Article 1: Decline of Globalisation
Why in News: Rising protectionism, tariff wars, supply-chain realignments, and geoeconomic rivalries are signalling the decline of cooperative globalisation and the emergence of competitive economic nationalism.
Key Details
- The traditional belief that international trade promotes peace and cooperation is being challenged by rising geopolitical tensions.
- Countries increasingly view economic interdependence as a vulnerability rather than a stabilising factor.
- Global trade is witnessing tariffs, export controls, technology restrictions, and supply-chain restructuring.
- The shift reflects a transition from globalisation to geoeconomic competition and strategic trade policies.
Concept of “Gentle Trade”
- Philosophical Origin: The concept of doux commerce was proposed by the Enlightenment thinker Montesquieu. It suggested that commerce encourages peaceful behaviour by promoting mutual dependence and reducing incentives for war.
- Trade as a Civilising Force: During the era of globalisation, trade was viewed as a mechanism that would soften political tensions and create shared economic interests among nations.
- Institutional Framework: Global institutions such as the World Trade Organization promoted the idea that rules-based trade could stabilise international relations.
- Economic Interdependence Theory: Liberal economic theory argued that countries trading extensively would avoid conflicts because war would disrupt mutually beneficial economic exchanges.
Rise of Globalisation (1990s–2010s)
- Expansion of Global Trade: After the end of the Cold War, global trade expanded rapidly. The establishment of the World Trade Organization in 1995 institutionalised a multilateral trading system.
- Integration of Major Economies: Countries such as China integrated deeply into global supply chains, particularly after joining the WTO in 2001, becoming a manufacturing hub.
- Efficiency-Driven Supply Chains: Corporations pursued offshoring and global production networks, prioritising cost efficiency and comparative advantage.
- Trade and Economic Growth: International trade contributed significantly to global GDP growth and poverty reduction, especially in developing economies.
Emergence of Geoeconomic Competition
- Trade Wars and Tariffs: Recent years have witnessed tariff disputes such as the trade conflict between the United States and China, signalling a shift from cooperation to economic rivalry.
- Weaponisation of Trade: Countries increasingly use trade policies such as export controls, sanctions, and technology restrictions to achieve geopolitical objectives.
- Technology Rivalry: Strategic sectors such as semiconductors, artificial intelligence, and telecommunications have become central to global power competition.
- Strategic Resource Control: Nations are competing for control over critical minerals, rare earth elements, and energy resources, which are vital for modern industries.
Supply Chain Vulnerabilities
- Lessons from the Pandemic: The COVID-19 pandemic exposed weaknesses in global supply chains, causing disruptions in manufacturing, logistics, and medical supplies.
- Geopolitical Shocks: Events such as the Russia–Ukraine War highlighted the risks of dependence on foreign energy and commodities.
- Shift to Strategic Trade Policies: Countries are increasingly adopting industrial policies and domestic manufacturing incentives to reduce dependence on foreign suppliers.
- Economic Security Concerns: Trade policy is now closely linked with national security considerations, particularly in sectors like energy, defence, and digital infrastructure.
Fragmentation of Global Trade
- Friend-shoring and Near-shoring: Nations are relocating supply chains to politically trusted partners or geographically closer countries to reduce risk.
- Decline of Multilateralism: The influence of global trade institutions is weakening as countries prefer regional and bilateral trade agreements.
- Rise of Protectionism: Policies such as “Buy National” campaigns and tariff barriers are being used to protect domestic industries.
- Emergence of Trade Blocs: Global trade is increasingly organised around regional alliances and strategic partnerships, reducing the universality of the global market.
Implications for India
- Strategic Trade Partnerships: India is diversifying its trade relations through agreements with partners such as the European Union and other regional blocs.
- Supply Chain Integration: India aims to position itself as an alternative manufacturing hub through initiatives like Production Linked Incentive (PLI) schemes.
- Balancing Protection and Integration: While protecting domestic industries, India must maintain integration with global trade networks to sustain economic growth.
- Role in Emerging Global Order: As a major developing economy, India has the opportunity to shape a more balanced and inclusive global trade architecture.
Conclusion
The transition from cooperative globalisation to competitive geoeconomics reflects deep structural changes in international politics. While economic security concerns are legitimate, excessive protectionism could undermine global growth and cooperation. The challenge for the international community is to rebuild trust in the global trading system while ensuring resilience and strategic autonomy. A balanced approach combining multilateral cooperation, diversified supply chains, and responsible economic policies is essential to prevent the global economy from descending into a destructive “law of the jungle”.
EXPECTED QUESTIONS FOR UPSC CSE
Prelims (MCQ)
Q. The concept of “doux commerce” is associated with which thinker?
a) Adam Smith
b) Montesquieu
c) David Ricardo
d) John Locke
Answer: b
Descriptive Question
Q. “Economic interdependence once promoted global cooperation, but today it is increasingly viewed as a strategic vulnerability.” Discuss in the context of emerging geoeconomic competition. (150 Words, 10 Marks)