WTO and India

[op-ed snap] Make the global economy work for all

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Mains Paper 3: Economy | Effects of liberalization on the economy, changes in industrial policy & their effects on industrial growth

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Trade war fears across the globe and its impact on economy


Context

World economic order since WWII

  1. Since the end of World War II, a broad consensus in support of global economic integration as a force for peace and prosperity has been a pillar of the international order
  2. Since the fall of the Berlin Wall a generation ago, the power of markets in promoting economic progress has been universally recognized
  3. From global trade agreements to the European Union project; from the Bretton Woods institutions to the removal of pervasive capital controls; from expanded foreign direct investment to increased flows of peoples across borders, the direction has been clear
  4. The world has grown smaller and more closely connected

Effect of this cohesion

  1. This has proved more successful than could reasonably have been hoped
  2. We have not seen a war between leading powers
  3. Global living standards have risen faster than at any point in history
  4. And material progress has coincided with even more rapid progress in combating hunger, empowering women, promoting literacy and extending life
  5. Every single day since 1990 there were an average of 108,000 fewer people in extreme poverty
  6. Since the beginning of the 21st century, global life expectancy has increased by more than four months a year

Looming fears of a trade war

  1. A backlash against the current paradigm of global integration is reshaping politics and economic policy in a way that may plague us for years
  2. The momentum toward global economic integration was stopped when the US repudiated the Trans-Pacific Partnership
  3. Worries of a trade war between the US, China and other countries have materialized, leaving a wide range of industries and countries anticipating substantial losses
  4. The International Monetary Fund estimates that rising trade tensions between the US and the rest of the world could cost the global economy 0.5% of gross domestic product (GDP), or $430 billion, by 2020

What is this trade war leading to?

  1. The shift away from openness extends to immigration and capital flows as well
  2. The EU, notable for its commitment to the free movement of people, is shifting toward much tougher immigration policies
  3. New immigration policies in the US have turned police officers into immigration-enforcement agents and hurt business growth
  4. Restrictions on foreign investment have been increasingly common
  5. The US has taken to blocking Chinese investments, China has set unfair terms for US companies wishing to invest there, and Europe has increasingly favoured domestic companies over foreign competitors

Reasons for the backlash against openness

  1. The backlash against global integration has many sources
  2. Some of it reflects broader economic frustrations associated with slower growth and rising inequality
  3. Some reflect the difficulties of maintaining harmony within multi-ethnic societies
  4. Most important is the growing suspicion on the part of electorates that globalization is an elite project that primarily benefits elites
  5. Somehow branches for financial institutions in foreign countries seem to be a higher priority than protections for displaced workers
  6. The protection of the intellectual property of global corporations is a more focal concern than preventing unfair competition from foreign companies that escape regulation

Ways of promoting global integration

  1. There should be major cooperative efforts to prevent global corporations from avoiding taxes
  2. Crackdowns on regulatory arbitrage, and
  3. Stronger domestic programmes to cushion the impact of structural changes on individual workers

Way Forward

  1. Political leaders must connect global integration with tangible benefits for middle-class citizens
  2. They must show that international cooperation helps to prevent exploitation of ordinary citizens by elites
  3. Electorates should be assured that adequate social protections are in place so that those who must adjust to economic change are protected
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Navneet01
Navneet01
1 year ago

Hello..
I want to purchase magazines of last 1 year (july,2017 to july 2018)..But in the store, there is option to buy only next 1 year magazine. Please look into this