The Future of Globalization

Overview

## Institute for International Monetary Affairs ### 1. Report Overview This column titled "The Future of Globalization" by IIMA Chairman Masatsugu Asakawa, dated July 1, 2025, questions the narrative that "globalization is over" against the backdrop of the COVID crisis and heightened geopolitical risks, and discusses the continuing importance and future prospects of globalization. The column provides a comprehensive analysis of the evolution of globalization from the post-war period to the present, along with the necessity of international cooperation and future policy challenges. ### 2. Key Points - Globalization is not over: Despite geopolitical risks and the pandemic, the tide of globalization is irreversible - Lessons from crisis response: The 2008 global financial crisis reaffirmed that global crises require global responses - Harmonization with national sovereignty: How to harmonize globalization with national sovereignty is an important future policy challenge - Importance of intra-Asian cooperation: Deepening intra-Asian cooperation and integration remains important even in post-COVID recovery - Rebuilding multilateral cooperation: New frameworks for international cooperation, such as strengthening the G20's functions, are needed ### 3. Current State of Globalization Analysis The world has achieved economic growth benefiting from globalism since the postwar period. However, starting around 2000, triggered by events like the Asian currency crisis, a trend toward bilateral and regional agreements (regionalism) emerged. Subsequently, during the 2008 global financial crisis, the recognition that global crises require global responses strengthened again, with the G20 being elevated to the leaders' level, demonstrating once more the importance of multilateral cooperation. Currently, amid the pandemic and geopolitical tensions, we are at a stage where the redefinition of globalization is required. ### 4. Economic Integration Challenges Major challenges in economic integration include: - Coordination between cross-border economic activities and national sovereignty - Addressing tax avoidance by multinational corporations - Building new international rules adapted to digitalization - Strengthening cooperation to prevent geoeconomic fragmentation and maintain rule-based free trade - Building redistribution mechanisms for the benefits of globalization ### 5. Relationship with Technological Innovation Technological innovation, particularly advances in digitalization and AI, is bringing new dimensions to globalization. Mr. Asakawa views the structural changes in economy and society brought by technological innovation as an important theme, pointing out the following: - The need to reduce the digital divide - International rule-making for managing risks and utilizing generative AI for growth - Reform of international taxation systems adapted to digitalization - Creating development opportunities for emerging countries through technological innovation ### 6. Impact of Geopolitical Factors While the rise in geopolitical risks has significantly impacted globalization, Mr. Asakawa maintains that the flow of globalization will not reverse despite these risks. Main points: - Responding to the trilemma of "democracy, nationalism, and globalization" - International cooperation to prevent the bloc-ization of the world economy - Seeking cooperation to address common challenges while respecting UN Charter principles - Complementarity between regional and global frameworks ### 7. Impact on Financial Markets The Lehman Shock experience emphasizes the importance of global financial crisis response. Major perspectives on financial markets: - Responses to international financial crises have swung between global and regional frameworks depending on the nature of the crisis - Need for building robust financial systems in emerging countries - Strengthening functions of multilateral development banks (MDBs) - Building global financial safety nets ### 8. Role of Emerging Countries Emerging countries, particularly Asian nations, play an important role in the future of globalization. From his experience as ADB President, Mr. Asakawa emphasizes: - Continuing importance of deepening intra-Asian cooperation and integration - Need for fiscal support to emerging countries during the COVID pandemic - International cooperation for sustainable development of emerging countries - Catalytic role of multilateral development banks in regional cooperation ### 9. Policy Recommendations Major policy recommendations based on Mr. Asakawa's analysis: 1. Return to globalization: "Return to globalization" is important for recovery from the COVID pandemic 2. Strengthening multilateral cooperation: Enhancing international cooperation mechanisms such as the G20 3. Updating international rules: Building new international rules and norms adapted to the digital era 4. Inclusive growth: Building mechanisms to distribute the benefits of globalization more broadly 5. Promoting regional integration: Deepening regional integration starting with Asia ### 10. Conclusion and Future Outlook Mr. Asakawa expresses confidence that globalization is not over, concluding that its importance is rather increasing. Future prospects include: - Globalization will continue and its form will evolve - A new balance between national sovereignty and global governance needs to be built - Promotion of inclusive globalization utilizing technological innovation - Expansion of the role of emerging countries centered on Asia - Building new frameworks for multilateral cooperation and reforming existing institutions Ultimately, the future of globalization depends on whether countries can cooperate to address common challenges and distribute the benefits equitably. Mr. Asakawa's analysis presents a positive outlook that while recognizing the challenges facing globalization, we can build a better future through international cooperation and regional integration.