{"id":36628,"date":"2025-02-01T19:49:32","date_gmt":"2025-02-01T14:19:32","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=36628"},"modified":"2025-08-05T16:30:06","modified_gmt":"2025-08-05T11:00:06","slug":"economic-survey-2024-25-shift-from-globalization-to-geo-economic-fragmentation","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/01-02-2025\/economic-survey-2024-25-shift-from-globalization-to-geo-economic-fragmentation","title":{"rendered":"Economic Survey 2024-25: Shift from Globalization to Geo-Economic Fragmentation"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In News<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The recent <strong>Economic Survey 2024-25<\/strong> highlights a major global economic transition: the <strong>backsliding of globalization<\/strong> and the <strong>rise of geo-economic fragmentation<\/strong>.\n<ul class=\"wp-block-list\">\n<li>The past few decades saw increasing global trade, investments, and economic interdependence, the next era is expected to witness <strong>trade restrictions, economic realignments, and shifting supply chains<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In the Era of Globalization: 1980-2022<\/strong><\/h2>\n\n\n\n<p>The following developments were largely driven by <strong>open markets, rapid technological advancements, and cross-border investments<\/strong>, leading to efficiency and economic growth.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Demographic and Urbanization Growth:<\/strong> The world\u2019s population grew from <strong>4.4 billion in 1980 to 8 billion in 2022<\/strong>, with urbanization rising from <strong>39% to 57%<\/strong>, driving global connectivity.<\/li>\n\n\n\n<li><strong>Trade Expansion:<\/strong> Global trade <strong>as a share of GDP<\/strong> rose from <strong>39% in 1980 to 60% by 2012<\/strong>, reflecting deeper market integration.<\/li>\n\n\n\n<li><strong>Surge in FDI:<\/strong> Foreign Direct Investment (FDI) inflows grew from <strong>$54 billion in 1980 to over $1.5 trillion in 2019<\/strong>.<\/li>\n\n\n\n<li><strong>Overall Economic Growth:<\/strong> The world economy expanded from <strong>$11 trillion in 1980 to over $100 trillion in 2022<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Rise of Geo-Economic Fragmentation<\/strong><\/h2>\n\n\n\n<p>Geo-economic fragmentation refers to a <strong>policy-driven reversal of global economic integration<\/strong>, guided by strategic and geopolitical considerations. This shift is characterized by:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Trade restrictions and tariffs<\/strong> impacting cross-border commerce.<\/li>\n\n\n\n<li><strong>Capital flow restrictions<\/strong> disrupting global investment patterns.<\/li>\n\n\n\n<li><strong>Reorganization of supply chains<\/strong> due to shifting geopolitical alliances.<\/li>\n\n\n\n<li><strong>Rising protectionism<\/strong> as countries prioritize domestic economic resilience.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Factors Driving Fragmentation<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Geopolitical Tensions: <\/strong>The re-emergence of <strong>Cold War-style economic blocs<\/strong> and \u201cfriend-shoring.\u201d For example: China\u2019s expansionism, <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/08-12-2021\/russia-ukraine-conflict\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/08-12-2021\/russia-ukraine-conflict\">Ukraine-Russia war<\/a>, Middle East disruptions.\n<ul class=\"wp-block-list\">\n<li>Conflicts and security concerns reshaping trade relationships.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Increased Trade Barriers: <\/strong>Trade-restrictive measures have surged, with <strong>WTO data<\/strong> showing that trade covered by new restrictions rose from <strong>$337.1 billion in 2023 to $887.7 billion in 2024<\/strong>.<\/li>\n\n\n\n<li><strong>Technological Decoupling: <\/strong>Nations are imposing controls on <strong>semiconductors, AI, and critical technologies<\/strong>, leading to fragmented innovation ecosystems.<\/li>\n\n\n\n<li><strong>Environmental and Social Standards: <\/strong>Western nations imposing <strong>one-size-fits-all labor and emission standards<\/strong> are contributing to global economic divisions.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Impact of Geo-Economic Fragmentation<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Trade Disruptions &amp; Protectionism: Global trade growth has slowed down significantly<\/strong>, reflecting a <strong>secular stagnation<\/strong> in the world economy.\n<ul class=\"wp-block-list\">\n<li>Between 2020 and 2024, <strong>over 24,000 trade and investment restrictions<\/strong> were imposed globally.<\/li>\n\n\n\n<li>The IMF warns that today\u2019s trade fragmentation is far costlier than during the Cold War, as <strong>goods trade-to-GDP ratios have risen from 16% to 45%<\/strong>.<\/li>\n\n\n\n<li><strong>Reduced knowledge diffusion<\/strong> due to limited cross-border exchanges hampers innovation and productivity.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>FDI Relocation &amp; Investment Realignment: <\/strong>Global FDI flows are now <strong>concentrated among geopolitical allies<\/strong>.\n<ul class=\"wp-block-list\">\n<li><strong>Emerging markets face greater vulnerability<\/strong>, as they rely on <strong>FDI from advanced economies<\/strong>.<\/li>\n\n\n\n<li><strong>Friend-shoring and reshoring<\/strong> of investments to allied nations create uneven economic opportunities.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>China\u2019s Strategic Economic Dominance: <\/strong>China has gained <strong>a strategic upper hand in global supply chains<\/strong>, leveraging its <strong>manufacturing prowess and resource control<\/strong>:\n<ul class=\"wp-block-list\">\n<li><strong>Electric Vehicles (EVs):<\/strong> Disrupting traditional players like Germany and Japan.<\/li>\n\n\n\n<li><strong>Critical Minerals:<\/strong> Controls the global supply of <strong>lithium, cobalt, nickel, graphite<\/strong>.<\/li>\n\n\n\n<li><strong>Renewable Energy:<\/strong> Produces <strong>80% of battery components, 60% of wind turbines, and 80% of solar PV components<\/strong>.<\/li>\n\n\n\n<li><strong>Rare Earth Processing:<\/strong> Processes <strong>70% of the world\u2019s rare earth minerals<\/strong>, vital for <strong>batteries, electronics, and defense<\/strong>.<\/li>\n\n\n\n<li><strong>Outsourcing Reset:<\/strong> The world\u2019s prior strategy of manufacturing dependence on China is now <strong>under reconsideration<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Response: Amplifying Deregulation &amp; Economic Freedom<\/strong><\/h2>\n\n\n\n<p>As global markets become <strong>more restrictive<\/strong>, India must turn <strong>inwards<\/strong> and <strong>strengthen domestic economic engines<\/strong>. A <strong>pro-business regulatory environment<\/strong> can:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Lower business compliance costs<\/strong>, boosting ease of doing business.<\/li>\n\n\n\n<li><strong>Enable SMEs to drive employment and innovation<\/strong>.<\/li>\n\n\n\n<li><strong>Make India a global manufacturing hub<\/strong> by attracting capital and technology.<\/li>\n\n\n\n<li><strong>Improve resilience to external shocks<\/strong> by strengthening internal supply chains.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Path Forward: Deregulation &amp; Economic Reforms<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Accelerating Deregulation:<\/strong> Removing unnecessary <strong>licensing, inspection, and compliance burdens<\/strong> on businesses.<\/li>\n\n\n\n<li><strong>State-Level Best Practices:<\/strong> Encouraging states to <strong>adopt pro-growth policies<\/strong> from top-performing regions.<\/li>\n\n\n\n<li><strong>SME Empowerment:<\/strong> Supporting <strong>small and medium enterprises<\/strong> to expand globally.<\/li>\n\n\n\n<li><strong>Trade &amp; Investment Policies:<\/strong> Despite global fragmentation, India must <strong>proactively engage in exports and foreign investments<\/strong>.<\/li>\n\n\n\n<li><strong>Balancing Regulation with Freedom:<\/strong> Striking the right balance to <strong>unleash entrepreneurial potential<\/strong> and <strong>enhance competitiveness<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conclusion: A New Global Economic Order<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Economic Survey 2024-25 underscores a critical shift: <strong>globalization is retreating, and economic fragmentation is on the rise<\/strong>. Trade restrictions, shifting FDI flows, and China\u2019s strategic dominance are shaping a <strong>new world order<\/strong>. In response, India must <strong>double down on deregulation, empower SMEs, and create an investment-friendly climate<\/strong> to position itself as a leading economic powerhouse.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: PIB<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The recent Economic Survey 2024-25 highlights a major global economic transition: the backsliding of globalization and the rise of geo-economic fragmentation.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-36628","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=36628"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36628\/revisions"}],"predecessor-version":[{"id":50400,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36628\/revisions\/50400"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=36628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=36628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=36628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}