Economy

Look back at the decade: Globalisation

A series to highlight crucial points in the second decade of the new millenium: Here's looking at how ultra-localism started to replace globalisation

 
By DTE Staff
Last Updated: Thursday 26 December 2019
Ultra localism is replacing globalisation. Illustration: Ritika Bohra

The 2008 recession shattered the well crafted narrative of globalisation. A free economy did deliver the profits as expected. Wealth generation was at its peak.

The first onslaught on globalisation was the widening inequality in wealth distribution, more in developed countries. Developing countries were basking in the glory of high economic growth, ignoring their long-standing problem of inequality.

The first ones to abandon this naturalised model of growth were its champions. Developed economies decided to go back to their earlier worlds: The economy of and for locals. For the new generation, the decade witnessed arrival of the new rage: Deglobalisation.

We take you back to December, 2015

Free fall for free market 

The developed world’s poorest country — the United States of America — voted for its new president Donald Trump. His victory was unexpected. But the anger that fuelled his victory was very much expected, and sent out a clear message.

It questioned the free-market model of economy that has been the only model in existence for more than half of the world’s population. Championed by the developed world, the free market economy has been under scrutiny since 1990.

But developments in the aftermath of the recession of 2008 show that countries are increasingly losing interest in this model of economy. Britain’s surprise vote to leave the European Union (Brexit) was the biggest reality check on the efficacy of globalisation, while high unemployment in Spain and severe economic crisis in Greece that led to adoption of austerity measures across the countries were wake-up calls.

Trump is just a rude reminder that there is some fundamental problem with the free market model. “Clearly, people are not feeling they profit from the benefits of globalisation and free trade,” said Anthony L Gardner, the US ambassador to the EU. The victory of Trump also indicated that the developed world struggled with the third world problems. Its economies are in tatters; inequality is further widened, with a handful of people amassing the major chunk of profits generated out of a free market; and human development indices have declined sharply.

Trump’s call for “Americanism, not globalism” struck a chord with the white working-class voters at a time when the US was still licking the wounds of the North American Free Trade Agreement (NAFTA), an agreement signed between the US, Mexico and Canada in 1994.

Way back in 2011 when the Occupy Wall Street took roots, highlighting inequality and the failure of the economy to meet people’s expectation, the International Labour Organization hinted that the growing unrest had an uncanny protagonist: The youth. Currently, the population in the age group of 15-24 is at a historic high. This group has not seen any economic model other than the free market. 

A World Trade Organization report, which analysed restrictive trade measures between mid-October 2015 and mid-May 2016, said the G20 economies introduced new protectionist trade measures at the fastest pace since 2008 economic recession. “G20 economies applied 145 new trade-restrictive measures — an average of almost 21 new measures per month, compared to 17 in the previous report.” 

Also in the decade 

In 1992,

This year, the world moved several steps towards globalisation. It was also the year of market integration and General AGreement on Trade and tariff. Rich governments pushed harder for a powerful GATT to free world trade

In 2018,

This history is a reminder that there is an old pattern to these shaky modern times. In the 21st century, counter-reactions to globalisation have also been taking radically different forms. Early in the century, Latin America’s leftist governments challenged the neoliberal order, rejecting the Washington Consensus and building regional solidarity

Also read Look back the decade: It's a tinderbox world

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