Populism and the Economics of Globalization by Dani Rodrik Populism has been on the rise for a while, and economic history and theory suggest that advanced stages of economic globalization may lead to political backlash. Populism comes in different forms, with left-wing and right-wing variants differing in the societal cleavages they highlight. Left-wing populism is prevalent in Latin America, while right-wing populism is more common in Europe. These different reactions are related to the relative salience of different types of globalization shocks. Populist politicians can more easily mobilize along ethno-national/cultural cleavages when globalization shocks take the form of immigration and refugees, as seen in Europe. On the other hand, it is easier to mobilize along income/social class lines when globalization shocks take the form of trade, finance, and foreign investment, as seen in southern Europe and Latin America. The United States has produced populists of both stripes due to the salience of both types of shocks. The economic roots of populism, particularly the role of economic globalization, are examined in this paper. While globalization is not the only force at play, it is a significant factor. Economic history and theory both provide strong reasons to believe that advanced stages of globalization are prone to populist backlash. The specific form of the backlash, however, was less predictable. The paper distinguishes between the demand and supply sides of the rise in populism. Economic anxiety and distributional struggles generated by globalization create a base for populism, but do not necessarily determine its political orientation. The relative salience of available cleavages and the narratives provided by populist leaders provide direction and content to the grievances. The paper outlines the following sections: a historical overview of globalization and populism, the distributive consequences of trade liberalization, the economics and politics of compensation, questions of fairness and distributive justice, the consequences of financial globalization, the supply side of populism, and concluding comments. The paper argues that it is important to distinguish between the demand and supply sides of the rise in populism. The economic anxiety and distributional struggles exacerbated by globalization generate a base for populism, but do not necessarily determine its political orientation. The relative salience of available cleavages and the narratives provided by populist leaders are what provide direction and content to the grievances. Overlooking this distinction can obscure the respective roles of economic and cultural factors in driving populist politics. The paper also discusses the economic and political implications of financial globalization, including the risks of financial crises and the adverse distributional impacts within countries. It argues that financial globalization may exacerbate the weaknesses of domestic institutions and debt-enforcement mechanisms, leading to adverse effects that may offset its direct beneficial effects. The paper concludes that the future direction of the world's economic-political order is at an inflection point, with its future direction hanging very much in balance.Populism and the Economics of Globalization by Dani Rodrik Populism has been on the rise for a while, and economic history and theory suggest that advanced stages of economic globalization may lead to political backlash. Populism comes in different forms, with left-wing and right-wing variants differing in the societal cleavages they highlight. Left-wing populism is prevalent in Latin America, while right-wing populism is more common in Europe. These different reactions are related to the relative salience of different types of globalization shocks. Populist politicians can more easily mobilize along ethno-national/cultural cleavages when globalization shocks take the form of immigration and refugees, as seen in Europe. On the other hand, it is easier to mobilize along income/social class lines when globalization shocks take the form of trade, finance, and foreign investment, as seen in southern Europe and Latin America. The United States has produced populists of both stripes due to the salience of both types of shocks. The economic roots of populism, particularly the role of economic globalization, are examined in this paper. While globalization is not the only force at play, it is a significant factor. Economic history and theory both provide strong reasons to believe that advanced stages of globalization are prone to populist backlash. The specific form of the backlash, however, was less predictable. The paper distinguishes between the demand and supply sides of the rise in populism. Economic anxiety and distributional struggles generated by globalization create a base for populism, but do not necessarily determine its political orientation. The relative salience of available cleavages and the narratives provided by populist leaders provide direction and content to the grievances. The paper outlines the following sections: a historical overview of globalization and populism, the distributive consequences of trade liberalization, the economics and politics of compensation, questions of fairness and distributive justice, the consequences of financial globalization, the supply side of populism, and concluding comments. The paper argues that it is important to distinguish between the demand and supply sides of the rise in populism. The economic anxiety and distributional struggles exacerbated by globalization generate a base for populism, but do not necessarily determine its political orientation. The relative salience of available cleavages and the narratives provided by populist leaders are what provide direction and content to the grievances. Overlooking this distinction can obscure the respective roles of economic and cultural factors in driving populist politics. The paper also discusses the economic and political implications of financial globalization, including the risks of financial crises and the adverse distributional impacts within countries. It argues that financial globalization may exacerbate the weaknesses of domestic institutions and debt-enforcement mechanisms, leading to adverse effects that may offset its direct beneficial effects. The paper concludes that the future direction of the world's economic-political order is at an inflection point, with its future direction hanging very much in balance.