The pressure towards protectionism: Is it systematic? A legacy of the recession? The result of policy to promote recovery?

In light of the concern being expressed in many national and international fora about the pressures towards protectionism, this paper explores the reasons for and the possible consequences of this new protectionist trend. The analysis is restricted to macroeconomic issues and policy situations. In answer to the question, ‘Can the current recovery be turned into durable economic growth, more evenly distributed among countries, across productive sectors, and throughout the population?’, the author replies in the affirmative on two conditions: (i) if macroeconomic and structural adjustments are pursued with unmitigated determination where needed; and (ii) if trade, the vital link among our economies, is allowed to revive worldwide. The core of the paper discusses four major unresolved policy issues that have important implications for world trade: (1) internal and external imbalances in the US recovery; (2) trade and underperformance in Europe; (3) the question of Japan and the Pacific NICs; and (4) external debt and adjustment in LDCs.