Globalization, as a ‘power of prosperity’ is in trouble

Globalization, as a ‘power of prosperity’ is in trouble

No one can forget the financial crisis of 2008, as it was one of the most distressful conditions that made people believe that world would go back into the isolationism. However, today these fears seem subsided, but restrict the policymakers in many nations to thoroughly evaluate the benefits of globalization. Regulators in America and Europe have decided to save their financial institutions against contagion from abroad. So, does it indicates that Globalization, as a ‘power of prosperity’ is in trouble?

Yes

- Multilateral trade didn’t materialize in 2008, and after that many nations have classified their liberalization measures into regional agreements with like-minded neighbors, like the Trans-Pacific Partnership.

- Big emerging markets like China, India, Russia and Brazil represented a more interventionist approach that depends on government-directed lending and industrial policy. It was meant to boost domestic sellers.

- The world GDP is not encouraging, and negative trends can be seen on financial capital and direct investment inflows.

- The existing dualism between economic globalization and the political sphere restricted within the national borders can prove to be fatal.

- In the present world, international commerce takes place in goods as well as services, and can consist of movement of staff, investments and ideas across borders. However, with the increased number of categories, the governments also have more number of means to disadvantage foreign firms.

No

- The volume of global trade relative to world GDP after financial crisis declined sharply, but bounced. It indicates globalization has not reversed.

- WTO issued "World Trade Report 2013" which states there was rise in global trade in new emerging markets, encouraged by trade reforms in China and India. It boosted the ratio of global trade to world GDP from almost 20% to 30% approximately.

- During this period, the world witnessed a sharp decline in world poverty. A large percentage of people in India and China got rid from a life of impoverishment as they jumped into the lower middle class.

- After the crisis in the 1930s, the world had taken a u-turn towards protectionist direction. It was not the same case after 2008. The crisis resulted in protectionist measures like producer subsidies, anti-dumping duties, most of which were piecemeal and ad hoc.

- The starting gains from market openness in India and China seem to end leading return of manufacturing to the U.S. It doesn’t indicate that globalization is in trouble but rebalancing of economic activity across the world.

Conclusion

The financial crisis forced the nations to opt for protectionist measures. It is more or less good for the world economy. The world prepares itself for a much better form of globalization. The growth may be slow, but will come with stability and sustainability. The protectionist measures have not resulted in a large closing of markets. The world trade rebounded four years ago and has been rising steadily ever since.