Globalization has been extolled as an engine of development for a long time. Today it is considered the most important cause of the sense of anxiety and distrust in the future that emerged after the long crisis that exploded in 2008 and intensified by the growth of flows of refugees and migrants from all over the world.
La job loss, wage stagnation, growing income inequality and trade deficits they are all considered an integral part of the consequences of globalisation.
Globalization has reached a stage where its costs have been largely ignored. The Nobel A. Deaton (2016) argued that development depends on globalization which is accompanied by inequalities: the latter are not always unjustified. They are such when they arise from position rents. The results of recent empirical analyzes (K. Desmet, 2016) show that, despite a growing feeling of discontent, globalization remains a powerful engine of growth and the world finds itself benefiting significantly from a liberalization process that has not stopped.
However, the latest Global Trade Alert Report underlines the growing evidence of the acceleration in the use of protectionism in the G20 countries since 2012. The increase in G20 protectionism in 2015 and 2016 coincides with the halt in the growth of global trade volumes (SJ Evenett, 2016).
What would be the consequences on international trade and the G7 economy of President Trump's proposal to renegotiate NAFTA and impose a tax on imports from Mexico and China? The emergence of China is perceived as a major competitive shock by all manufacturing producers in rich countries. It is a shock that has especially affected production with a high labor content, linked to price competitiveness.
In Europe we have just entered an era that can be defined as “post-Brexit”, in which Brexit risks being a turning point, a change of era that can change the future, as has happened many times in our history.
The prevalence of the idea that an automatic machine is created in the economy and in society convergence between economic efficiency and social justice has created a breakdown of trust relationships that goes to the root of civil society.
The loss of confidence and growing insecurity prevailing in our society has given way to the proposal of the so-called responsible nationalism. “With this approach, the content of international agreements is assessed not by how much they are harmonized or how many barriers to global trade are broken down, but by how much people such as workers, consumers and voters acquire a role in society” (L.Summers,2016) .
The concept of "responsible nationalism" is useful insofar as it can help avoid the distortions of "irresponsible nationalism", which has characterized many past experiences and to which no one should want to return.
With respect to this risk, the G7 should propose international coordination actions. In particular, Eurozone countries should aim to deal more effectively with international emergencies such as migration flows, natural disasters, terrorist and cyber attacks.
In this context, it must be adopted a new political approach, involving the G7 in the implementation of the “Sustainable development goals”, not only for those relating to the climate and the environment but for all the objectives that actually concern the main socio-economic issues of our time.
They are three major issues to deal with.
The question offair globalization, aimed at rediscovering the cultural and political soul that can and must accompany the processes of globalization and, in particular, its potential inclusiveness. D. Rodrik (2015) has argued that hyperglobalization, national sovereignty and democracy cannot be had at the same time and that it is now too late to adopt compensation policies for the losers of globalization.
The second question is related to policies to adopt in response to protectionist pressures. In the Trump administration's view, free trade agreements are responsible for the income stagnation of the last two decades. Scrapping trade deals and raising tariffs will not create new high-wage manufacturing jobs, argues R. Baldwin (2017) because XNUMXst-century globalization is driven by knowledge and not mere trade.
The consequence of this trend is the polarization of employment and the labor market into high-skill, high-wage jobs and low-skill, low-wage occupations, both of which are gaining share in the economy. Mid-skill, mid-wage workers, who make up the majority of manufacturing, have not experienced any significant increases in their wages over the past decade.
In a situation where workers already compete with robots within the economy and with low-income workers in foreign markets, globalization and technological innovation imply the need to invest in retraining initiatives, lifelong learning, mobility programs and income support, regional transfers. The G7 could take a transnational initiative proposing a program of retraining actions that addresses the effect of automation on labor markets and avoids the unemployment effect linked to technological change.
The third question is one sustainable development policy which foresees action by the G7 aimed at rebuild the foundations of a renewed and rediscovered trust in civil society. A priority issue is to respond to citizens' demand for security, in a society dominated by systemic risks and destabilizing tendencies in which many certainties of the past, starting with job security and the support of social networks, are no longer such. Growing risks and loss of confidence also lead to a fall in the investment rate, which negatively affects development and employment, creating an accentuation of the feeling of insecurity and confidence in the future.
Many observers fear that the efforts made in recent years in terms of policies against climate change, starting with the Paris agreements, could be questioned. This can only happen if other countries, after President Trump's statements, will move in this direction. It is therefore necessary to defend the Paris Agreements, invest in energy security, decarbonise the economy and promote access to electricity for developing countries.
The G7 should make proposals for policies aimed at increasing productivity and growth, particularly in the countries of the Eurozone, including through an initiative to coordinate and support national investment programs in infrastructure.
Relaunching innovation is a necessity. Nobel laureate E. Phelps argues that "failed innovation, not trade, is primarily responsible for economic stagnation" (2017). Even if “an economy open to new concepts and new initiatives is bound to generate unequal gains, it would be a mistake to misunderstand the relationship between inequality and innovation. It is less innovation – not growing innovation – that has widened inequality of recent decades in the United States".
International development policies are increasingly perceived as at odds with efforts to improve conditions of relative disadvantage within richer countries. Injustice and inequality seem to be on the increase in the globalized world. The return of nationalism calls into question development programs and assistance and support policies for poor countries and those in favor of their own population.
Governments and the G7 must respond to the need for stronger economic development policies and international assistance. At the same time, the G7 countries must intervene internally to reduce poverty and income inequality, with a strong commitment to education. It is essential at an international level to promote investment in education, continuous training, social protection and politically manage the "digital revolution".
Demography plays an important role in sustainable development policy. The migratory flows are challenging the European institutions which have to solve the dilemma of hosting refugees: invest in immigration or protect themselves from it? No doubt about the answer, from an ethical perspective. But the answer does not change if a demographic perspective of sustainable development is adopted for advanced countries afflicted, as they are, by a growing aging trend of their population.
