Globalization is not ending, it’s changing: 

Globalization is not ending, it’s changing

Context

  • Globalization isn’t ending, it’s changing. World is witnessing emergence of a new global economy, an economy without borders driven by digital rocket boosters.

What is happening?

  • Companies that have learnt to thrive in this increasingly connected world have built large global businesses at astonishing speeds.
  • Economic nationalism and protectionism are growing.
  • WTO data indicates that India and the US rank among the countries with the most number of trade restrictive measures in recent years.
  • Global Trade Alert reports that in 2016 alone more than 500 discriminatory measures (and only 300 liberalizing measures) were introduced worldwide.
  • At the same time, the ability of multilateral institutions to establish and enforce shared rules seems to be weakening.
  • The dominant role of the multilateral financial institutions that traditionally have provided global capital appears to be receding, as new financial institutions, such as China-backed Asian Infrastructure Investment Bank and the New Development Bank, emerge.
  • Advanced digital manufacturing and global digital platforms are changing the structures in the world economy.
  • Advanced digital manufacturing systems (“Industry 4.0”), for example, are enabling businesses to alter their global production and distribution networks by making it feasible to operate smaller, more flexible facilities closer to customers, instead of concentrating production in large plants in countries with low labour costs.

What is the status of global market?

  • The global market has been growing as both traditional companies, such as General Electric, and relative newcomers, such as Uber, Airbnb and India’s Flipkart, gain access to borderless global markets through their information technology platforms and networks of local partners.
  • Together, these shifts are leading to a different kind of globalization, more-fragmented, with decentralized supply chains and more countries involved. This creates a host of challenges for global corporations.
  • The emergence of a new model of globalization does not mean, of course, that the old ways of engaging with the world will suddenly become irrelevant. The precise contours of the new global economy have yet to be defined.
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