Holger Görg: Governments Need to Deal with Negative Impact of Globalization

The recent trade dispute, also observed at the G7 Summit last week, shows again how highly relevant and urgent it is to learn more about negative impact of globalization and to develop adequate policies and measures to deal with such impact. Imposing higher tariffs on imports may be an easy action to take. But protectionist measures cannot be the right solutions here. Protectionist measures hinder trade and investment across countries and leave parts of potential benefits of globalization unrealized.

Instead of implementing protectionist measures to deal with negative impact of globalization, Prof. Holger Görg, Ph.D., Managing Director of KCG, argues in an interview by Zeit that governments should pay more attention to establishing a social security system that would financially support people who lose jobs. He emphasizes that providing financial support is, however, not sufficient. Policies should help deal with problems of lack of perspectives of individuals concerned. Governments should, for example, encourage the provision of education and training programs to people in need so that they can acquire further skills and knowledge that would help them find new jobs.

When facing protectionist measures implemented by other countries, Görg argues in another interview by Capital that it is not enough to negotiate with these countries bilaterally to obtain preferential treatments. He takes the tariffs recently imposed by the US on imported steel and aluminum products as an example. In this case, negotiations of the EU and other countries with the US should not end up with them being added into the exclusion list only. It would be of no help for international trade and investment either, if the EU and other countries would react to the new tariffs of the US by imposing tariffs on imported goods from the US.

Without adequate measures, escalating trade dispute would become a threat for the world economy and the global prosperity.

Both interviews (in German) can be accessed online: Zeit and Capital.