Why Costa Rica “Cannot” Deglobalize

John Maynard Keynes, one of the most influential economists of the 20th century, wrote in 1919 the book entitled The Economic Consequences of Peace, where he warned about the repercussions of the Treaty of Versailles for global peace. In Chapter 2, Keynes describes the period that marked the end of a decades-long expansion of economic integration that many call the first era of globalization. This period was precisely the one that preceded the First World War.

He says that the inhabitants of London had the ability to order products from anywhere in the world from their homes and receive them at the door. They could safely invest in companies abroad, as well as travel the world knowing that they would be welcomed and their payment methods accepted.

But the most important thing, says Keynes, “is that they regarded such a state of things as normal, certain, and permanent, unless to improve it still further, and any deviation from it, as aberration, scandal, and intolerable case. The aims and politics of militarism and imperialism, the rivalries of race and culture, the monopolies, restrictions and privileges that were to play the part of this paradise’s serpent were little more than the entertainment of their newspapers, and it seemed that they hardly exerted no influence on the ordinary course of social and economic life, the internationalization of which was almost complete in practice.

Beyond the obvious differences, Keynes paints a very similar portrait of today. After the dissolution of the Soviet Union, the fall of the Berlin Wall, the democratic turn of many countries, the reduction of global poverty and, above all, the full manifestation of globalization in all its facets, it seemed that we were entering a time of certainty, stability, peace and lasting prosperity.

However, the forces driving the phenomenon of “deglobalization” have gained momentum in recent years. In several countries, the advances of populism, both from the left and from the right, gave rise to a wave of opposition to globalization and its emblematic institutions, such as the European Union, the World Trade Organization (WTO) and the United Nations. (UN).

Snakes in paradise

The departure of the United Kingdom from the European Union (EU) was one of the strongest blows and populist parties in countries such as Poland and Hungary insist on following in the footsteps of the British. The United States under the Trump administration caused a protectionist tsunami and weakened the WTO.

The United Nations (UN) is widely seen as weak and stagnant, and populist movements tend to ridicule the notion of belonging to an international community of nations. Finally, the Russian invasion of Ukraine challenges the limits and authority of the UN and the North Atlantic Treaty Organization (NATO), and puts global stability at risk.

These deglobalizing forces have been joined by the deniers, who reject the scientific consensus, above all, on two crucial issues for humanity: climate change and the Covid-19 pandemic, which are precisely manifestations of global problems that can only be be addressed through international cooperation. Thus, populism, protectionism, geopolitical tensions and denialism are the snakes in our paradise.

Several analysts attribute the backlash against globalization to the result of unbalanced labor markets, where a growing portion of the population does not have access to good jobs and is displaced by technology or trade.

This has been exacerbated by educational and opportunity gaps within countries, as well as disparate responses to the pandemic, putting nations on divergent economic recovery trajectories.

Bad examples

The departure of the United Kingdom from the European Union (EU) was one of the strongest blows and populist parties in countries such as Poland and Hungary insist on following in the footsteps of the British. The United States under the Trump administration caused a protectionist tsunami and weakened the WTO.

The United Nations (UN) is widely seen as weak and stagnant, and populist movements tend to ridicule the notion of belonging to an international community of nations. Finally, the Russian invasion of Ukraine challenges the limits and authority of the UN and the North Atlantic Treaty Organization (NATO), and puts global stability at risk.

These deglobalizing forces have been joined by the deniers, who reject the scientific consensus, above all, on two crucial issues for humanity: climate change and the Covid-19 pandemic, which are precisely manifestations of global problems that can only be be addressed through international cooperation. Thus, populism, protectionism, geopolitical tensions and denialism are the snakes in our paradise.

Several analysts attribute the backlash against globalization to the result of unbalanced labor markets, where a growing portion of the population does not have access to good jobs and is displaced by technology or trade.

This has been exacerbated by educational and opportunity gaps within countries, as well as disparate responses to the pandemic, putting nations on divergent economic recovery trajectories.

Dependence on globalization

The promoters of deglobalization propose a less interconnected world, which restricts trade flows, investment and, mainly, migration. They conspire against international organizations and undermine the foundations of cooperation to address global problems. For populists, it is very easy to blame someone else.

Costa Rica case study

Costa Rica is one of the best students of globalization and increased its development thanks to it. International trade represents two-thirds of the economy, foreign investment provides many of the best jobs, and tourism brings development and social progress throughout the country. A successful Costa Rica cannot be conceived without its connection to the world.

We must turn global risks into opportunities that arise locally and regionally. Precisely, governments and global companies promote regional convergence to minimize interruptions in the supply chain. Thus, Costa Rica can position itself as a safe, attractive and successful destination for more companies, but also for investors in agriculture and tourism and for individuals seeking peace, tranquility and nature.

Joining the Pacific Alliance and other integration initiatives in Asia-Pacific, as well as possible bilateral agreements with Israel and Ecuador, are correct responses to the challenges that the world presents us with.

Globalization can be defended and rebuilt one step at a time. The strength of our country is international law and the results of full incorporation into the international economy are evident. Costa Rica must continue to be a leader and a stronghold in international organizations and fight for the solution to the global problems we face.