Global macroeconomic imbalances—massive borrowing by some countries and massive lending by others—drove the financial boom and bubble that eventually burst into the current crisis. These imbalances are now shrinking, creating a new risk—this time, a political one. Nations that have relied on foreign borrowing to fuel government and household spending will have to cut back drastically; nations that have relied on exports as the engine of economic growth will have to rely less on foreign markets; in both cases, powerful interests will be threatened. In this Center for Geoeconomic Studies Working Paper, produced in association with the CFR's International Institutions and Global Governance program, Jeffry A. Frieden reviews the historical record on the political fallout from the unraveling of macroeconomic imbalances. He warns that the coming adjustments may test the capacity of national governments and international institutions to maintain an open international economic order.