(Finance) – The governor of the Bank of Italy, Fabio Panettastated that, in the event of “extreme scenarios”, the fragmentation economical And financial it could cost up to more than 6% of global GDP. According to Panetta, to avoid and counteract this risk we must act four pillars: information, innovation, flexibility and international cooperation. “The costs of fragmentation are not just economic. There is a lot at stake: from social progress to international cooperation. And the freedom to exchange goods and services, to manage across borders and to share knowledge and ideas”, he declared in his speech opening of the seminar organized in Rome on these topics by the institution of Via Nazionale, as part of the G7 initiatives, entitled “A Fragmenting Trading System: where we stand and implications for policy“.
While the cooperation at a global level “it becomes more difficult, there are reasons to at least strengthen the relationship between countries that share the same ideas – he declared –. The benefits are extensive”. More generally, international cooperation and progress on the social side are “prerequisites for ensuring prosperity and peace”https://www.Finance.it/DettaglioNews/169_2024-11-15_TLB/.”The protectionism would not be able to protect as it might seem”, given that these measures would risk being “circumvented” through third countries, only increasing costs and opacity.
“There globalisation it has often become an easy scapegoat. For example, empirical analysis shows that i progress technological have had a much greater impact on wage inequalities than relocations and participation in global value chains”, explained Panetta. At the same time, however, “it has become increasingly clear that some countries have been able to attract production volumes significant thanks to substantial public subsidies”. Panetta cited the growth of electric cars in China. “Multilateral institutions have not always been efficient in intervening on these distortions”, he underlined, with a possible reference to the WTO, the World Trade Organization. “This has contributed to the erosion of the multilateral system,” he added
In the global economy “we must avoid the illusion that generalized measures, increasing protectionism, are the solution to our problems. measure generalized it’s like a kitchen knife: it is not suitable for carrying out complex surgery.”