Entrenchment of Neo-Protectionism in Global Economy of 21st Century

By the early 2020s in the context of the combined effects of intensifying global competition for technological leadership, tightening trade protectionism and slowing global economic growth there has been emerging a new aggressive form of protectionism – neo-protectionism. The article analyzes the stages of neo-protectionism formation at the turn of the century. Actually, protectionism as an instrument of foreign trade policy has been used in world practice for almost 3 thousand years. Its forms have evolved over time as a response to the need to maintain or intercept global economic initiative in the face of the emergence of new innovative cycles. Classical protectionism (in the format of tariff restrictions for competitors) emerged in the era of the first industrial revolution. Hidden protectionism, which has been spreading since the 17th century as an instrument of non-economic coercion of competitors, finally took root in the foreign trade practices of countries by the 1950–1960s. At the turn of the 1980s and 1990s, hidden protectionism transformed into “protectionism 2.0”, which is characterized by increasing legalization of unilateral measures that restrict trade and act in the interests of sanctioning states outside the perimeter of regulation of GATT–WTO rules. In the 2020s neo-protectionism is taking root as an aggressive trade-force form of competitors’ coercion and “out of line” allies pressure. In the process of their transformation the instruments of each form of protectionism are not abolished but are given new content and, if necessary, are used in a complementary manner. The paper identifies three key factors for the increasing spread of neo-protectionism: a sharp increase in competition for economic and technological leadership between the countries of the Global North and the Global South, the insufficiency of the Western countries’ own raw material base to ensure an innovative transition and new reindustrialization, and the emerging fragmentation of the global economy according to a block type. It is concluded that the rooting of neo-protectionism policies may lead to a new round of global recession and exacerbate the overall fragility of the global economy. The hypothesis is supported that the confrontation between new version of protectionism and mercantilism will continue in the coming years.