Global Rebalancing: The Dangerous Obsession, February, 17, 2011

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Global Rebalancing: The Dangerous Obsession, February, 17, 2011

While the obsession with global rebalancing stokes currency and protectionist tensions, it diverts attention from what is really needed—reforms at home.

By Uri Dadush

Published on Feb 17, 2011

The current emphasis on global rebalancing—which aims to reduce trade deficits and surpluses—is misguided. Trade deficits and surpluses narrowed significantly during the Great Recession, can be financed and eased over time, and are largely the result of domestic forces—making further global rebalancing unlikely.

While the obsession with global rebalancing stokes currency and protectionist tensions, it diverts attention from what is really needed—reforms at home. Rather than focusing on global rebalancing, countries should concentrate more on fixing their domestic problems and expanding their domestic demand at the maximum sustainable rate.

A version of this policy brief was originally published in Current History.

About the Author

Uri Dadush

Former Senior Associate, International Economics Program

Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.

Recent Work

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Greece, Complacency, and the Euro
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Economy Trade Foreign Policy North America United States East Asia China Western Europe Asia Europe

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

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