GLOBAL TECHNOLOGY SUMMIT: GLOBALIZATION V/S PROTECTIONISM

GLOBAL TECHNOLOGY SUMMIT: GLOBALIZATION V/S PROTECTIONISM

Why in News

• The External Affairs Minister of India (EAM), at the recent Global Technology summit, has asserted that the Covid-19 pandemic has brought India’s capabilities and need for more domestic production rather than unchecked globalization.
• He further held that, to foster tech growth, nations must seek more start-ups, supply chains and jobs to be created internally.
• This speech of EAM has sparked a debate between protectionism vs globalization.

Globalization:

• Globalization envisages a borderless world or seeks a world as a global village.

Origin of Modern Globalization:

• What today is referred to as globalization, started with the end of the Cold war and the disintegration of the Soviet Union in 1991(https://www.britannica.com/topic/perestroika-Soviet-government-policy; https://www.britannica.com/topic/glasnost; ).

Driving Factors:

• Globalization was the offshoot of two systems — democracy and capitalism — that emerged victorious at the end of the Cold War.

Dimensions of Globalization:

• It may be attributed to accelerated flow of goods, people, capital, information, and energy across borders, often enabled by technological developments.

Manifestation of Globalization:

• Trade without tariffs, international travel with easy or no visas, capital flows with few impediments, cross-border pipelines and energy grids, and seamless global communication in real-time appeared to be the goals towards which the world was moving.

Arguments in favour of Globalization:

• Access to Goods and Services: Globalization results in increased trade and standard of living.
• It heightens competition within the domestic product, capital, and labour markets, as well as among countries adopting different trade and investment strategies.
• Vehicle of Social Justice: The proponents say globalization represents free trade which promotes global economic growth, creates jobs, makes companies more competitive, and lowers prices for consumers.
• Increases Cultural Awareness: By reducing cross-border distances, globalization has increased cross-cultural understanding and sharing.
• Sharing Technology and Values: It also provides poor countries, through infusions of foreign capital and technology, with the chance to develop economically and by spreading prosperity.

Arguments against Globalization:

• Rise of Global Problems: Globalization has been criticised on account of exacerbating global disparities, spread of international terrorism and cross-border organised crime, and allow for the rapid spread of disease.
• Backlash of Nationalism: Despite the economic aspect of globalization, it has resulted in National competition, advancement of national ambitions.
• Moving Towards Cultural Homogeneity: Globalization promotes people’s tastes to converge which may lead to more cultural homogeneity.

Protectionism or De-Globalisation

Meaning:

• Protectionism refers to government policies that restrict international trade to help domestic industries.
• Tariffs, import quotas, product standards, and subsidies are some of the primary policy tools a government can use in enacting protectionist policies.

Protectionism in Global Arena:

• Globalization had already begun to plateau or stagnate since the 2008-09 global financial crisis (GFC).
• This is reflected in Brexit and US’ America First Policy.
• Further, trade wars and the halting of WTO talks is another recognition of the retreat of globalization.
• These trends pave the way for an anti-globalization or protectionism sentiment, which may further amplify due to the spread of the Covid-19 pandemic.

Protectionism in India:

• In the past few years, many countries have criticized the Indian economy for becoming protectionist. This can be depicted in the following instances:
• Not opening up for imports, particularly after the Indian Government failed to agree on terms for a mini trade deal with the US.
• India walked out of the 15-nation Regional Comprehensive Economic Partnership of Asian countries.
• The “Aatmanirbhar Bharat (Self-Reliance) initiative”, launched in May 2020, after the beginning of the pandemic, was also perceived internationally as a protectionist move.