the economic decoupling of the U.S. companies have expedited their plans to change their business models and move supply chains closer to home. and China by deepening the divide in trade, technology and investment. The health crisis has served to press further on long standing tensions between the U.S.

as it steps away from trade liberalization. All of this is taking place in an environment of reduced international cooperation and in a vacuum created by the U.S.

The pandemic is now acting as an accelerator towards increased protectionism and re-onshoring by exposing the vulnerabilities of relying too much on long supply chains, particularly when it comes to public health concerns and national security. In turn, this has contributed to the rise of populism that has led to stricter visa regimes designed to discourage the cross-border movement of people and goods. Several factors have put these forces in play, including rising income and wealth inequality, off-shoring leading to job losses, and migrant crises leading to anti-immigrant stands. 2 In fact, the deglobalization process started soon after the global financial crisis (GFC). But this pattern was unfolding well before the pandemic hit. Many are noting that the pandemic risks driving deglobalization forces, beyond the tensions between two superpowers. 1 This note will explore deglobalization by narrowly focusing on the economic aspect. The term is used to describe a reduction or break in interdependence between worldsвЂ™ economies, cultures and populations that includes the cross-border movement of goods, services, people, information and technology. Deglobalization is a term regularly thrown around, often in reference to the U.S and China clash.

Economic drivers of globalization