The slowdown in trade: end of the “globalisation hype” and a return to normal?*

  • Ansgar BelkeEmail author
  • Daniel Gros


Trade liberalisation has been a significant driver of globalisation over the past half century, but global trade has slowed in recent years. This paper argues that globalisation can also be driven by higher commodity prices, as commodities constitute a large fraction of global trade. This is reflected in trade volumes and commodity prices, which increased until around 2014 but have fallen since. Commodity price-driven globalisation implies lower living standards in advanced countries, as the higher commodity prices diminish the purchasing power of workers. Based on a Krugman (Am Econ Rev 70(5): 950-959. 1980, J Polit Econ 89(5): 959-973 1981) type model we show that the relation between globalisation and the “emergence of China” follows a hump-shaped relationship. Moreover, we argue that the “globalization hype” should come to an end with an eye on global value chains and finance.


China Commodity prices Finance Globalization Global value chains Trade 

JEL codes

F14 F62 



We are grateful for valuable comments from the guest editor and three anonymous referees.


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Copyright information

© Academy of Economics and Finance 2019

Authors and Affiliations

  1. 1.University of Duisburg-EssenEssenGermany
  2. 2.CEPS Brussels and King’s College LondonLondonUK

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