Protectionists dislike trade and migration. And capital flows?
The Economist
February 26, 2026
AI-Generated Deep Dive Summary
Globalization has faced significant challenges over the past decade, with protectionist policies hindering trade and migration. However, capital flows remain relatively unrestricted despite these tensions. While anti-globalists have focused on curbing the movement of goods and people, the flow of capital across borders continues to adapt to changing economic conditions. This dynamic is particularly notable in the United States, where policymakers have debated measures like taxing foreign bond purchases to maintain dollar competitiveness. Despite ongoing concerns about speculation and currency distortions, capital flows have not been significantly hampered by capital controls.
The article highlights that while trade barriers and migration restrictions have gained traction among protectionists, capital movement has largely escaped similar scrutiny. Economists remain divided on the issue, with some arguing that unfettered capital flows can lead to speculative bubbles, unstable exchange rates, and mismatches between local assets and dollar-denominated liabilities. However, others advocate for maintaining open capital markets, citing the potential benefits for economic growth and global integration.
The flattening of cross-border capital flows is not due to explicit restrictions but rather reflects broader shifts in market dynamics. In an era of rising nationalism, capital has maintained its cosmopolitan nature, continuing to circulate globally despite political headwinds. This resilience underscores the enduring importance of capital markets in driving economic activity and connecting nations financially.
For businesses and investors, understanding the state of global capital flows is crucial. The stability and predictability of these flows influence exchange rates, investment opportunities, and risk management strategies. As nationalism continues to shape international trade and migration policies, the relative freedom of capital movement offers both challenges and opportunities for global economic actors. This dynamic highlights the interconnectedness of global markets and the ongoing debates over how best to manage them in an increasingly fragmented world.
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Originally published on The Economist on 2/26/2026