A Safety Net to Foster Support for Trade and Globalisation

This new survey in 12 developed and emerging countries shows that a majority views trade and globalisation positively. However, many also perceive downsides to globalisation and trade, such as increasing social inequalities, pressures on wages and job security. Many feel inadequately protected by their respective governments against these downsides.

Given the rise of protectionist reflexes and a world on the brink of trade war, a survey by the Bertelsmann Stiftung of attitudes towards trade and globalisation gauges the temperature among people in twelve developed and emerging economies. It finds that attitudes are generally positive but that some negative side effects worry the respondents.

In the emerging countries 64 percent believe that globalisation is a force for good. Support in the developed economies is still large with a relative majority of 44 percent seeing globalisation as positive (25 viewing it as a force for bad). Support for increased international trade is even larger: In emerging economies 73 percent believe that trade is positive for their own country, almost matched by 69 percent in developed countries. The most enthusiastic pro-trade countries were Russia, India and Indonesia among the emerging economies and Canada and the UK among the developed ones. Turkey and France are the most sceptical about international trade. Respondents believe that globalisation and trade particularly benefit growth, companies, consumers, product prices and job creation.

However, the survey also uncovers several sources of discontent that ought to be taken seriously. Generally, people are sceptical about the effects of globalisation and trade on job security, wage increases and product quality. While generally sympathetic to foreign direct investment, they do not believe takeovers of domestic companies by foreign investors to be beneficial. A key finding of this survey is that many do not feel sufficiently well protected by their governments against any negative side-effects of globalisation: in developed economies, 49 percent do not feel adequately protected (against 27 percent) while in emerging economies opinion is tilted slightly towards the opposite direction: 50 percent feel sufficiently protected while 40 percent hold the opposite view.

The survey also asked participants to list the most/least preferred trading partners. Japan and Germany lead the list of countries with which people believe trade to be most beneficial. China leads the list of least preferred trading partners. Similarly, respondents were asked to rank who they believed to be the country/region most benefitting/suffering from globalisation. The USA emerge as the perceived winner of globalisation, closely followed by China. The list of losers is headed by Africa, followed – tellingly – by the USA.

Trade remains a highly controversial topic – more so by the day, it seems. Our survey shows that people’s views are in fact more nuanced than some populist voices give them justice. For most, it is clear that trade and globalisation bring many opportunities for growth, employment and development. They are not naïve about possible negative effects – such as pressure on wages or job security – but this does not alter their overall support for the international exchange of goods and services.

What they do ask from politicians is not protectionism as such but better safeguards from these negative effects. Since many are dis-satisfied with the current level of insurance provided by their respective governments, some turn towards protectionist tendencies.

The policy implications are clear: The societal consensus backing greater integration of the world economy so as to reap the benefits but to compensate any potential losers is in danger. If too many people feel that increased trade could result in a deterioration of their personal situation from which it is hard to recover, sustaining the consensus in favour of free trade will become tougher. Therefore, it is vital to mitigate the negative impact of structural change more effectively. Protectionism does not protect. Rather, a strong safety net is the appropriate tool to foster support for trade and globalisation.