The Great "Globalization" - Jeopardized !!!
Nationalist politics is on the rise. Protectionist sentiment can be observed all around with rising tariffs and falling global trade as the concept of globalization goes begging. Over the last 20 years with the period of ‘deep globalization’ international relations have resurfaced powerfully. Nation states are acting particularly selfish, individualistic and according to an ‘every-nation-for-itself’ mode in this global juncture of renewed nationalisms. However, this may be more of a continuation trend than a dramatic break. In short, We have moved closer to the ‘risk of deglobalization’ against a backdrop of great uncertainty, countries increasingly adopting trade and industrial policies based on a notion of ‘local-contentism’ which is a strong trend showing itself in the world economy.
For at least a century, the international system has alternated between cycles of globalization and deglobalization. At times, a period of deglobalization has emerged right after major wars, as in the latter parts of 1910s; other times, deglobalization has stemmed from global economic shocks, as in the 1930s.. After each period of deglobalization, the world eventually bounced back, as we saw after the World War II. Still, the impact of this period of deglobalization could cause long-term damage, harming economic growth, hindering innovation, making the entire international economy less dynamic and cultural and personal links between countries may wither leaving a legacy of the most toxic kinds of politics around the world. Banks in most developed countries drastically slashed their lending to companies in other nations passing legislations-forcing banks to invest more within their own borders, in order to reduce risks for banks and to support European companies. Cross-border flows of capital have regressed so badly that they are about as low as they were in 1983.
In a difficult economic context, the path of least resistance can be to prioritize short-term national interests over long-term global ones, as has been seen many times in recent years. Political tensions can lead to face-offs and tit-for-tat sanctions, even when decision-makers recognize, intellectually, that each country is inflicting economic self-harm. In a climate of fear about cyber attacks or online ideological contagion, concerted global efforts to manage the internet could become so fraught with difficulty that governments decide it is easier to “protect” their population by cutting off their national internets from the world. Other types of social and cultural integration have dropped as well. The Internet is in some ways becoming less free, with many governments putting up walls around their domestic Internets. . “Overall, the depth of global connectedness remains quite limited—lower than many people think,” concluded the 2014 DHL Global Connectedness Index.
In many respects, of course, the Internet and social media have knit the world more closely together. But that virtual closeness doesn’t necessarily mean closeness in practical terms; in fact, it can conceal the realities of slowing or falling migration, trade, investment, and other types of international integration.
There have been a number of shocks to the political system recently that have jolted analysts’ thinking and brought about a reassessment in business planning for next years.
The first surprise was the decision of the UK to leave the European Union in June last year. Given the forecasts of economic harm following such a move, Theresa May’s Government will be preoccupied by managing panicked markets and reforging new relationship with its continental trading partners.
The second shock was the election of Trump as president of the United States. Few anticipated that the American public would elect such an inexperienced candidate. Yet, his aggressive defense of national interest, launched not from an analytical basis but from an emotional platform, served to both repulse the elite and attract voters.
Trump promised to put ‘America First’ and the Brexit campaign hinged on the slogan ‘we want our country back’.
A parade of foreign targets was identified at as bogey-men, China and Mexico within the American campaign; Poland and Syria during the Brexit referendum. In Europe, many politicians have instead tried to copy elements of far right, anti-immigration parties.
The open trade relations with foreign powers, it was argued, unfairly favored overseas businesses at the cost of local jobs and opportunities.
Now that this groundswell of nationalist opinion is converted into executive power, many believe that 2017 will herald a new era of protectionism in which the apparatus of economic globalization will be dismantled.
The question is whether the political developments in 2016 were part of a broader trend, or whether they represent a significant break from the prevailing trend for the globalization that has dominated commercial activity since the fall of the Soviet Union.
It’s not just economic ties that are loosening; personal and cultural links between countries also have dwindled since the late 2000s. With growth slowing and unemployment rising, many countries have seen a spike in nationalist and anti-migrant sentiment. In Greece, that sentiment has coalesced into public support for Golden Dawn, a neo-fascist political party whose members have become infamous for brutally beating migrants. Even in wealthier and seemingly more secure European nations like France and Denmark, extreme nationalist and anti-migrant parties, like France’s National Front, have made huge inroads in the past six years. The National Front likely will be a serious contender in France’s next presidential elections in 2017.
The anti-migrant sentiment has affected cross-border migration-a key sign of globalization, which has dropped significantly from its levels in the 2000s. A study by The Financial Times of data on migration accumulated by the United Nations shows that there are “a million fewer people a year moving to another country on average [every year] after 2010.”
Our interconnected world is shrinking back toward its national borders—and that’s a problem. . We’ve avoided this scenario by such a thin margin in the past. Think about how even greater protectionism than we see today could spread. The route to this imagined future does not involve anybody deciding that de-globalization would be a good idea – yet it could still emerge from the unconscious choices of political decision-makers.
For at least a century, the international system has alternated between cycles of globalization and deglobalization. At times, a period of deglobalization has emerged right after major wars, as in the latter parts of 1910s; other times, deglobalization has stemmed from global economic shocks, as in the 1930s.. After each period of deglobalization, the world eventually bounced back, as we saw after the World War II. Still, the impact of this period of deglobalization could cause long-term damage, harming economic growth, hindering innovation, making the entire international economy less dynamic and cultural and personal links between countries may wither leaving a legacy of the most toxic kinds of politics around the world. Banks in most developed countries drastically slashed their lending to companies in other nations passing legislations-forcing banks to invest more within their own borders, in order to reduce risks for banks and to support European companies. Cross-border flows of capital have regressed so badly that they are about as low as they were in 1983.
In a difficult economic context, the path of least resistance can be to prioritize short-term national interests over long-term global ones, as has been seen many times in recent years. Political tensions can lead to face-offs and tit-for-tat sanctions, even when decision-makers recognize, intellectually, that each country is inflicting economic self-harm. In a climate of fear about cyber attacks or online ideological contagion, concerted global efforts to manage the internet could become so fraught with difficulty that governments decide it is easier to “protect” their population by cutting off their national internets from the world. Other types of social and cultural integration have dropped as well. The Internet is in some ways becoming less free, with many governments putting up walls around their domestic Internets. . “Overall, the depth of global connectedness remains quite limited—lower than many people think,” concluded the 2014 DHL Global Connectedness Index.
In many respects, of course, the Internet and social media have knit the world more closely together. But that virtual closeness doesn’t necessarily mean closeness in practical terms; in fact, it can conceal the realities of slowing or falling migration, trade, investment, and other types of international integration.
There have been a number of shocks to the political system recently that have jolted analysts’ thinking and brought about a reassessment in business planning for next years.
The first surprise was the decision of the UK to leave the European Union in June last year. Given the forecasts of economic harm following such a move, Theresa May’s Government will be preoccupied by managing panicked markets and reforging new relationship with its continental trading partners.
The second shock was the election of Trump as president of the United States. Few anticipated that the American public would elect such an inexperienced candidate. Yet, his aggressive defense of national interest, launched not from an analytical basis but from an emotional platform, served to both repulse the elite and attract voters.
Trump promised to put ‘America First’ and the Brexit campaign hinged on the slogan ‘we want our country back’.
A parade of foreign targets was identified at as bogey-men, China and Mexico within the American campaign; Poland and Syria during the Brexit referendum. In Europe, many politicians have instead tried to copy elements of far right, anti-immigration parties.
The open trade relations with foreign powers, it was argued, unfairly favored overseas businesses at the cost of local jobs and opportunities.
Now that this groundswell of nationalist opinion is converted into executive power, many believe that 2017 will herald a new era of protectionism in which the apparatus of economic globalization will be dismantled.
The question is whether the political developments in 2016 were part of a broader trend, or whether they represent a significant break from the prevailing trend for the globalization that has dominated commercial activity since the fall of the Soviet Union.
It’s not just economic ties that are loosening; personal and cultural links between countries also have dwindled since the late 2000s. With growth slowing and unemployment rising, many countries have seen a spike in nationalist and anti-migrant sentiment. In Greece, that sentiment has coalesced into public support for Golden Dawn, a neo-fascist political party whose members have become infamous for brutally beating migrants. Even in wealthier and seemingly more secure European nations like France and Denmark, extreme nationalist and anti-migrant parties, like France’s National Front, have made huge inroads in the past six years. The National Front likely will be a serious contender in France’s next presidential elections in 2017.
The anti-migrant sentiment has affected cross-border migration-a key sign of globalization, which has dropped significantly from its levels in the 2000s. A study by The Financial Times of data on migration accumulated by the United Nations shows that there are “a million fewer people a year moving to another country on average [every year] after 2010.”
Our interconnected world is shrinking back toward its national borders—and that’s a problem. . We’ve avoided this scenario by such a thin margin in the past. Think about how even greater protectionism than we see today could spread. The route to this imagined future does not involve anybody deciding that de-globalization would be a good idea – yet it could still emerge from the unconscious choices of political decision-makers.
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