Page 64 - Accelerating out of the Great Recession

THE NEW REALITIES

ing standards and wage levels in most developed economies, the
focus will have to be on industries that require a high level of
skill and expertise. But not every country can reindustrialize
around renewables, nanotechnology, material science, biotech-
nology, pharmaceuticals, photonics, defense, aerospace, IT, and
other highly skilled industries.
Moreover, the risk is that support for these industries will
become subject to protectionism as countries fight to control
them. Just look at the United States, which imports $1 billion
worth of oil each day. Some lobbyists promoting green energy
are basing their message on a potential reduction in the country’s
dependence on foreign oil and on a likely boost to employment.
They assert that alternative-energy businesses could create 1.7
million U.S. jobs—albeit over an unspecified time frame.
The Risk of Increased Protectionism

Global trade has grown from less than 10 percent of global
GDP during the 1950s to around 25 percent today. But this
level could be a high-water mark. Protectionism is becoming a
major threat as governments realize that there will be no return
to the precrisis level of GDP growth anytime soon. In tough
times, it is difficult for politicians to pursue policies that are just
as or more beneficial to foreigners (for instance, promoting the
demand for imported goods) as they are for domestic voters (for
instance, the creation of new jobs).
There are already signs of a beggar-your-neighbor policy.
Publicly, leaders may try to distance themselves from protec-
tionist words, but their deeds reflect a different story.
Recessions historically have been associated with a surge in
protectionism. During the recessions of the 1980s and 1990s,
government investigations designed to counter dumping—

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