The Future of Globalisation

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As political events across the globe have given rise to increasing nationalism and populism, Obinna Chima wonders if globalisation is gradually coming to an end

The wave of nationalism around the world has left many wondering if the trend toward greater global connection has reversed.

Since his election as the President of the United States last November, the posture of Donald Trump, an opponent of free-trade deals, has further heightened concerns about the gradual demise of globalisation.

In addition, the United Kingdom’s vote to leave the European Union last year, which has also reflected a wave in rising populism as was seen in Gambia, Ghana and in France recently, according to experts, would further hurt globalisation.

Clearly, the global economy had grown on the back of economic integration and inter-dependency.
According to the International Monetary Fund (IMF), economic integration has delivered tangible—real—benefits for most people and most countries.

Emerging and developing economies have been the prime beneficiaries of economic openness.
On its part, the World Bank stated that trade has helped reduce by half, the proportion of the global population living in extreme poverty (1990-2010).

The Bank argued that China, for instance, saw a phenomenal drop in its extreme poverty rate—from 36 per cent at the end of the 1990s to 6 percent in 2011.
Along with higher incomes, millions of new jobs were created that tend to pay relatively higher wages, the World Bank added.

But a Professor of Economics, Department of Economics and Cowles Foundation for Research in Economics, Yale University, Robert J. Shiller, noted that the world today is increasingly polarised into locals versus cosmopolitans.

“My concern about our college and graduate school education today is that we are further developing a sense of cosmopolitan community for some people, excluding others,” he added.

Also, Nobel prize-winner Joseph Stiglitz, who has long worried about the corporate capture of trade deals, said with developments across the world, the global economy may be at a turning point in the nature of capitalism.

History of Globalisation
Globalisation is the process by which nations become increasingly integrated. This is occurring primarily due to advances in technology that have enabled people, goods, money, data and ideas to travel the world much faster than before; and the reduction of trade and economic barriers, which has greatly increased trade between countries.

In recent years, globalisation has become a major topic. Historically, people have left their surroundings and travelled to distant lands for four main reasons: conquest (the desire to control other countries); prosperity (the search for a better life); exploration (the desire to discover new lands); and trade (the desire to sell goods profitably). The primary agents of globalisation in the past were soldiers, sailors, traders and explorers.

For thousands of years, traders carried their goods across oceans and continents and armies launched invasions on their rulers’ orders. Powerful nations have brought new lands under their authority, integrating disparate nations, peoples and cultures into empires.
Earlier forms of globalisation existed in the Egyptian, Medo-Persian, Babylonian, Greek and Roman empires. During the time of the Mongol empire in the Middle Ages, the famed “Silk Road” connected Central Asia and Europe, linking several civilisations.

The New Reality
The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele has urged Nigerians to embrace the wave of nationalism sweeping across the globe as exemplified by the Brexit vote in Britain and election of Donald Trump as President of United States.

Furthermore, he pointed out that there was the new reality of nationalist and populist sentiments sweeping across the world.

Emefiele therefore stressed the need for Nigerians, especially policy makers, to develop a sense of national consciousness in carrying out their duties.

He pointed out that with events such as the Brexit, issues surrounding the election of Donald Trump as the US President, as well as recent development in France and some other developed economies, there was need for Nigeria to now begin to look inward so as to harness its resources for national development.

On his part, the Director General of the West African Institute for Financial and Economic Management, Prof. Akpan Ekpo, argued that recent development across the globe, especially the policies of the US President, shows that neo-liberialism is dead.

“That is, we are back to the old era of nationalism. But there is a problem because any vacuum they (US) leave, I think the Chinese would fill it which is very strange because the Chinese are not meant to be imperialistic in a way.

“So, if Trump persists, and it looks like he is serious about it, you would see globalisation dying slowly because every country would also want to be nationalistic and then we are going to have problem because of the so called free world.

“For us in the third world and Africa, we have not really gained from globalisation because for us to enjoy from globalisation we need to have a strong national economy. For us it wouldn’t really mean much.

“America stopped buying our oil sometimes ago. But generally, the way the world is going, a la American approach, it points to the fact that globalisation is beginning to die off the way we understand it,” Ekpo said.

However, following the rise of political populism characterised by the desire to assert domestic democratic sovereignty and rejection of the “cult of the expert,” a former CBN Deputy Governor, Prof, Kingsley Moghalu, has stressed the need for policy makers in Nigeria and other developing nations, especially Africa, to pursue “smart protectionism.”

Moghalu, who is a professor of international business and public policy at The Fletcher School at Tufts University, noted that for developing nations, especially those in Africa, populism’s rise in the Western world may ultimately be beneficial, despite negative short-term impacts. These countries, according to him, would be forced to confront mistaken assumptions about development that relies on the “benevolence” of foreign aid.

“They must reconsider unquestioning acceptance of the inevitability of globalisation and their status as markets, not factory. And they have already seen that efforts to model the African Union on the basis of the European Union, complete with common currency, may not be wise in light of challenges facing the EU over the past decade. African nations must embrace an inside-out perspective on economic transformation rather than the exclusively outside-in model that, in reality, robbed them of opportunity to control their destiny.

“Industrialised countries, aided by technological superiority which produced value-added goods at competitive prices and the WTO treaty regime, flooded the markets of developing countries, leaving them import-dependent.

“Considering that more than 50 percent of world trade is based on manufactured goods and the rude awakening offered by populism’s rise in the West, these nations should pursue the idea of “smart protectionism” – by deploying the “special and differentiated” provisions of the WTO treaty that can apply to less developed nations to prevent the dumping of Chinese goods in their markets and create enabling environments for modest industrial growth and intra-African trade,” he opined.

According to Moghalu, at 13 per cent of its total global trade, Africa’s intra-regional trade remains the lowest in the world compared to North America, Europe and other regions.
While noting that for decades, political risk had been synonymous with developing countries and emerging markets in Africa, Asia and Latin America, he pointed out that the rise of populism in the Western world has redefined the notion of political risk and teaches that risk has no permanent address.

He further stated that mitigating such risk requires avoiding arrogance toward those embracing populism.
“Those who oppose populism must engage with it rationally in the political space with the force of their own ideas. Political populism, characterised by a desire to assert domestic democratic sovereignty and rejection of the “cult of the expert,” owes its rise to increasing rejection of the conventional wisdom by citizens who feel left behind by globalisation trends favoring the elite that gained ascendance over the past 30 years.

“Populism seeks to reverse the power of the international community by utilising the democratic legitimacy of the majority to re-assert primacy of the national interest – seen by liberals as isolationism or “nativism” – in public policy.

“Home-country multinationals that ship production – and jobs – abroad can anticipate a backlash. Multinationals will no longer receive benign preferences and protections in populist countries if they cannot prove their value to local economies, especially by creating jobs,” the founder of Sogato Strategies, a global risk and strategy advisory firm stated.

Nonetheless, Stiglitz, in his “Globalisation and its Discontents,” urged developing nations to assume responsibility for their well-being. According to the Nobel Prize winner, with the seeming demise of globalisation and following rising populism, Nigeria and other low-income countries should manage their budgets so that they can live within their means, “meagre though that it might be, and eliminate the protectionist barriers which, while they generate large profits for a few, force consumers to pay higher prices.”
“They can put in place strong regulations to protect themselves from speculators from the outside or corporate misbehaviour from the inside.

Most importantly, Stiglitz stated that developing countries need effective governments, with strong and independent judiciaries, democratic accountability, openness and freedom from corruption that had stifled the effectiveness of public sector and the growth of private investments.