In the context of rising trends of de-globalization being witnessed across the world, examine and explain the associated implications. (15 Marks)

 Mentors Comments:

  • The question is in the context of rising trends of de-globalization being witnessed across the world. Increased protectionism professed especially by countries like USA etc.
  • The answer must first elaborate on what is deglobalization, what are the causes of it, its impact and implications on countries like India. Compare and contrast it with the effects of globalization in the recent past.
  • Briefly discuss the backdrop of the rising trend of protectionism in the intro.
  • The body of the answer should address the following dimensions:
  • What do you understand by deglobalization?
  • Discuss the rising global fears of a possible slowing down of the global economic recovery, due to de-globalization.
  • Elaborate on “national interests first” attitude in trade and economic policies by the countries of the world.
  • What are the implications of it?
  • Its effects on India, discuss it with examples.
  • Conclude with a way forward, what needs to be done to strike a balance between globalization and deglobalization.


Harvard Business School professor Geoffrey G. Jones says Brexit and Donald Trump’s rise show that the world is in the second wave of deglobalization. The present talk around ‘trade war’ and ‘de-globalisation’ cropped up after the US, in March 2018, imposed 25 per cent and 10 per cent duty on steel and aluminium imports, respectively, from certain countries, citing national security and job creation as the triggering factors.

The term de-globalisation is used by economic and market commentators to highlight the trend of several countries wanting to go back to economic and trade policies that put their national interests first. These policies often take the form of tariffs or quantitative barriers that impede the free movement of people, products and services among countries. The idea behind all this protectionism is to shield local manufacturing by making imports costlier.

Implications of Deglobalization:

  • We still live in a highly globalised world, and these protectionist moves upend the fundamental premise on the basis of which global growth is estimated and organisations such as the WTO regulates global trade.
  • When large, industrialised and prosperous nations break ranks to erect new entry barriers for goods and services, this can dramatically impact the fortunes of their many trade partners.
  • All calculations of global economic growth, inflation and interest rates then go haywire.
  • The US economy, for instance, imports a lot of inexpensive manufactured goods from China. If a tariff war increases costs of imports into the US, its domestic inflation may rocket and US interest rates may increase faster.
  • India may not be much affected by the recent rash of tariffs, given that the US derives only a little over one per cent of its steel and aluminium imports from India.
  • But de-globalisation with respect to the mobility of services and people can impact both the export of services and the trend of Indians migrating abroad for higher education and jobs.
  • The recent global bull market is predicated on a global recovery and de-globalisation can puncture the optimism very quickly.
  • What starts with goods can also move to the people. The US and the UK have already made immigration norms very stringent for outsiders.
  • Deglobalization may hamper efforts towards gender equality.
  • Restrictions on the movement of people will limit women’s ability to move in search of greater opportunities.
  • Reduced capital flows, which make investment capital harder to come by, may encourage the return of old cultural myths against investing in women.
  • Internationalization weakens biases, but with economic fragmentation, these old biases kick back in.

Way forward:

  • In order to stifle nationalist and protectionist feelings, we must produce stability and security.
  • There is a need to bring emerging countries into closer association with world governance, implying that, in return, they share the responsibility and the costs of underpinning capitalism and an open society.
  • Promotion of new forms of international and regional integration that preserve and allow the multiple dimensions of life to flourish.
  • Cooperation is vital to make the world economy more predictable, to mitigate vulnerabilities and to strengthen the free trade system.
  • the culture of tolerance and understanding must be promoted which provides space for positive dialogue

The spectre of protectionism is haunting the global economy, as politicians in many parts of the world cast doubt on the benefits of globalization and free trade. Deglobalization does not oppose trade nor the exchange of products or services, but proposes that trade is not done at the expense of the communities, the local and national economies and the diversity of its products, whether agricultural or industrial.

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Dipanshu Sharma
9 months ago

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