The Libra scale of Globalisation

What if you can no more travel by Uber? What if you can no more buy Apple products from the USA, aircraft from Israel and various other products? What if you could only see the Eiffel Tower of Paris or Kawachi Fuji Garden of Japan in pictures and only dream of going to? Could that really happen? What could be the consequences? How would it affect you? These would easily be the inevitable effects of living in a world that is not globalized, inward looking and protectionist.

Globalisation is the social, economic and political integration of nations. This interconnectedness and exchange can be seen in our lives through the food we eat, the clothes we wear, the entertainment we watch and the values we uphold among others. On the other hand, de-globalisation is the process of diminishing interdependence and integration between nation-states around the world. This could be due to distrust among other nation-states, threatened internal politics or threatened national security. 

The second half of the twentieth century was a period of increased global integration. “Since the financial crisis, the pace of integration of the global economy certainly looks to have slowed.”  

Weighing benefits and downsides of globalisation

The last two decades saw a sudden increase in the exchange of knowledge, trade and capital around the world. The supporters of globalisation argue that it promotes job creation and increased productivity, which eventually leads to a rise in per capita GDP. Increased free trade, communication between nations and increased access to education, media, healthcare, technology, consumer goods and greater competitive pricing are often seen as factors that have enriched the world scientifically, culturally and economically as well. What one fails to consider is the unintended disadvantages that come along. Some failures could emerge from the miscalculation of political decision-makers.

Disadvantages of globalisation can be seen as cultural homogenisation increases, developing countries get exploited, and domestic economies are affected adversely. While liberal economists argue that it reduces global poverty, critics of free market economics assert that it increases wealth inequality in the world. The growth of GDP is not the only indicator of overall growth, income distribution also needs to be considered. With China entering the world trading system, manufacturing job losses have increased for many communities in other nations. Another example of unemployment can be the threat of American workers losing their jobs to H1 B workers sourced from various countries. The growth of interconnectedness also makes sovereignty of nation states vulnerable to the large trading blocs by world governments. Increased sharing of knowledge has resulted in improved technologies but that has negative consequences too as humans lose their jobs to robots.

“The International Monetary Fund in 2007, admitted that inequality levels may have risen by the introduction of new technology and the investment of foreign capital in developing countries. Others, in developed nations also distrust globalisation.”

Impact of foreign policy

Geopolitical tensions on the geo-economic landscape is an important element to understand the behaviour of Global trends. As the frequency of crisis rises, we can see the world heading towards protectionism.

“In recent years, several prominent countries such as the UK resisted globalisation by raising tariffs.” Far-right parties in Europe also gained popularity in this sphere of financial weakness. Significant global disintegration trends include the UK voting for Brexit and against integration with the European Union.

Other de-globalisation trends present how large economic players like the US and UK are withdrawing from global markets. President Trump appointed Peter Navarro as the leader of a newly created trade council recognising him as a strong China critic. Apart from trade, relations between the US and China are also deteriorating and showing conflicting views related to maritime territory and political policy. President Trump also abandoned the Trans-Pacific Partnership (TPP agreement) that accounted for 40% of Global GDP and 33% of Global Trade, set for reducing tariffs and boosting trade among signatories. The disintegration of this agreement has been a significant factor in the reversal of exchange of goods and economic globalisation. Even though this agreement tends towards disintegration, many countries like India actually benefit from it as boosting trade between the 12 countries would have made India’s exports less competitive considering the fact that it would give countries like Vietnam and Malaysia preferential access to markets in the United States and Japan. Trump’s executive order on the temporary visa ban of seven Muslim nations also highlighted the xenophobic and intolerant nature as per the current populist prejudices.

Restricted communications, as another trend of de-globalisation, such as national internet systems namely Great Firewall of China, Iran’s Halal internet, and Russia’s Cheburashka are established and have blocked the citizens from accessing many websites under the countries’ policy of internet censorship.

 Economic factors like the pattern of movement of labour, movement of capital, and politics highlight the trends of disintegration. The expectation of such a future is plausible but its implications could be far reaching.

The growth of developing countries also depends on globalisation. With the increasing integration, there is an increasing scope for economic restructure and diversification of new products. The countries’ growth also depends on foreign borrowings and commodity booms. Even though these factors seem to be promising growth to these developing nations, these come with their own risks. For instance, increasing export trade and maintaining a huge trade surplus like China does, can threaten the sovereignty of China and their ability of self-determination. This was visible when Trump threatened to exercise 40% duty on Chinese exports. A country that depends heavily on foreign borrowings is vulnerable and also at the risk of devalued currencies. “Growth driven by a commodity boom is also susceptible to busts.” For these reasons, countries now tend to reverse the process of globalisation.

Striding towards the new balance

The implications of an entirely de-globalised nation could be harmful and such a situation is very unlikely but a balance between globalisation and de-globalisation could resolve the imbalance between global markets and national responsibilities.

There needs to be the right balance between trade and protection of domestic markets, between international financial interdependence and independent financial stability between adopting western cultures and maintaining national cultural identity.

Progress in globalisation needs to be done with precautionary measures such as adhering to domestic needs, protecting the lower class from the threatening global economy, securing national sovereignty, reducing dependence on other countries and many more challenges that need to be addressed. Therefore, a social contract that would balance the interdependence and integration of countries would serve national as well as international interests.

 

List of citations and references.

Weldon, Duncan. 2015. “Is De-globalisation on the way” BBC News. 18 May, 2015. Accessed July 4, 2017

C.R. 2013. “When did Globalisation start”, The Economist. 23 September, 2013. Accessed July 4, 2017

Gregory, Nitin. 2016. “De-globalisation- The cycle is turning.” Equitymaster. 28 December, 2016. Accessed July 4, 2017

Rodrik, Dani. 2009. “A De-globalised World?” Realclear Newsletter.  18 May, 2009. Accessed July 4, 2017

 

The author, Sharon Jose, is a student of the Jindal School of International Affairs.

 

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