Deglobalisation, a downward movement in the world’s interdependence entrenched its roots early in the 21st century with the world’s most historic trade collapse. Since the Financial Crisis of 2008, globalization has been shrinking. Countries are moving inwards and protectionism is ruling out hyper connectivity. The recent world has seen Financial Deglobalisation, trade protectionism and not to mention, migration backlashes. Even with the solid and escalating growth of countries, there exists the situation of unease with the shaken inter connectivity because Interdependence and openness makes more room for growth, ask it from a country like India who had suffered decades of stagnation due to its protectionist policy.
After the Great Depression of 1930s, the world has seen the fall in the interdependence from the commencement of 21st century. In the early 2000s, interest rates in US were so low that many Americans borrowed money to buy houses which leads to the early signs that symbolize the beginning of the crisis: by 2004, U.S. home ownership had peaked at 70% which is often called the US Housing bubble and the burst of this bubble is one of the main causes of the financial crisis of 2008.This episode not only shook the US Mortgage market but also destroyed the banking sector of several interconnected nations. The collapse of the American housing market started the chain reaction that leads to the bankruptcy of the Lehman brothers and many European economies. Since the financial system is managed by the centralized powers, the fall of the US housing and financial market scared many world leaders of the extreme inter connectivity and downwards trends in the same were shown thereafter. Not only is the world still struggling to get out from the shocks of the Financial Crisis, certain other events proved to add fuels to this trend.
The two largest economies of the world – U.S. and China are not on good terms which have negatively affected the trade and bought the most damage to the world economies. The economic benefit of the expanding integration between the two nations in the past never kicked the United States from the position of the no. 1 economy but it surely made China the second largest economy of the world. China gained the most from globalization: cheap labor supplies, lending space for warehouses and selling goods at cheaper rates, China rose rapidly but this means that if Deglobalisation prevailed, china will be the biggest loser. 21st century has witnessed increased trade war- Russia-Belarus, U.S.-China, Japan-South Korea and recently India- China trade war. Donald trump introduced Tariff policy with the motive to increase the sale of American products by simply making the imports expensive and even imposed restrictions on immigration, PM Narendra Modi banned 59 Chinese apps and urges people to buy made in India products. In 2018, net migration to the United States hit its lowest point in a decade. All these evidence shows that trade has been the modern day weapon of war. Not to forget, the outbreak of the Covid-19 pandemic stems the flow of inter connectivity completely. There has been a notable decrease in the trade (except for the medical products), immigration and the world’s growth is slow. There has been a county-wide lock down, restricted economies and air of uncertainties. In 2020, the world has been fighting two big crisis- Health and economic crisis. Many counties has banned not only the imports but exports of certain goods like Vietnam banned the export of rice, the US banned the export of masks and may others. Global trade has seen a 3% drop in the first quarter of 2020 and this downturn is expected to accelerate in the coming quarters to an appalling 27% fall in trade which means this pandemic has surely trembled the supply chains and the economic condition worldwide.
Even before the Covid-19 crisis, the US-China trade war and the ineffectiveness of the WTO already proved a dampener to international trade. With the increased protectionism, rising trade wars, a communicable pandemic and lots of political tension around, we can quote that the world is becoming less integrated each day. India’s “made in India” and trump’s “America First” indicates that Counties are moving inwards and urging their people to buy nation-made products. China is said to suffer more from this deglobalised trend as more and more countries are boycotting china goods and shifting their warehouses foreign(which gives India a new hope of economic growth as after china the possible location is said to be India) and back to their country. India too is suffering from the rising risk of the pandemic on economy and health. But, is the world completely deglobalised? I would say, not precisely. Globalisation refers to the integration of world- not only in terms of trade, immigration and financial sector but also in terms of ecology and technology We still have open lands, open skies and open water bodies, we still have an internet connection to everywhere in the world. The world is still united, but in terms of trade and financial connectivity in recent times, there has been a slower progress. The world is experiencing more of a Slobalisation- a slower interlinked trade and a slower growth. As discussed above, Interdependence and openness makes more room for growth and with all the political wars and threats, there is a sure fall in the worldwide integration in the near future.