ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
-A A +A

Globalisation at Peril

.

The recent pitch by the Prime Minister to push swadeshi and Atmanirbhar Bharat to support local businesses has rekindled a worldwide debate on countering the forces of globalisation by adopting localisation as a measure for India’s economic revival. The outbreak of an uninvited virus from China has not only crippled the global economy but has also muddled the global societal structure. Deriving a comparison with the Great Depression of 1929, countries are quashing their growth trajectories due to disruptions in supply chains and contractions in demand. Isolation, self-sufficiency and self-dependence seem to have become the
order of the day.

Globalisation, which had attained worldwide acceptance for its benefits in the early 1990s, has also contributed to the creation of unequal societies with low growth and high debt. The outcome has been the upsurge of issues like the global financial crisis, migrant issues, Brexit, and multiple protests in countries like Hong Kong, Bolivia, Iraq, and Lebanon, among others, while the current crisis of COVID-19 clearly adds to the vulnerabilities of the same. The failure of globalisation emanates not from the creation of the crisis but due to its inability to respond and resolve.

On the business front, the creation of the buzz like “just-in-time,” “comparative advantage,” “outsourcing” in the name of globalisation paid off well in the past in terms of profits and efficiency. Globalisation served as a free hand for various capital-infused organisations to expand their presence and dominance while creating a network of supply chains. No doubt the network enabled free movement of people, ideas, capital, goods and services but at a huge cost.

Nonetheless, overdependence on inputs from international markets has brought the supply chain to a complete halt, especially a larger dependence on China. The fragility of supply chains can be seen from the perspective of a global domino effect. For example, China is a manufacturing hub of the world, and it gets most of its machinery from Germany. As China is unable to set in the manufacturing cycle, demand for new machinery from Germany has reduced. This has further affected the German trade with the rest of the European Union. Thus, the interconnected world has certainly raised concerns on the concept of globalisation. The worst-hit industries are automobiles, electronics and, more importantly, drugs and medical supplies, which play a crucial role in fighting the pandemic.

Many scholars have expressed that overdependence on one nation and interconnectedness have taken the world to the inflexion point. They predict that from now on, the process of globalisation may change its course and multilateral organisations may have to restructure their bargain or become defunct. Certainly, developing nations will be the worst hit as they have always accrued the benefits of globalisation in terms of employment, investments, etc.

Countries may have to reassess their strategies to adapt to new realities, keeping in mind the stakes on the economy at large. Countries will be required to develop their economies in a sustainable manner going forward. This would lead to less dependence on imports, with an increase in the localisation of products, which would not only help in safeguarding the foreign exchange of a country but also gain better control over the national economy. Such a move can also assure better inventory management and less dependence on the supply chain, which reduces the transaction costs.

This may lead to a major shift in the approach towards globalisation and the rise of economies based on the norms of the regional social systems and security networks. If the situation continues for long, the global conglomerates may revert to their practices of the times when globalisation was not a popular word. Countries may be led to a tussle for economic and political power in regions
instigating the rise of a new form of imperialism. The future can only be speculated. However, the current pandemic and the fight against it at every level have made countries realise the importance of self-sufficiency, which would lead to the invention of localised economic set-ups and less global economic dependence.

Amidst the confusions and beliefs, some degree of globalisation is inevitable. But, going back to the business-as-usual scenario highly unlikely. However, a sudden exodus from multilateral cooperation will certainly have greater ramifications that need thoughtful consideration. On the contrary, instead of a fallback, it will be pragmatic for economies to restructure and prioritise. Targeted restructuring can reduce overdependence and push for better control in stabilising economies.

Globalisation is no doubt a necessary evil; however, the question remains if we are playing the right cards with it. Our focus was only to channelise the factors of production across borders that are very vulnerable currently. The world economies need to rethink and re-strategise in terms of agreements and opening up their borders.

S Subramanian, Meha Pant, Ashutosh Srivastava

Gurugram

 

Updated On : 14th Jun, 2020

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top