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Two wars are raging in 2022, which have undermined the hyperglobalisation.
- The first war is Russia’s invasion of Ukraine and the second is an economic war, a geopolitical confrontation between two superpowers (US and China).
Hyperglobalisation
- Features of a hyperglobalised world:
- Wars are not the norm and economies broadly follow the principles laid down by the late-18th/early-19th century economists Adam Smith and David Ricardo.
- Smith said in his ‘Wealth of Nations’ that if a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it from them.
- Ricardo said that countries could produce even things in which they had no “absolute advantage”. What mattered was “comparative advantage”.
- The second golden age of “hyperglobalisation” was propelled by the belief in comparative advantage.
- Different Phases:
- The first “golden age” of globalisation was between 1870 and 1914, when world trade in goods surged from 9% to 16% of GDP.
- The second golden age of globalisation – The era of “hyper globalisation”: Between 1990 and 2008, global trade in goods soared from 15.3% to 25.2% of world GDP.
- Hyperglobalisation’s chief protagonist was China that emerged as the “world’s factory” and a “mega-trader”. China’s share in world merchandise trade has risen from 1.8% in 1990 to 11.1% in 2012.
- The end of the era of hyperglobalisation: This era formally ended in 2022, which has seen not one, but two wars.
- Assumption of “doux commerce”:
- The idea states that trade makes men less prone to violence or irrational behaviour.
- The French philosopher Montesquieu said that “commerce is a cure for the most destructive prejudices” and “peace is the natural effect of trade”.
Hyperglobalisation’s Impacts on the Indian Society
- It promoted production based on comparative advantage in India.
- India is granting incentives amounting to 30-50% of project cost for semiconductor units manufacturing less-sophisticated 28-65 nm range chips that can be used in mobile phones, home appliances and cars.
- Five years ago, it may not have considered this to be worth spending taxpayer money.
Source: IE
