Measuring Globalization When It Is Needed the Most : A Long-Run Analysis

This paper studies globalization dynamics over 1965–2021. Based on the definition that refersto globalization as an extension beyond national borders of the same market forces that operate at all levels ofeconomic activity, the paper is able to determine where the world economy stands compared to the 1960s. The results showthat the world economy has not entered an era of deglobalization and that China’s role as one of theglobalization leaders started in the mid-1980s. Also, contrary to what the tradeto- GDP ratio suggests, it isshown that China has outperformed the world economy since then. This paper builds on recent contributions in thestructural gravity literature and adopts a long-run perspective to offer an analytical toolkit for the currentdebate around globalization dynamics. The methodology and empirical results provide deep insights across countries andsectors, showing that country-specific events are intuitively captured and illustrating how to disentangle therole of factors like trade agreements.