The current "unprecedented" pace of global economic integration could raise living standards and cut poverty, but those benefits are at risk from geopolitical tensions and protectionism, Federal Reserve Chairman Ben Bernanke said on Friday.
"The scale and pace of the current episode (of globalisation) is unprecedented," Bernanke said as he opened two days of discussions on globalisation at the Kansas City Federal Reserve Bank's annual Jackson Hole retreat.
"Economic and technological changes are likely to shrink effective distances still further in coming years, creating the potential for continued improvements in productivity and living standards and for a reduction in global poverty," he said.
"Further progress in global integration should not be taken for granted," Bernanke warned, citing risks posed by international tensions and terrorism, as well as social and political opposition that can bubble up as some workers are displaced by shifting trade trends.
His remarks, which offered a wide overview of the history of economic integration from the Roman Empire on, did not touch on the current outlook for the US economy or Fed policy.
The Fed chief said it was "natural" for workers hurt by globalization to push back.
"The challenge for policy-makers is to ensure that the benefits of global economic integration are sufficiently widely shared - for example, by helping displaced workers get the necessary training to take advantage of new opportunities," he said.
Bernanke said the emergence of China, India and the former communist-bloc countries has brought "the greater part of the earth's population" into the global economy.
"The economic opening of China, which began in earnest less than three decades ago, is proceeding rapidly and, if anything, seems to be accelerating," he said.
Fresh features of the current globalisation trend included the high level of integration between mature industrial economies and emerging market economies, and the direction of capital flows, Bernanke said.
The huge current account deficit run by the United States, substantially financed by capital from emerging market nations, contrasts with surpluses run by Great Britain when it was the centre of the world economy in the 19th century, he noted.
Meanwhile, the geographical extension of production processes is more advanced and pervasive than ever, he said, a trend that can lead to "substantial productivity gains."
Bernanke also noted that gross capital flows are much larger than in the past and held in a much wider array of debt instruments, equities and derivatives.
Flows of foreign direct investment are much larger relative to output than they were fifty years ago, a trend helped by capital-market liberalisation, he said.
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