• A
  • A
  • A
  • ABC
  • ABC
  • ABC
  • А
  • А
  • А
  • А
  • А
Regular version of the site

There Is No Way Back from Globalization, So We Must Learn to Trust Each Other

Giovanni Tria, Minister of Economy and Finance of Italy

Giovanni Tria, Minister of Economy and Finance of Italy
© Mikhail Dmitriev/ HSE

On January 14, 2019, Professor Giovanni Tria spoke at HSE on contemporary globalization, including its consequences and problems. Below are the key highlights of his talk.

Although Giovanni Tria took up the position of Italy’s Minister of Economy and Finance in June 2018, he is also a well-known academic, serving as Professor and Dean of the Faculty of Economics at the University of Rome Tor Vergata (an HSE partner university, with which HSE has a double degree agreement). Professor Tria has acted as advisor to various Italian ministries and served as member of the Board of Directors of the International Labour Organization. One of the key areas of his research is globalization.

How We Look at Globalization

In its contemporary form, globalization is a phenomenon of progressive economic, political and cultural integration, driven by economic growth and technological development. Neo-liberal approaches would see it as a consequence of free international markets and freedom from invasive government activities.

I would suggest framing globalization differently, since it is not necessarily friendlier to markets than to governments. Globalization can be seen as a form of self-organized structure that is complementary to the markets and that aims to integrate the world’s ability to provide global public goods. Public goods include, among other things, global public health, world peace, global security, respect for fundamental human dignity, harmonized transportation and communication networks beyond borders, information and knowledge, and institutional global infrastructure.

If we interpret globalization as a process of network creation, we should expect a much more fluid and unpredictable process than traditional international trade development. However, this process is neither uniform in time nor equally spread across countries, social groups and individuals. These differences tend to create inequalities, but they also lead to creative destruction since new connections tend to destroy and substitute the old ones in density, number and location.

From Strong Ties to Weak Ones

In a globalized, fluid network, connections between different clusters are defined by a smaller set of common practices, in some cases even by only one single common standard, for example, a common language. Such connections are called ‘weak ties.’ Greater connectivity also implies that weak ties tend to become increasingly dominant, as growth and preferential attachment will increasingly favour local networks that are more highly connected globally.

But the domination of weak ties leads to a global system that is looser, less resilient to shocks, and prone to rapid shifts. Weak ties forming the global networks are more effective in carrying information over long distances, but they are not necessarily more reliable. In that sense, the exploding phenomenon of fake news is a good example.

Giovanni Tria, Minister of Economy and Finance of Italy
Giovanni Tria, Minister of Economy and Finance of Italy
© Mikhail Dmitriev/ Higher School of Economics

Undesirable Effects of Globalization

The first undesirable effect is the loss of trust in Institutions, both at local and global level. One of the reasons for this is that weak ties substitute the more institutionalized mechanisms of cooperation. In addition, there is disillusionment related to failed expectations from globalization, which breaks the traditional ties with no benefit for the people.

The second unintended consequence of contemporary globalization is the decline in investment. This decrease has occurred at national level, but its moderate increase at the global level has not been enough to offset the overall decline. Investment in infrastructure, in particular, has been declining globally, which seems to go hand in hand with declining growth with some common features all over the world. For example, investment in infrastructure in the EU today is at 1.8% of GDP. This is 20% below pre- 2007-2008 crisis levels, and 2.5 times lower than the annual infrastructure investment needs for energy, transport, water and sanitation, and telecoms, according to the European Investment Bank.

In addition, the popular hypothesis that the contribution of the creative component of innovation, productivity and employment to GDP is much bigger than the effect of the destructive component, at least in the long run, is being seriously challenged. Both the negative effects of the destructive component of innovation and the social and economic costs of innovation in products and processes are growing. 


© Mikhail Dmitriev/ Higher School of Economics

A Way Forward

With all the problems and difficulties related to globalization, a return to the old models of international interaction is neither feasible nor desirable, because the instruments, policies and institutions of the past are not able to deal with the levels of connectivity that we experience today – or with its consequences. We feel a bit like we are in a trap, and we are looking for a way out. I do believe that trust is the key factor to look for a way out of this trap.

The recent process of adoption of the Italian Budget in the framework of the current European fiscal rules is a good example of the limits of the current legal, political and economic architecture of the EU. What the Italian government is doing today with our economic policy and expansive fiscal policy is very simple. We try to respond to the will of our fellow citizens to emerge from the path that the economic and financial crisis designed for us. What we have decided is to support the temporary losers of this globalization game at the local level in order to find new job opportunities. And we have made a big push for investments to create conditions for growth.

But we have to address rules that were agreed to at the EU level ten years ago when everything seemed to be falling apart with the financial crisis. These rules seemed to work during sustained periods of growth, but they do not address the current situation of a fast slowdown in Europe’s economies, and they do not look at the bigger picture.

I am not suggesting that we should not have rules, but I am noting that technicalities of economic policy should not be given the same political weight as fundamental reasons to cooperate among nations. We will never re-build trust like this. To rebuild trust, we need to look at why we are together, and after that, we have to see if the technical rules still correspond to the current state of affairs.

The path that I believe is necessary to follow to get out of the trap and to re-build trust as the basic foundation of globalization is to rebalance national interest within, and not at the expense of globalization or multilateral cooperation. Will this be an easy path? Absolutely not. It will be a lengthy and difficult process, but it is still a more confident outlook than the gloomy picture of a self-destructive system.

 

Although Giovanni Tria took up the position of Italy’s Minister of Economy and Finance in June 2018, he is also a well-known academic, serving as Professor and Dean of the Faculty of Economics at the University of Rome Tor Vergata (an HSE partner university, with which HSE has a double degree agreement). Professor Tria has acted as advisor to various Italian ministries and served as member of the Board of Directors of the International Labour Organization. One of the key areas of his research is globalization.

See also:

From Moscow to Brazil, South Africa, and China: Panelists Discuss Challenges and Potential for BRICS Countries in the Global Economy

On May 14, as part of the ‘World Economy’ session of the XXI April Conference 2020 an online panel attended by representatives of BRICS Network University took place. The session was devoted to the topic ‘BRICS Countries in the Global Economy’.

Experts Discuss Media, Art, Fashion, and Education at Telling Stories Festival 2020

What does the post-COVID future have in store for museums, universities, and the media? Does big data protect us or pose a threat? What are the prospects for fashion shows, cinema, and theaters? How are different generations experiencing the pandemic? These and other issues were discussed at the annual festival of communications, design, and media.

‘It’s about the “Moral Stability” of the Economy’

HSE experts participated in the first international online forum, ‘The World, Post-Coronavirus: A View from the Heart of Eurasia’, which was held on April 28 in Ufa on the initiative of the Bashkortostan government. Scholars, businessmen, and politicians from different countries discussed threats, opportunities, and solutions for the economy and the social sphere.

Scientists Are Taking Their Research Seminars Online

The first research seminar of the International Laboratory of Statistical and Computational Genomics had been postponed almost a month due to COVID-19. In April, however, the event finally took place. Laboratory Head Vladimir Shchur discusses what life is like for scientists in self-isolation during the pandemic, what genomics is, and why gesturing is important when teaching online.

Countries Strengthen Scientific Cooperation in Response to Coronavirus Pandemic

The OECD Committee for Scientific and Technological Policy (STP) held its first meeting of the year in early April. HSE staff members Mikhail Gershman, Dirk Meissner and Elena Sabelnikova joined Ministry of Education and Science representatives as members of the Russian delegation to the event. Here, they explain which approaches participants discussed for combating the coronavirus and for preventing other global crises.

‘No One Expected Online Education to Receive Such a Powerful Impetus for Further Development’

On March 17, the Institute of Education hosted its annual seminar dedicated to issues in education. This year’s seminar addressed the topic, ‘Higher Education during an Epidemic: The Possibilities of Digital Technology’. For the first time in eight years, the seminar participants—representatives of Chinese, American, and Russian universities—participated in the event remotely.

Discovering Russia from the Inside and Out

At the end of February, the HSE IGITI Research Centre for Contemporary Culture hosted a roundtable entitled ‘Field Studies in Russia: A Country Familiar and Foreign’. Roundtable participants talked about field work methods and standards, research challenges, and ways to solve them. The participants also discussed the extent to which it is possible to apply international experiences and approaches to field work in Russia as well as ways to study Russia from within and without.

HSE University and United Nations Volunteer Programme Sign Cooperation Agreement

HSE University, represented by the Center for Studies of Civil Society and the Nonprofit Sector, and the United Nations Volunteer Programme (UNV) signed a partnership agreement, under which they will regularly exchange information, carry out joint research, as well as organize conferences and other events.

Ambassadors and Embassy Representatives Gather for HSE University Day for Diplomatic Missions

On December 12, heads of missions and embassy representatives from over forty countries gathered in Moscow for HSE University Day for Diplomatic Missions. The event, which was held at HSE’s newly renovated Pokrovka campus, was aimed at fostering further cooperation between HSE and its international partners.

‘Today Is a Wonderful Day, Because I Hear Persian Being Spoken’

The Institute for Oriental and Classical Studies of the Faculty of Humanities has launched a Center of Iranian Studies and the Persian Language. On December 6, representatives of HSE University and the Cultural Representative of the Embassy of the Islamic Republic of Iran in Moscow signed the cooperation agreement.