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Is the world ‘deglobalizing’?

Introduction:

Deglobalization is the process of diminishing interdependence and integration between world economies. It is used to describe the periods of history when economic trade and investment between countries decline.

The topic here asks you to present your opinion, backed up by sufficient data, on whether the economies of world today are moving towards Deglobalization. The student will need to present data points on policies of major economies w.r.t. trade.  Here are some pointers for you to consider while constructing your argument:

  •  Measures of deglobalization:
    • Deglobalization can be assessed by looking at economic flows of:
    • Goods and services
    • Labor/people
    • Capital
    • Technology (considered not possible)
  • History of trade and periods of globalization:
    • 1914 to 1970 witnessed a decline of trade as a proportion of total economic activity.
    • 1850-1914, and 1950-2007 saw high interaction among world economies (albeit South Asia shows a clear break for economic globalization in 2009. In 2010, the standstill in the globalization process basically continued but with different regional patterns: globalization index of KOF Swiss Economic InstituteThe a very minor increase) while Latin America and Sub Saharan Africa saw a very minor decrease in their regional average. High income countries and in particular OECD countries continue their trend of stagnation which has started even before the current crisis.
  • Creeping protectionism has been visible in the rising number of minor trade disputes.

  • In U.S., Oxford Economics estimates that as much as 70% of the trade growth comes from the knock-on effects of Chinese demand, which few expect to last.

  • Harvard Business School professor Geoffrey G. Jones’ view on Deglobalization:(Kindly go through his complete interview to get an in-depth understanding of the issue. Link mentioned below)
    • I think we are in a deglobalization period. We are in the second wave now. The first one was the Wall Street crash that lasted until the 1970s. There was Communism, extreme regulation and controls that we had seen in that period. Think we are probably repeating that now.
    • I personally think globalization has a bit of an issue—it rewards winners. Losers, lose out. So, in the first global economy, in the early 20th century, the world as a whole got very rich. But there was a huge gap between the winners and the losers. So who did well? White men in the US and Europe did well. Who lost out? Women lost out, colonized people lost out, Muslims lost out.
    • It (deglobalization) is the revolt of the losers. In the first wave the colonized people revolted against that. There was a huge wave of extreme Muslim rebellion and Jihadi movement. We are seeing a repeat of that now. This time it’s not colonized people, but the blue collared, the white workers, the middle class due to the rising disparity in incomes and we are seeing that across geographies from the US to China. We are seeing a very close similarity between these two deglobalization periods. Our story is still starting out, but its direction seems rather too clear.
  • The side-effects of globalization:
    • Bad credit defaults in the US, in the past the kind of local issue that would be a blip on the world stage, infected everyone, precisely because of the new borderless, interconnected monetary activities of the world. Suddenly everyone owned a part of the poisoned fruit and everyone had to deal with the outcome.
    • The Eurozone crisis, the defaults by Eurozonecousin Greece and subsequent bailout dramas, and ultimately Brexit, all followed in quick succession. By now, banks had long begun to scrutinize foreign investments and slow the money flow, with cross border banking claims going from $34.6 trillion in Q1 2008 to $27.9 trillion in Q2 2010.
  • Beginning of protectionism:
    • Donald Trump was elected with his populist platform to “make America great again” by bringing back protectionism. This set in motion a serious movement away from globalization, in the face of political and human frustration at the dual personality displayed by globalization.
    • Elections worldwide as a reflection of rich world people’s fear of globalization: Britain elected to leave the European Union, and Poland elected ultra-nationalists who vowed to defy the EU’s demands to admit Middle Eastern immigrants. 
    • Physical, anti-immigrant fences have sprouted from Bulgaria and Hungary to Macedonia and Greece, and others are now planned in Argentina, Guatemala, Estonia and even in Norway’s sliver of Russian border, an Arctic wilderness where it is raising an 11-foot-tall wall of steel.
    • In an article published in Nov, 2016: We are currently experiencing the longest period of trade stagnation in 70 years. Foreign direct investment flows by big corporates is down by around $700 billion in seven years -- around $1.2 trillion in 2014, according to the United Nations Conference of Trade and Development.

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