The
recent political upheavals, especially Brexit, the election of Donald Trump, and
an increase of populism in Europe, are offering direct impacts on the future of
firms’ globalization and the evolution of de-globalization as an upcoming era.
According to Frieden, there is a predominant backlash noted on the part of
globalization (2018). Referring to the political events of Brexit, the Presidency
of Donald Trump, the rise of European populism, Frieden noted the increasing
threats over the globalised mode of the economically integrated mode of
international business. These are the instances that are marked in this essay
for critical analysis of comprehending these elements in terms of creating
hostility towards the prevalent integrated global economy and the scopes of international
free trade ventures, in future.
CONSEQUENT
DERIVATIONS
Williams-Grutnov
very rightly consolidated the emerging 'global anti-establishment mood' in 2016;
which was said to be created by Brexit, followed by the victory of Donald
Trump, and further enhanced by the rise of European populism. As analysed by
Chu (2018), the condition of the UK economy might look like having attained
some developments after the decision of Brexit, yet the facts get cleared when the
same economy gets compared to nations of G7. As per the comparison within G7,
the economic status of the UK appears to be very meagre (see Graph 1 below)
-
Figure 1 Economic
status of the UK & the US as in G7
 Source: Chu (2018) |
As
shown in the graph above, the annual growth of the UK gets estimated at 2%
during the vote for Brexit. However, the growth deteriorated by 1.4% in the Q4
of 2016. Moreover, as the growth rate of other nations from G7 accelerates in
2017, the UK economy still is at the rate of decline. However, in the case of
the US governance, there seemed to be a better situation than in the UK.
However, as reported by Giles in the Financial Times (2018) according to IMF,
the economic growth of the US in 2017 remained “exceptionally robust”. This was
affirmed by the lowest unemployment data and tax deductions, there are also the
downgraded statistics in the possible growth in 2019, which will be by 0.2% as
against 2.5%, led by the current tariff structure for international
businesses. This report further adds that the impact of increasing
populism in Europe is also adding tough time to the international mode of
offering cooperation on the economic front and is liable for the rising
extensive inequality through the establishment of nationalist policies (Giles,
2018). The consequences are such that as reported by Rodionova for The
Independent (2018), states that the former Socialist PM, of France, sighs that
“Europe could die” by the “attacks from the populists”. The
consequences of these instances are clear signs of increasing possibilities of
deglobalisation, that eventually withstand a state of restricted free trade and
tremendous challenges in the expansion of business due to increasing
limitations led by political policies of international trade and commerce.
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RATIONAL
BACKLASH TO GLOBALISATION In a very
metaphorical way, Lamy stated in VOX CEPR Policy Portal (2018) that Brexit is
like ‘taking the egg out of the omelette’ and hence is a very costly step.
Moreover, in the US, President Donal Trump with his ‘protectionist agenda’
so-called, is restricting imports and breaking the integrated supply chain
spread all over the globe (Lamy, 2018). As investigated by Cox (2018, p. 10)
the new populism as noted in the case of Europe has been marked as the
‘biggest threat of all to the continent’s stability’ and is noted to be more
challenging than Brexit and the Presidential era of Donald Trump. According
to Autor, et al (2016), the impact of globalisation gave rise to super
economically powered nations like the UK, the US, or the nations like Germany
and Spain; yet the impacts varied in terms of developing nations like China
and India. The impact of globalisation is getting challenged now but at the
same time, it is also creating the exemplified platform for other nations to
restrict the flow of cash across borders. Sooner or later deglobalisation
will take over globalisation and there will be more ways to derive
nationalist modern of attaining economic growth. However, this is an assumption
that only time will decide. As for now, global political unrest is creating
huge challenges in the maintenance of globalisation in the internal business
scenario.
EVOLVING
DE-GLOBALISATION Amalgamated
developments in all these instances are creating the conditions for the
evolvement of deglobalisation. As reported by RSM International Ltd.
(2018) due to the aforementioned political upheavals the growth of world
trade is slowing down and the global GDP dipped by 47% in the last couple of
years. |
Figure 2 Evidence of Deglobalisation
Source:
RSM International Ltd. (2018)
The report affirms that deglobalisation against the
globalisation is getting notable due to the falling trend of capital flows. The
cross border international trade diminishing by 1/3rd of the data
prior to 2015. The RSM International Ltd. (2018) report collected data from
McKinsey Global Institute and stated that banks are restricting offers to
investments. Moreover, Derbyshire reports to Finacial Times reported that
(2018) even the global elites are turning blindfold to the increasing crises of
supporting investment in international trades. They are least getting involved
in the concerns led by UK's vote to leave the EU through Brexit, President
Donald Trump’s way to empower the US, or the rise of ‘leftist’ and the
‘rightist’ in the increasing populism within Europe. As such the financial
support to globalisation is getting at a stake and is a matter of high concern
to the future economical bonding of globe as a whole.
Works Cited
Autor, D., Dorn, D., &
Hanson, G. H. “The China shock: Learning from labor market adjustment to large
changes in trade.” Annual Review of
Economics, 8. 2016: 205–240.
Chu, Ben. "One year
to Brexit: How well has the British economy really been performing? And what
can we expect next?" The Independent.
30 March 2018 https://www.independent.co.uk/news/business/analysis-and-features/brexit-uk-economy-one-year-gdp-inflation-investment-growth-a8270861.html
Cox, Michael. "The
rise of populism and the crisis of globalisation: Brexit, Trump and
beyond." Irish Studies in
International Affairs, 28. pp. 9-17. February 2018. ISSN 0332-1460
Derbyshire, Jonathan.
"Opinion today: Overlooking deglobalisation." Finacial Times. OCTOBER 15, 2018.
https://www.ft.com/content/8b6f9838-d006-11e8-a9f2-7574db66bcd5
Frieden, Jeffry. “The
backlash against globalization and the future of the international economic
order.” Prepared for a Policy Network volume, The Next Phase of Globalisation:
Capitalism and Inequality in the Industrialized World. Harvard University. February 2018. https://scholar.harvard.edu/files/jfrieden/files/frieden_future_feb2018.pdf
Giles, Chris. "Growth
policies and populism threaten global economy, IMF warns." Financial Times. OCTOBER 9, 2018 https://www.ft.com/content/9d03bef0-cb0e-11e8-b276-b9069bde0956
Lamy, Pascal. "Trump,
Brexit, globalisation in crisis?" VOX
CEPR Policy Portal. 06 June 2018 https://voxeu.org/content/trump-brexit-globalisation-crisis
Rodionova, Zlata.
"Rise of populism in Europe a bigger threat to the continent's stability
than Brexit, says KPMG boss." The
Independent. 31 December
2016https://www.independent.co.uk/news/business/news/brexit-populism-europe-threat-global-economy-kpmg-john-veihmeyer-a7503191.html
RSM International Ltd.
(2018) “What is deglobalisation?” RSM
International Ltd. 4 January 2018 https://www.rsm.global/insights/finding-opportunity-in-change/what-is-deglobalisation
Williams-Grutnov, Oscar.
"Brexit and Trump are just the start - populism is coming to Europe
next." Business Insider. Nov 10,
2016. https://www.businessinsider.in/Brexit-and-Trump-are-just-the-start-populism-is-coming-to-Europe-next/articleshow/55349119.cms
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