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Post Globalization Issues and Power shift of the Century
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- 2. We can define globalization as the increasing interdependence and integration of economies, markets, nations, and cultures. OR Globalization envisages a borderless world or seeks the world as a global village. OR Globalization is the flow across national borders of trade, finance, people, and of course ideas.
- 3. The component parts of globalization—the flow of ideas, people, and money— are retreating, and the United States is now erecting barriers to trade with Europe and Asia. At a more sinister level, technology—which was once regarded as an outright positive—is breeding more-sinister threats in cyberspace and in new forms of warfare, such as cluster drones.
- 4. We will go through a period of next 5 to 10 years until we get new frameworks, new ideas. The world economy has to digest a number of enormous imbalances. Indebtedness is the highest since the second world war. The power of central banks is enormous. The governments have to rediscover the recipe for organic growth.
- 5. Era of globalization is ending and giving way to new power centers. Globalization world was where interconnectedness and the people used to do the same in terms of law and approaches but now we are witnessing the clash of civilizations. We are now going to a multipolar world where at least three big regions do things increasingly differently.
- 6. Political Discontent Economic Growth Debt and Central Banks Geo Politics
- 7. The first problem relates to political discontent, expressed initially through Brexit and then in the US presidential election of 2016. It is now cropping up in Europe in the form. For example, of the rise of the right-wing party Alternative für Deutschland (AfD) in Germany
- 8. The second challenge is economic growth. Since the turn of the twenty-first century, economic growth worldwide has been running out of steam; only stimulants in the form of very high levels of debt and aggressive central bank action have kept it going.
- 9. The two obstacles are debt and central banks. It seems the world has learned little from the 2009 global financial crisis. More importantly, many of the institutions set up in the twentieth century—the World Bank, IMF, World Trade Organization (WTO), and North Atlantic Treaty Organization (NATO)— may become defunct.
- 10. Geopolitics will be dominated by three significant players: Chinacentric Asia, the Americas, and Europe. India may constitute a fourth pole, but its time has not yet arrived. These will be the players in the Great Game of the twenty-first century.
- 11. If the world comes to be dominated by three great intercontinental powers, several things may happen. Countries that fall between the cracks of these great power blocs, such as the United Kingdom, Japan, Russia, and Australia, will be forced to redefine their place in the world. Countries that lack the economic power to match the military might of the big three, such as Russia, may have to rethink their national development models.
- 12. We are in the first phase of De-globalization. There is a paradigm shift that would see the disintegration of the world order. The election of Donald Trump, Brexit, and new governments in Mexico and Italy, to name a few. These events simply represent the smashing of the old order; they are the detonators, the wrecking balls of the system that has grown up since the fall of communism.
- 13. The Levelling is about how the center of gravity in our world, societies, and economies is changing. The confusion those changes create, and the ideas that will help bring new structure to what is a disordered world. The West appears to be in decline and the rise of liberal democracy is slowing.
- 14. In absolute terms, world GDP and wealth are at all-time highs, unemployment is at a decade low in many large countries, technological advances are spellbinding, and there has been a sharp fall in poverty at a global level in the past twenty years. So it seems that things are really not so bad.
- 15. However, if we scratch beneath the surface, it all looks very different. The world economy has so strained and contorted itself to arrive at a post- crisis recovery that debt levels and intervention by central banks are at record highs. Though growth through 2018 has been positive despite trade tensions, forecasts from bodies like the IMF and the US Federal Reserve show that trend growth—long-run average rate of growth— in the next five to ten years will be considerably lower than the average of the past thirty years.
- 16. The way we communicate is also changing. In 1990 close to 270 million letters passed through the US Postal Service on a daily basis, but this had dropped to close to 150 million by 2014. At the same time, the number of email accounts globally has risen from close to 3 billion in 2011 to nearly 5 billion in 2017. On a similar trajectory, social media users have grown from fewer than 1 billion in 2010 to 2.5 billion in 2017, and the average time spent on social media has risen from 96 minutes daily to 118 minutes daily in 2016
- 17. In 2007, less than 20 percent of people in European countries were pessimistic about the European Union, but this has now risen to close to 35 percent, led by Germany and France. Nearly half (49 percent) of Europeans felt that their voice doesn’t count in European affairs.
- 18. In order to answer this question we have to go all the way back to world war II and look at the growth environment. After the world war II the world’s productive capacity was wiped out. The US was really the only major producer that left standing. That created what we call a supply-constraint growth environment.
- 19. During the 1990s we had demand growth constraint environment where rather than fighting inflation we were fighting deflation because there wasn’t enough demand. We saw successful growth strategies like exported growth to reach these wealthy market in the United States and Europe.
- 20. We have seen rapid increase in some dimensions of globalization. For example the digital classes are the reflection of the rapid acceleration of digital connectivity and that’s a crucial dimension of globalization increasing. There has also been increase in some other areas of globalization such as scientific collaboration.
- 21. There is also increase in other dimensions like over 100 countries are under dire economic stress. Some dimensions have slowed down dramatically such as trade, travel, and tourism. There was really a peak supply chain fragmentation in 2019 that will now accelerate.
- 22. Technological Globalization will be rise. Cultural Globalization will recede. Economic Globalization has already stagnated. Political Globalization is declining.
- 23. COVID-19 won’t end globalization instead different dimensions of globalization will take new forms.
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