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| BIS warns rolling back globalisation would be ‘detrimental’ | BIS warns rolling back globalisation would be ‘detrimental’ |
| (35 minutes later) | |
| The international body that represents the world’s central banks has claimed that globalisation has been made a “scapegoat” for rising inequality, as it launched a defence of closer cross-border ties. | The international body that represents the world’s central banks has claimed that globalisation has been made a “scapegoat” for rising inequality, as it launched a defence of closer cross-border ties. |
| Against the backdrop of protectionist rhetoric in many countries, including from US president Donald Trump, the Bank for International Settlements used its annual report to argue that globalisation has cut global poverty and will continue to lift living standards around the world. | Against the backdrop of protectionist rhetoric in many countries, including from US president Donald Trump, the Bank for International Settlements used its annual report to argue that globalisation has cut global poverty and will continue to lift living standards around the world. |
| The body – which is known as the central bank of central banks – warned that reversing globalisation would be “greatly detrimental to living standards”. The BIS concedes gains from trade have not been evenly distributed at the national level but that other factors, most notably technology, have played a bigger role in widening the gap between rich and poor. | The body – which is known as the central bank of central banks – warned that reversing globalisation would be “greatly detrimental to living standards”. The BIS concedes gains from trade have not been evenly distributed at the national level but that other factors, most notably technology, have played a bigger role in widening the gap between rich and poor. |
| “There is ample evidence that globalisation has not been responsible for the majority of the concurrent increase in within-country income inequality,” said the report. | “There is ample evidence that globalisation has not been responsible for the majority of the concurrent increase in within-country income inequality,” said the report. |
| “Attempts to roll back globalisation would be the wrong response to these challenges. Globalisation, like technological innovation, has been an integral part of economic and development.” | “Attempts to roll back globalisation would be the wrong response to these challenges. Globalisation, like technological innovation, has been an integral part of economic and development.” |
| The strong backing for globalisation echoes pleas from the International Monetary Fund and the Organisation for Economic Co-operation and Development not to move towards more inward-looking policies. | |
| After Trump’s presidential win following a campaign on an anti-globalisation platform, both bodies emphasised the apparent benefits from more global trade and placed the onus on national governments to ensure the gains are fairly shared. | After Trump’s presidential win following a campaign on an anti-globalisation platform, both bodies emphasised the apparent benefits from more global trade and placed the onus on national governments to ensure the gains are fairly shared. |
| The BIS took a similar line in Sunday’s report, urging governments to make their labour markets flexible enough to help people whose jobs are displaced to retrain and to benefit from regional employment drives. It also calls for international cooperation to shore up the stability of the global financial system. | The BIS took a similar line in Sunday’s report, urging governments to make their labour markets flexible enough to help people whose jobs are displaced to retrain and to benefit from regional employment drives. It also calls for international cooperation to shore up the stability of the global financial system. |
| “Instead of retreating from the ties of global trade and finance, we should reinforce them. Instead of loosening them, we should make them more resilient,” BIS general manager Jaime Caruana wrote in a foreword to a chapter on globalisation. | “Instead of retreating from the ties of global trade and finance, we should reinforce them. Instead of loosening them, we should make them more resilient,” BIS general manager Jaime Caruana wrote in a foreword to a chapter on globalisation. |
| “We must work together to create well designed policies, both domestically and internationally. Only then can we make sure that globalisation will continue to lift economic growth and living standards around the world for generations to come,” Caruana continued. | “We must work together to create well designed policies, both domestically and internationally. Only then can we make sure that globalisation will continue to lift economic growth and living standards around the world for generations to come,” Caruana continued. |
| The BIS noted that certain costs and financial risks had arisen from globalisation and that they needed to be carefully managed. “But they do not justify a backlash against globalisation,” the report said. Instead there should be more acknowledgement of the gains from greater trade and cooperation, it said. | The BIS noted that certain costs and financial risks had arisen from globalisation and that they needed to be carefully managed. “But they do not justify a backlash against globalisation,” the report said. Instead there should be more acknowledgement of the gains from greater trade and cooperation, it said. |
| “The globalisation surge over the past half-century has brought many benefits to the world economy. Openness to trade has enhanced competition and spread technology, driving efficiency gains and aggregate productivity. | “The globalisation surge over the past half-century has brought many benefits to the world economy. Openness to trade has enhanced competition and spread technology, driving efficiency gains and aggregate productivity. |
| “The resulting stronger income growth has supported a remarkable decline in global poverty and cross-country income inequality. The ability to source cheaper, and better-quality, goods and services from all over the world has also directly increased households’ living standards,” the report said. | “The resulting stronger income growth has supported a remarkable decline in global poverty and cross-country income inequality. The ability to source cheaper, and better-quality, goods and services from all over the world has also directly increased households’ living standards,” the report said. |
| In its recommendations of how to cut inequality, the BIS noted the trend for big companies to declare work and earnings in various parts of the world in order to limit their tax bills. It called for more international cooperation to ensure businesses pay their fair share of tax. | In its recommendations of how to cut inequality, the BIS noted the trend for big companies to declare work and earnings in various parts of the world in order to limit their tax bills. It called for more international cooperation to ensure businesses pay their fair share of tax. |
| “Trade and financial linkages enable companies, particularly large multinationals, to make decisions regarding production and profit declaration to minimise their taxes,” the report said. “Avoiding this can ensure that highly mobile capital can share the tax burden with less mobile labour, and so address income inequality.” |