Current Affairs : Deglobalization General Studies I Essay writing I UPSC Mains I HCS Mains I RAS Mains I UPPCS Mains
mobile-whatsapp-img
9817390373,8295688244
Baljit Dhaka
hcs prelims testseries image
hcs prelims mains testseries image
HCS Mains test series

Current Affairs : Deglobalization General Studies I Essay writing I UPSC Mains I HCS Mains I RAS Mains I UPPCS Mains

Validity: 9 Months
What you will get
Course Highlights
  • Based on latest Pattern
  • English Medium eBooks
Click to Bookmark

Current Affairs : Deglobalization  General Studies I Essay writing I  UPSC Mains I HCS Mains I RAS Mains I UPPCS Mains 

Deglobalization: questions can be asked in the exam like: 

Questions 

  • How is Deglobalization coming into the limelight in recent years? Enumerate India’s position in recent times on Deglobalization. 
  • Globalization is no more the growth driven engine for many economies now. Trace the steps taken by the major economy which indicates this trend. In the context of India, do you think India is decoupling from Global integrations? Explain with suitable examples. 
  • How far globalization is still helpful in improving quality of life, eradication of poverty, and sustainable growth. 
  • Which protectionist steps India took in recent times to protect the domestic economy from global disruption?
  • The COVID-19 pandemic has added further momentum to the deglobalization trend. Discuss.
  • India could re-emerge as a land of opportunity even during the trends of deglobalization post-covid-19. Discuss the opportunities for India in this scenario. 

 

Deglobalization

  • What is deglobalization? 
  • Why is it becoming a more and more hot topic?
  • Major economies' actions?
  • Why deglobalization?
  • Is globalization and Liberalisation not producing results?
  • India’s actions 

What is Deglobalization?

 

  • Deglobalization or deglobalization is the process of diminishing interdependence and integration between certain units around the world, typically nation-states. 
  • It is widely used to describe the periods of history when economic trade and investment between countries decline. 
  • It stands in contrast to globalization, in which units become increasingly integrated over time, and generally spans the time between periods of globalization.
  • The term de-globalisation is used by economic and market commentators to highlight the trend of several countries wanting to go back to economic and trade policies that put their national interests first. 
  • These policies often take the form of tariffs or quantitative barriers that impede the free movement of people, products, and services among countries.
  • The idea behind all this protectionism is to shield local manufacturing by making imports costlier.
  • The multi-dimensional globalization index of KOF Swiss Economic Institute shows a clear break for economic globalization in 2009 in 2015 KOF observed for its overall index: "The level of globalization worldwide increased rapidly between 1990 and 2007 and has risen only slightly since the Great Recession. 
  • In 2015, globalization decreased for the first time since 1975. The fall was due to the decline in economic globalization, with social globalization stagnating and political globalization increasing slightly.
  • Other indicators of deglobalization include the development of Foreign Direct Investment, that according to UNCTAD slipped further in 2017 and in stark contrast with production.
  • Measures of deglobalization

    These centre around the four main economic flows:

    • Goods and services, e.g. exports plus imports as a proportion of national income or per head of population.
    • Labour/people, e.g. net migration rates; inward or outward migration flows, weighted by population (and resultant remittances in percent of GDP)
    • Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population

    It is generally not thought possible to measure deglobalization through lack of flows of technology, the fourth main flow. Those areas that are measurable do suggest other possible measures, including:

    • Average tariffs
    • Border restrictions on labour
    • Capital controls, including restrictions on foreign direct investment or outward direct investment
    • The multi-dimensional globalization index of KOF Swiss Economic Institute shows a clear break for economic globalization in 2009 in 2015 KOF observed for its overall index: "The level of globalization worldwide increased rapidly between 1990 and 2007 and has risen only slightly since the Great Recession. 
    • In 2015, globalisation decreased for the first time since 1975. The fall was due to the decline in economic globalisation, with social globalisation stagnating and political globalisation increasing slightly.
    • Other indicators of deglobalization include the development of Foreign Direct Investment, that according to UNCTAD slipped further in 2017 and in stark contrast with production.

  • Why is it becoming more and more hot topic?

    • The present talk around ‘trade war’ and ‘de-globalisation’ cropped up after the US, in March 2018, imposed 25 per cent and 10 per cent duty on steel and aluminium imports, respectively, from certain countries, citing national security and job creation as the triggering factors.
    • A 25 per cent tariff was then imposed on over 1,300 other Chinese products. China hit back by imposing additional levies on a range of American imports, including walnuts, raisins, and almonds. 
    • The European Union too has jumped into the battle, with a 25 percent duty on certain US products.
  • Nation first policy is a part of de-globalisation which is visible in the EU policies related to refugees. The crisis in 2015 highlighted a key shortcoming in the European asylum system: the failure to share responsibility fairly across all EU member states.
  • One of the biggest geopolitics events in 2016 was the BREXIT. It was also considered as the part of the first wave of globalization.
  • Increasing trends of Protectionism by various economies is also triggering the de-globalization process. 
  • Protectionism encompasses a number of different economic policies designed to restrict trade and boost domestic manufacturers. 
  • From new taxes to import restrictions, these policies are implemented by both emerging markets and developed economies alike and can have a negative impact on global free trade.

Is globalisation and Liberalisation not producing results?

  • Many observers have pointed out that globalization has aggravated the problems of poverty, inequality, and employment while it has benefitted a few countries and the elite population only. The adverse consequences of globalization are appearing in many forms.
  • Job Insecurity: Globalization provides a double-edged sword when it comes to jobs. It creates jobs for people in developing countries who provide cheaper manufacturing jobs. For example, many companies are setting up in India and China because wages and manufacturing jobs are cheaper there this means less opportunities in developed worlds. In short, globalization takes jobs from one country and provides them to another. 
  • This can be negative or positive depending on what part of the world you are in.
  • Causes Fluctuation of Prices: Increased competition means that businesses with the best prices win. Due to competition prices are always fluctuating, for example, a country like the US has to reduce its prices often to compete with prices for the same product coming from China. China’s production costs are lower than the US hence they can have ridiculously low prices. For the US companies reducing prices will have a negative effect on their profits which in turn may led to actions like laying off workers.
  • Causes Environmental Damage : Globalization has led to increased production for businesses in order to meet global demand. Increased production means more natural resources are used and this can be used up before they are regenerated leading to a negative impact on the environment.
  • Also in developing countries rules and regulations on environmental protection are not as strict as in developed countries. This has seen some multinationals leave their countries to set up in developing countries to take advantage of this lax regulation in the process they manufacture products that are harmful to the environment.
  • More risk of spreading of Pandemics like COVID-19 : This has become crystal clear to everyone that how an increased and rapid flow of goods, services and people from one part of the world to another can make a pandemic like coronavirus spread easily all over the world. For the presents generation, the globalization has proved as a bane (not a boon) as far as covid-19 is concerned.

Major economies actions

  • One of the prominent examples of deglobalization movement could be found in the United States of America, where the Bush and Obama administration instituted Buy American Act clause as party of massive stimulus package, which was designed to favor American-made goods over traded goods. 
  • Likewise, the EU has imposed new subsidies to protect their agricultural sectors for their own protection. 
  • These movements of deglobalization can be seen as the example of how developed nations react to the Financial crisis of 2007–08 through deglobalization movements.
  • Recently a change in the pattern of anti-globalism has been observed: anti-globalism now has a strong foothold in the Global North and among right-wing (conservative) politicians, with much different attitudes in the Global South, particular among the BRICS countries.
  • Under President Donald Trump, the United States has embraced an “America First” policy, shifting away from trade liberalization (withdrawing from the Trans-Pacific Partnership) and moving toward protectionism. The Trump administration imposed tariffs on imports of steel and aluminum ostensibly on grounds of national security, prompting retaliation and the spread of trade barriers elsewhere.
  • The United States also initiated a trade war with China over its unfair trade practices, significantly reducing bilateral trade. 
  •  The tensions between the United States and China have weakened their relationship in what some call a “decoupling” between the world’s two largest economies. 
  • Decoupling does not mean that integration shrinks to nothing, only that it is reduced, perhaps substantially.

Deglobalization triggered post COVID-19

  • The COVID-19 pandemic is driving the world economy to retreat from global economic integration. 
  • Policymakers and business leaders are now questioning whether global supply chains have been stretched too far. 
  • National security and public health are now the main concerns and are providing new rationales for protectionism, especially for medical gear and food, and an emphasis on domestic sourcing.
  • This retreat will not mark the end of globalization, a process that has reached a historically high level. 
  • But globalization can be reversed, at least partially. The Great Recession of 2008–10 marked a historic turning point in the degree of global economic integration. 
  • Now, in response to the current health and economic crisis, policymakers appear to take deliberate steps to reinforce the movement toward deglobalization.
  • These steps threaten to slow or reverse the economic growth delivered by globalization. 
  • Even worse, new restrictions on trade could proliferate and inflict damage that could take decades to reverse.

 

 

THE PANDEMIC HAS ADDED FUEL TO THE TREND AWAY FROM GLOBALIZATION

  • The COVID-19 pandemic simply adds further momentum to the deglobalization trend. The World Trade Organization has forecasted that world trade will decline between 13 and 32 percent in 2020, much more than the expected fall in world GDP.
  • Countries are now thinking about economic integration in a different way. For example, President Emmanuel Macron of France has said that the coronavirus “will change the nature of globalization, with which we have lived for the past 40 years,” adding that it was “clear that this kind of globalization was reaching the end of its cycle.”
  • The pandemic has reinforced concerns around the world that supply chains have gone too far. 
  • Export bans have been imposed over concerns about inadequate domestic production of medical equipment, personal protective equipment, and pharmaceuticals. (In the food crisis in 2012, export bans drove up world prices and made short-term shortages even worse.) 
  • Past experience suggests that when some countries start restricting trade in critical goods, others are likely to follow suit. This is nothing new. 
  • Experience also suggests that fear leads countries to turn inward. Many countries are now rethinking trade dependence. 
  • The risk of overreaction and a slide to protectionism is compounded by the failure of leadership in the United States, leaving a vacuum in the world trading system. 
  • The absence of a coordinated and cooperative response could accelerate destructive beggar-thy-neighbor policies not seen since the 1930s.
  • The world economy is at a critical inflection point in history in which fears about dependence on others are growing. 
  • An inward turn would not spell the end of globalization, only a partial reversal. But undoing the resulting damage is likely to prove difficult.
  • The demise of the WTO and its impacts on globalization

    •  Finally, the dysfunctioning of the WTO could be one of the most relevant turning points towards deglobalization, especially as far as trade is concerned. 
    • This should bring downward pressure to growth globally.
    • The WTO has become increasingly dysfunctional during the last few years and, in particular, since the arrival of President Trump to power. 
    • Various reasons can be identified. 
    • First, the increase in membership has brought about heterogeneity as more emerging countries joined the club. This is clearly shown by the lack of agreement on concluding the Doha round of trade liberalisation measures, which launched in 2001. 
    Second, under the Trump administration, the United States has clearly turned its back on the WTO as an institution that can solve the US’s perceived trade problems.
    • India could re-emerge as a land of opportunity even during the trends of deglobalization post covid-19. Discuss the opportunities for India in this scenario. (250 Words, 15 Marks)
    • Introduction : Discuss briefly how the pandemic (covid-19) has fueled deglobalizaion across the world.

    Main body : 

    • Enlist various opportunities for India.
    • Discuss various possibilities India can look upon.
    • India - a re-emerging leader?
    • Make a mention of ‘Make in India’ and ‘Atma-Nirbhar Bharat’ Initiatives.

    Conclusion : 

    A final remark on how India can make a room for becoming a global economic power even after the pandemic.

  • The COVID-19 pandemic has simply added a momentum to the deglobalization trend.

    The roots can be traced back to Brexit, US-China trade war, US pulling out of trade blocs such as North American Free Trade Agreement (NAFTA) and Trans Pacific Partnership (TPP) and recently, India doing a last-minute volte-face with the Regional Comprehensive Economic Partnership (RCEP).

    The current economic scenario is threatening to redraw business linkages between nations and trade blocs in entirety, with emphasis on bilateral trade rather than trade blocs.

    With developed nations impugning China for the coronavirus pandemic and seriously contemplating a shift in manufacturing bases and supply chains elsewhere, is it India's time to shine in global trade?

                Two recent studies (OECD Economic Survey of India, December 2019, and the World Development Report 2020 from the World Bank) make clear that India has many opportunities to benefit from an enhanced participation in the world economy and from a higher participation in global and regional supply chains. It can boost growth, create jobs and reduce poverty. It would very much contribute to the success of the ‘Make in India’ initiative.

  • The numbers offer myriad opportunities. India's coastline of over 7,500 kms serviced by 200 odd ports of various sizes, well connected by the second largest road network and fourth largest rail network in the world offers conducive logistics infrastructure and connectivity dotting the numerous industrial corridors and special economic zones.

    India is endowed with rich natural resources – coal, iron ore, copper, zinc, etc. being among the largest in the world — offering immense potential for mining and related activities. A large work force and a younger demographic provide a perfect stage for India to emerge as a producing and a consuming market for global companies.

    India, while protecting its national interests, has an opportunity to redefine the contours of global trade.

    With the novel coronavirus pandemic taking a toll on trade and economy, our Prime Minister Narendra Modi gave a clarion call to citizens and businesses, to look at the current situation as an opportunity for an "Atmanirbhar Bharat (self-reliant India)".

        In a world where global trade and commerce is inevitable, protectionist policies of a few nations will only cause severe inequality. A middle ground is the need of the hour and a gated globalization could be the preferred option, with India paving the path for other nations to follow, in the decades to come.

         Though unlocking the Indian economy to the world economy during a process of de-globalisation is not an easy task, India’s current position in the global economy offers opportunities to strengthen itself even in a more fragmented global economy.