New Globalization would yield mixed results for India

Synopsis:  

The old globalization was essentially good for India. The new globalization could be a mix of good and bad news.  

Background:  

• Some of the traditional forms of globalization (the free movement of goods, money, people, etc) are in partial retreat.  
• Globalization is transforming as new agendas come into focus. These agendas include action on controlling climate change, taxing global companies, tackling terrorism, sharing vaccines, and the like.   

Trends in Traditional elements of Globalization:  

1. Global Trade is growing slower than global GDP. This significantly reversed a long-term trend.  
   • In 2019, global trade shrank in absolute terms for the first time in a decade, and did so again in 2020 because of the pandemic.   
   • Protectionist walls have been going up in several countries, including India.  
2. Free Movement of People: Europe and North America account for over half the total of world migrants. Now their numbers are shrinking, though by a small margin.   
   • Brexit and Donald Trump’s policies have signaled the reversal of a 70-year trend of immigration regimes getting progressively more liberal.  Some West Asian countries too have begun tightening visa policies.  
3. Movement of Capital and Technology: These elements of globalization continue unabated. They are helping in development of Thomas Friedman’s “Flat World” thesis.  
   • It is world having level playing field in terms of commerce, wherein all competitors have an equal opportunity.   

Impact of changing traditional trends on India:  

• India would be adversely impacted if global trade and movement of people gets reduced. The country is currently the world’s No. 1 source of migrants and the No. 1 recipient of remittances.  
• The sustenance of capital and technology movement is beneficial for growth of India’s IT sector. It enables an accountant in Bengaluru to work out tax calculations for someone in Boston.  

New Globalization:  

• It exists as government agendas on Global issues like terrorism, climate change, global taxation etc.  
• Agenda-setting by governments is not great news for India because it is still essentially a rule-taker and not a rule-setter.  Any benefit or cost to it therefore tends to be coincidental.  

• For instance, the proposed new international corporate taxation regime will benefit India but its primary beneficiaries of the new regime would be the wealthy countries.  
• Similarly, in terms of climate change, India will get no assistance (financial or technical) to switch to new technologies and give up old ones like coal-based energy.   

• At the same time, the countries responsible for much of the historical emission of carbon gases get a free pass under the Paris agreement.  

• Even on the international supply of vaccines, the numbers agreed on at the recent meeting of the rich club of G7 countries are unremarkable. Further India’s push for a patent waiver on Covid vaccines awaits attention.   
• In the domain of social media, the giant tech companies that dominate the field have increasingly come up against sovereign state power, including in India.  

 Way Ahead:  

• Many countries want to reduce their dependence on China, which is the world’s largest manufacturing and trading power. India could ride the tide, but other countries have already grabbed the first mover advantage.  
• The other traditional elements of globalization should continue for augmenting India’s interest.   
• Further, the new elements of Globalization warrants setting up of global norms in consonance with the purpose and principles of UN charter.

Source:  Business Standard