Maharashtra Economic Development Council महाराष्ट्र आर्थिक विकास मंडळ

Viewpoint: New Dimensions of Globalization

13 MAR,2022 | MEDC

The Ukrainian crisis has changed the way we see the world. It may be too early to grasp its full implications. But two things are now becoming increasingly clear. Firstly, the reordering of international relations that Russia's military operation is bringing about in Europe and the world at large, is likely to have lasting effects, with Russia getting increasing global sympathy, especially from emerging markets. Secondly, the trend towards globalization, which had suffered reverses even before the Ukraine crisis, has got another severe jolt. The good news is that, with some strategic planning, there is a lot that India could potentially gain from it.
To get a truly unbiased picture of what is happening, we need to firstly take the narrative on Ukraine dished out by the West with a pinch of salt. That would be akin to hearing only one side of this complex story. For the better or the worse, neither Russia nor the USA are what they used to be. The world is no longer bipolar – a third major factor, China, has entered the picture and irreversibly changed the meaning of globalization, especially for India.
Russia is a geographic behemoth straddling much of Europe and Asia with 147 million people and a huge nuclear arsenal. It is also a key supplier of the oil, gas and raw materials that keep most of Europe's factories running. But unlike China, which is a manufacturing powerhouse and intricately woven into global value chains, Russia continues to remain largely at the fringes of international trade. Except for oil and gas, Russia does not matter much in the global economy. But a closed gas station can be crippling for those who depend on it … which is, today, much of the world. In the long run it could threaten inflation, food affordability, and economic growth globally, thus contributing to a rollback of the hard-earned gains of globalization. A worrisome picture is emerging on the horizon.
The Ukrainian crisis is not likely to end the way the West would want it to. If massive economic sanctions have been imposed on Russia, Western banks and companies also face huge losses in consequence. Even without Russia curbing supplies, oil and gas prices have soared. The West, and indeed, much of the world, will have to live with the costs of higher inflation and lower growth. Coming on the heels of a Covid-induced economic slowdown, this is not a welcome scenario for anyone.
Given this background, the Prime Minister's slogan of Atmanirbhar Bharat is likely to gain in appeal. This catchphrase may have been interpreted in different ways by different people, but its meaning is becoming increasingly clear now. Unless we focus wholeheartedly on economic self-reliance, the new dimensions of globalization will do us more harm than good. In the post-Ukraine world, self-sufficiency will be not just about producing national champions, but equally about reducing dependence on external factors that enhance our economic vulnerability. This has to become a national priority.

*Picture Credit: Google

Viewpoint: New Dimensions of Globalization

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