Deglobalization refers to the process of reducing dependence and integration between different countries and regions around the world. This can be caused by various factors including:
- Tariff Wars: Tariff wars occur when countries impose taxes on imported goods from other countries in order to protect their domestic industries. This reduces trade between the two countries and can lead to a reduction in globalization.
- Right Wing Ideology: Some right-wing political parties and leaders in different countries have been promoting nationalist and protectionist policies which aim to reduce economic and political integration with other countries. This is based on the belief that globalization has led to the loss of jobs and economic opportunities for domestic workers.
- Political Rivalry: Political rivalries between different countries can also lead to deglobalization. For example, trade relations between countries may be adversely affected during times of political tension, such as during the Cold War between the United States and the Soviet Union.
- Trade War: Trade wars occur when countries impose tariffs on each other’s goods and services in order to gain a competitive advantage. This can lead to a reduction in globalization as trade between the countries is reduced.
- Decrease in Migration: Migration is an important aspect of globalization as people move from one country to another in search of better economic opportunities. However, recent political changes in different countries have led to a decrease in the number of immigrants, leading to a reduction in globalization.
- Refugee Crisis: Both climate-induced and political refugee crises can also lead to a reduction in globalization. Large numbers of refugees can put a strain on resources in host countries and can lead to political and social tensions.
Deglobalization can have both positive and negative effects. While it can help protect domestic industries and jobs, it can also lead to reduced economic growth and opportunities. It is important to strike a balance between globalization and protectionism in order to achieve sustainable economic growth and development.
Challenges faced by Advanced Economies
- Labour Market Disruption: Advanced Economies are facing a challenge due to the death of relatively low-skilled sectors such as textiles and the support economies that grew around it. The reabsorption of this displaced labour has been slow and incomplete, resulting in a drop of 5% in the share of wages to GDP from 2000 to 2017.
- Technological Change Deceleration: Advanced Economies have largely relied on technological change for per capita income growth. However, during the last decade, there has been a deceleration in technological change, partly due to low investment in innovation and partly due to fading additional gains from the internet and computer revolution.
- Consumer Credit Dependence: Advanced Economies focused on consumer credit in the early 2000s as a way to keep spending alive. This led to the Great Financial Crisis of 2008.
Impact on Emerging Markets (EMs)
- Trade: The imposition of higher tariff barriers by Advanced Economies is having a negative impact on the exports of Emerging Markets. This has led to a shrinking of job-intensive manufacturing sectors in EMs, resulting in a loss of employment opportunities.
- Migration: Advanced Economies have become attractive destinations for high-skilled labor from EMs. However, the increased protective measures by Advanced Economies regarding the free movement of high-skilled labor are posing a threat to the productive growth and job opportunities in EMs.
Impacts on India
- Social impact: The decrease in globalisation would lead to a decrease in standards of living as it would impact exports and economic growth, thus impacting the welfare of the poor and vulnerable sections of society. This would further impact the standard of living for these sections of society.
- Political impact: The decrease in globalisation would affect the political framework of countries, leading to instability due to an increase in prices and the cost of living, which may lead to civil uprisings. This would further impact the political stability of India.
- Impact on technology: The decrease in globalisation would limit the technological advancement of the world, especially developing countries like India. The limited knowledge sharing and lack of flow of technology to developing countries would limit advancement in science and technology.
- Impact on women employment: The decrease in globalisation would impact women’s empowerment efforts, as it would impact women’s movements across the globe. The lack of cooperation among nations would reduce opportunities for women across the world to work and progress in their careers. This would further impact women’s empowerment efforts in India.
FAQs
1. What is deglobalization?
- Deglobalization refers to the process of reducing or reversing the level of global integration and interdependence among countries and economies. It often involves a shift away from policies and practices that promote international trade, investment, and cooperation.
2. What are some factors driving deglobalization?
- Factors driving deglobalization may include protectionist trade policies, nationalism, political shifts, economic crises, concerns about national security, and the desire to regain control over domestic industries and resources.
3. How does deglobalization impact international trade and commerce?
- Deglobalization can impact international trade by leading to increased trade barriers, tariffs, and restrictions on the movement of goods and services across borders. This can reduce the volume of global trade and disrupt supply chains.
4. Are there any potential benefits of deglobalization?
- Some argue that deglobalization can lead to greater economic self-sufficiency, job protection, and reduced vulnerability to global economic downturns. However, its overall benefits are a subject of debate.
5. What are the potential drawbacks or risks associated with deglobalization?
- Risks of deglobalization include reduced economic growth, higher prices for imported goods, reduced access to international markets, and potential conflicts arising from protectionist policies. It can also hinder global cooperation on issues like climate change and pandemics.
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