Future of Globalization

What is the issue?

• There is a growing wave of anti-globalisation sentiments expressed across the world.
• One possible explanation is that fruits of globalisation have reached its maximum.
• Experts have started to caution that the current phase of globalisation is nearing its end.

How does it roll out?

• Globalisation refers to the integration of markets in the global economy, leading to the increased interconnectedness of national economies.
• It provides for free movement of goods, capital, services, people, technology and information.

• ‘Hyper-globalisation’ is used to describe the dramatic increase in international trade witnessed for about a decade and a half from the early 1990s.
• It led to an unprecedented movement of capital and of people.
• Capital and labour flowed across the world.

• As global demand expanded countries exploited the trade route to grow their economies.
• These conditions held great promise of globalisation to the developing countries in the 1990s.
• Economists now claim that hyper-globalisation was a one-time event which is moving to its end.
• Possibilities in terms of demand, consumption, investments, inventions, etc are less to sustain this phase of globalisation.
• The demand for any inventions or possibility of them and resulting spurt in trade is very meek in the immediate future.

How could India adapt to these developments?

• India had only recently started to benefit from globalisation.
• However it has started to sense its decline.
• It is especially reflected the most in the IT industry.
• Manufacturing sector led exports could also not sustain in future. e.g Chinese economy, slowing down due to global fall in demand.
• So alternative economic opportunities would have to be found.
• When the global economy is sluggish, only domestic investment can move demand.
• India has an intrinsic advantage of population and its vibrant domestic demand.
• Problems like bad loans and lack of proper insolvency mechanism have depressed private investment.
• This should be dealt with measures like IBC.
• Appropriate monetary policy decisions should be made to boost investment.
• It should be accompanied with public infrastructure especially the transport sectors which also increase would demand.

Source: The Hindu