Nickeled & Dimed

Penny for your thoughts?

We are accepting articles on our new email:

Rethinking Globalization – 30 years down the line.

Besides the “coldness”, the post-Cold War era instilled a desire for unity and trust among nation-states after almost causing a breach to the foundations of the United Nations and putting to test Woodrow Wilson’s theory on the need for a new world order, the Liberal World Order 3.0, a fresh start towards peace. Global governance, smoother economic integration between nation-states and ‘Laissez-faire’ capitalist ideologies evolved to define a popular form of governance and an identity for nations to be associated as ‘Liberal Democracies’. As westernization became more and more synonymous with modernization, for developing countries, modernization came to be associated with the idea of progress. What these countries didn’t realize was the nature of western economies that stood in contrast to them, the very fundamental difference lying in economic governance. This also led to the development of capitalist notions all over the globe especially due to  the emergence of the United States, a capitalist economy, as the only superpower. 

Focusing on how it affected India , the 1991 Liberalization, Privatization and Globalization Act was primarily done to make India globally competitive and help its markets expand and grow. This increased our exports and foreign direct investment, removed obstacles in trade and basically did wonders for the Indian markets to flourish…globally. The Indian Economy has grown to become one of the fastest growing economies and also stands in competition as the sixth largest economy to its worldwide competitors. Our massive population has proven to provide an ideal market to foreign investment especially in the form of labor force participation. However, in a rut to market itself to the external  world, did we start paying less importance to issues within our own development structure? Did a new form of colonialist ideology emerge in our efforts to strive for progress, a power that led to the increasing rise of multinational corporations and their independence in global trade? Was this the goal that the new liberal world order aimed to fulfil by calling it ‘decentralization of power’, but instead shifted to a polarized governing structure bending towards free-market capitalism? 

Amongst its many benefits, globalization policies in India also created problems in its existing poverty paradigm, causing inequalities in income levels within the country which further led to a huge distinction between developed and developing countries like India; a distinction that occurred because of the irony of its own liberal policies and aims that highlighted the “third-worldliness” of these countries. The capitalist system in the US went hand in hand with globalization because global governance, in the name of fair trade and widespread opportunities, came to become a game dealing in output numbers while often it is the case that  GDP doesn’t necessarily reflect welfare. Because of the strong influence of the US on the WTO, mixed economies like India felt obliged to alter their policies ( another reason being pending obligations to the IMF in terms of debts), without realizing the primary motive behind the nature of these economies. 

While capitalist economies are profit driven, mixed economies pay attention to both public and private welfare. India plunged into the capitalist scheme and 30 years down the line, its economic slowdown has finally come to reflect on its past actions. Our fiscal deficits are high and less focus on public expenditure runs rampant in government policies. What is interesting to note in the recent article posted by The Economist on countries with the largest deficits in the world, is that the US surpasses all other countries in its deficit numbers, being twelve times that of India. Is this what we call our economic inspiration? 

Globalization takes another form in threatening developing countries like India, owing to our capacity to provide cheap labor for foreign industries. Manufacturing industries have set up their bases on our lands and have contributed immensely to the exploitation of natural resources. Of course, the onus of such actions then has to be taken up by these countries themselves, which also  adds burden to their health, economy and housing set up. Consequently, this leads to the restructuring of the developmental needs of these countries that are already trying hard to be on the path to progress. Moreover, the size of their labor force may place them at an advantage in one situation, but in their own country, they fight for access to resources and the means to survive. So even China, which is similar to the US in terms of promoting a capitalist economy and high deficit, has still shown less development compared to other western countries. 

To say that globalization should not have happened is wrong, the simple reason being along the lines of the famous quote – “no man is an island”. Gandhi always wanted India to become self-sufficient in production and to disregard all ideas of the west and their methods of progress. But to do so could only have been possible if a country was physically (geographically) equipped with doing so. For example, we rely on Middle Eastern countries for oil and they, in turn, rely on us for our fruits and vegetables. Each country benefits from the uniqueness of another, which is also the reason why each of them should adopt appropriated policies that suit their country best. All said and done, the debate on LPG in India is an exhaustive one and currently requires rethinking our past reforms especially while dealing with the economic slowdown currently at hand.


Snehal Sreedhar is an undergraduate student of Ashoka University, pursuing her major degree in Economics.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: