Globalization - a Paradigm Shift
Globalization – How it’s defining today’s world.
After having a steady growth in US stock market for quite a long time, recently there was a big downward swing in US stock market which resulted in panic in other international stock market as well and other international stock market also reported a heavy dip in their stock index. It’s just not the stock market alone, if anything happens in any part of the world, it causes domino effect across the whole world. During late last year, the Bitcoin mania took the whole world by surprise and any favorable news about crypto-currency in any country was only giving more momentum to already high priced crypto-currencies. Recently, the momentum for crypto-currencies’ prices seemed to be heavily dented by the crackdown by government of many countries, including China, South Korea, India and many other countries. These two examples show that today’s world is heavily interdependent on each other. The concept that best describes these kind of interdependencies of countries on each other is referred as globalization. Globalization is not a new concept. It is being followed since the ancient times. In addition to different government’s globalization friendly policies, modern day infrastructure in transportation and communication has only helped globalization to expand more rapidly.
Globalization has brought drastic changes not only in individual countries’ economy but also has given a big boost to the world economy. For instance, India, the 7th biggest economy in the world, can attribute its current economic growth to the major economic reforms taken during the early 1990s as the government of that time focused on liberalization, privatization, and globalization, commonly referred as LPG of economy. Prior to economic reforms of the early 1990s, Indian economy had more of an isolated approach, holding traditional values such as self-reliance and socialistic policies of economic development, which is mainly attributed to restrictive form of governance, resulted in inefficiencies of the economy. Before the reforms of the early 1990s, economy was heavily regulated, major industries were mostly nationalized, and there were very few private contributors at the highest level. There were hardly any foreign cars seen on roads as government was trying to promote cars built in India by imposing heavy import duty on foreign made cars (almost 200% - 300%). Fast forward to current time, now there are plenty of foreign made cars running on the roads of India. Many international MNC’s (multinational companies) which are now operating in India, have their manufacturing as well as distribution centers in India. Many of the major industries are privatized and Indian government is making favorable economic policies to encourage FDI (Foreign Direct Investment). This has brought a new prosperity in India making many new Billionaires in India and providing economic growth opportunity to many.
It’s not that globalization has only brought prosperity to everyone in the countries that embraced this concept. Globalization has its own downsides too. Many of the businesses were shut down and many people lost their jobs as many of the goods that are being imported from other countries are much cheaper and widely available, making it preferred by the local consumer, and hence adversely impacting the local business and people associated with that business. Even here in USA, President Trump is making a big case for reviewing trade deals of USA like NAFTA, TPP etch with other countries. Mr. Trump is considering these trade deals unfair for USA and stating that other countries are taking much more benefit from these deals than USA. He even go on to the length to state that USA will terminate these deals if terms of these deals are not re-negotiated. Mr. Trump’s argument is that because of these deals, many of the manufacturing industries are either shutdown or moved oversees, resulting in hampering local jobs and economy. This case is true for other countries too where there was influx of cheap imported goods resulting in badly impacting the local manufacturing industries and hence impacting manufacturing jobs and the local economy, resulting in people getting angry with government and showing their frustration in election by voting to candidates who promises about working to bring back local jobs. This is very much what has happened in recent US presidential election and a strong reason why Mr. Donald Trump was elected as president. Mr. Trump’s recent signing of proclamation that will impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports into the US is a step towards fulfilling his election promises to help the local industries by shielding the local industries from adverse impacts on globalization.
In a nutshell, in today’s economic world, an individual country’s economy cannot survive in its own bubble. It has to be reliant on other countries for its own economic growth and same is true for other countries of the world. The effort of economic development should be a collaborative effort put on by the whole world. Rather than trying to exploit weaknesses, the effort should be to do a joint venture having mutual benefits to all involved parties. If this can be attained then globalization in a true sense can be considered as a global success.
© 2018 Aastha Gurung