Although global economic growth forecasts are cut sharply, food demand shou...
2020-07-02 3 ENGLISH REPORTS
In later sections of the paper we show that the agreements will matter even more for deeper, structural changes, including shifts in trade patterns and global supply chains. They will also shape East Asia’s geopolitics by reorienting its economy toward regional partners. These results emerge from simulations of a large computable general equilibrium (CGE) model of the world economy, like one that we developed and applied in previous studies.4 The model’s methodology is summarized in appendix A. The analysis is repeated for two contrasting assumptions about the global trade environment. The first anticipates that trade barriers will return to preTrump levels within the next decade.
The second envisions a sustained trade war and much more limited trans-Pacific relations. This latter scenario anticipates policies that continue to weaken global and US-Chinese economic ties through trade restrictions, controls on foreign investment, and technological nationalism. The disruption caused by COVID-19 is amplifying these trends by sowing distrust and undermining confidence in international supply chains. For example, the McKinsey consultancy argues that “distance” will become much more important because of the high perceived risks of cooperation (Sneader and Singhal 2020).
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