Globalization might prioritize inclusive growth,
social fairness, and sustainability through changing legislative frameworks and fostering responsible global economic governance.
Globalization emerged as a concept in the latter half of the 20th century with the intention of promoting just and equitable development on a worldwide scale. The rate of global integration, however, has lagged behind analysts’ predictions. Globalization is become a topic of political discussion rather than only being an economic issue. Gaining understanding of the complexities of globalization and its effects on the world economy can be accomplished through delving into the historical context, opposing opinions, and important events influencing its trajectory.
Development studies, which sought to solve the discrepancies in economic progress among the nations that had previously been exploited during the colonial era. Many newly independent poorer countries stuck to traditional market systems, while some carefully integrated contemporary tactics with government interventions to promote inter-country commerce and economic relationships. Nationalistic emotions and the perception of an unequal distribution of advantages, which are especially strong in nations in the Global South like India, Bangladesh, and Pakistan, have contributed to this skepticism of globalization.
Many newly independent poorer countries stuck to traditional market systems, while some carefully integrated contemporary tactics with government interventions to promote inter-country commerce and economic relationships.
According to Amartya Sen, defying globalization would be a costly mistake in the long term. He makes the point that historical instances disprove the idea that modernization only came from the West, such as the Chinese civilization’s development of printing technology and the translation of ancient Indian writings into Chinese. In reality, the Vajracchedik Prajpramit Stra (also known as the “Diamond Sutra”), a Sanskrit discourse on Buddhism from India that was translated into Chinese in the fifth century AD by an Indian-Turkish man named Kumarajiva, is the earliest known printed book in the world. According to Sen, globalization has a time-independent, dynamic, and multi-directional nature, emphasizing its ability to promote cultural advancement.
On the other side, Joseph Stiglitz, a well-known economist, is a supporter of fundamental modifications to the legal structures controlling modern globalization. According to him, fundamental changes must be made to the current system in order to advance social fairness and economic convergence. Fundamental difficulties that the state-led mechanisms of globalization have failed to adequately address include important problems including illiteracy, healthcare issues, corruption, and inadequate disaster management.
The Washington Consensus framework, which placed an emphasis on state deregulation and the opening up of the capital and commodity markets to improve global competitiveness and the development of local economies, brought about a paradigm change in the 1990s. Even though macroeconomic openness has been criticized for escalating economic inequality and environmental damage, countries like India have achieved remarkable growth as a result. The North American Free commercial Agreement (NAFTA), which was established in 1994 between Canada, the US, and Mexico, became a symbol of commercial openness. This development stood in stark contrast to the pessimism that had been pervasive in the decade prior regarding globalization.
Even though macroeconomic openness has been criticized for escalating economic inequality and environmental damage, countries like India have achieved remarkable growth as a result.
The Asian Currency Crisis of 1997, however, highlighted the drawbacks of globalization, particularly in Southeast Asian countries with deep market integration. The huge disconnect between theoretical expectations and actual results of international policies, particularly in relation to financial market integration and foreign investments, has drawn criticism. The Global Financial Crisis of 2007–2008, brought on by the collapse of the US housing bubble, dealt the world economy yet another devastating blow. The only period in which Americans lost more than one-third of their average net worth was from June 2007 and November 2008. Market collapses that followed and rising unemployment rates had a negative influence on interrelated economies all over the world and sparked crises in European sovereign debt.
More recently, the over-reliance on Chinese manufacturing and ensuing supply chain disruptions caused by the COVID-19 outbreak slowed down global economic growth. Lockdowns, limitations, and a lack of resources have made market imbalances worse and hampered the rebuilding process. China’s Zero-COVID policy, which was characterized by severe lockdowns, drew condemnation from both internal and foreign quarters because of its effects on the world economy.
The conflict between Ukraine and Russia has also had a significant impact on globalization. The battle has highlighted the dangers posed by the interconnectedness of global trade, disrupting global value chains and forcing businesses to reassess the relationship between efficiency and security. In addition, the conflict has harmed the economy and sparked a refugee crisis, which has an effect on social structures and labor markets outside of Ukraine and Russia. Due to the consequences of the war on different commodity prices and the disruption of commerce, the global economy faces slower growth and increasing risks of food and energy inflation. As supply chains are increasingly disrupted, there may be a shift from global to regional sourcing. The durability of global economic dynamics and the future of global economic interdependence have both been called into doubt by the conflict.
The battle has highlighted the dangers posed by the interconnectedness of global trade, disrupting global value chains and forcing businesses to reassess the relationship between efficiency and security.
Additionally, the macroeconomic issues that the South Asian region is currently facing are enormous. Both Sri Lanka and Pakistan have experienced significant economic downturns, with the former grappling with a sizable external debt, power shortages, and extremely high inflation, and the latter with similar problems. To both nations at this time. In addition, the IMF has granted a precautionary loan of US$4.7 billion given Bangladesh’s fragile macroeconomic circumstances, characterized by rising inflation and the volatility of the Bangladeshi Taka. Following the coup in February 2021, there were company closures and a dramatic increase in unemployment in Myanmar as well. Nepal also has problems, such as growing trade imbalances and declining foreign currency reserves.
It is clear that a recalibration is required lasting problems caused by the COVID-19 epidemic and evaluates the vulnerabilities of globalization. Addressing the issues brought up by detractors like Stiglitz and recognising the possible advantages advocated by academics like Sen are necessary for achieving a more egalitarian and sustainable version of globalization. Globalization processes could be guided along a course that prioritizes and synchronizes inclusive growth, social fairness, and environmental sustainability through revising legislative frameworks, advancing responsible global economic governance, and boosting international cooperation. This strategy may assist develop a special response to the complex problems that globalization raises in our dynamically changing environment.
