A reversal of globalization could change global dynamics and destinies of nations.
Brexit is an indubitable indication that deglobalization is the next big thing in global economics. The UK Referendum, though, is not projected to impact its trade relations with the EU, at least in the short run. It depends on the international policies followed by Britain; especially its probable restrictions on immigrants from the EU. Brexit could also pave the way for UK to forge free trade agreements with other countries, outside the EU.
Brexit caused a Domino effect in several EU countries, egging on ultra-nationalist sentiments, especially in France, Germany and Holland, which are due for elections in 2017, and where anti-EU forces are expected to win. Scotland and Northern Ireland are already slated follow Britain’s example. Even countries like Hungary and Bulgaria, feeling the ripple effect, have taking a tough stance against immigration and infiltration. Smaller countries like Norway are also taking steps to safeguard its borders.
Anti-globalization sentiment has also proliferated to the Americas. By dint of his protectionist stance against free international trade, Donald Trump’s recent election to the most powerful office of the world, has stroked fresh debates on the acceleration of nationalist trade policies in the US. Apart from Brexit and Trump’s presidency in the US, a lot of other independent and interdependent events such as fiscal crisis in Eurozone nations, crash of oil and commodities prices in 2014, unsuccessful rounds of multilateral trade negotiations at the Doha convention, etc., all point to an progressively stronger anti-globalization sentiment across nations. With an increasingly terse atmosphere of interpersonal mistrust amongst themselves, most nations are avoiding new trade agreements. This will adversely affect the global economy as suggested by IMF projecting a slow global growth rate in 2016.
While the almost uninhibited globalization of the past half-century is on the decline, countries may enter into strategic partnership for self-seeking politico-economic reasons. Russia’s partnership with Turkey to deal with combined EU-US’s NATO pressure is one such example.
If it was the developing world that benefited from the tide of globalization, it would be the internally stronger and richer countries/Regions such as the US, UK, and EU that would be at the most advantage, with the rise of populism. Countries like Saudi Arabia would be the biggest losers with rapidly falling oil prices.
The most unpredictable fate is that of China, which gained tremendously from globalization, not just economically, but also in terms of its position on the global political platform. Opinions are divided – some say that it could be well be the biggest victim of the reversal in globalization; while others say that in its past three decades of unprecedented development, China has managed to create strong internal supply-chain as well as a robust domestic market, effectively providing a cushion against the possible short term ill-effects of deglobalization. However, two facts need to considered here -Chinese stock market fell drastically during Brexit and its growth rate is halved from 10 percent to the current 5 to 6 percent. However, it’s still difficult to say exactly where the chips will fall.
However, total isolation in trade practices is not imminent, given the technological advancement which has brought the world closer than ever. Experts also suggest that the transition from the blooming globalization to reverse globalization has been slow over the past decade post the financial crash of 2007-2008. Hence there is no immediate need to worry.
In the meantime, enjoy the new Toblerone chocolate bar! After all, it’s a fruit of regionalization!