The world continues to be intertwined with more nations becoming interdependent, a phenomenon that is highly evident in the exchange of goods and services. In understanding the global economy, there is the need to be familiarized with the matters of globalization that are highly intertwined. However, globalization is a variable that attracts a lot of different perceptions when it comes to its meaning. Some hold a view that globalization is not a constant variable, and thus its definition cannot be limited to particular premises (Scholte 5). On the other hand, there are those who believe that it is geopolitical in nature, and thus the understanding of globalization is highly influenced by the prevailing attitudes and beliefs in their regions. Despite various perceptions of globalization, there is a standard agreement on global economy, which entails the free movement of goods and services brought about by globalization. This is a phenomenon captured under the universalization approach in globalization where the argument is that globalization entails the dispersion of goods and services making them available everyone all in the world (Scholte 11). In other words, the global economy is the summation of all economic activities, which takes place in the form of selling and buying of goods and services among the nations. One of the key features of the global economy is the high level of interdependence. Over time, it has become evident that global economy is an ever-changing phenomenon where globalization is a key variable. There have been different effects in various regions, which has led to the debate about the effects of global economy and globalization.
International Economic Relation Pre- and Post-1980s
International economic relations were significantly booming in the 1960s when there was a tremendous growth in the global economy. This process was highly evident as countries tried to reconstruct their economies after the World War 2 (Kose and Ozturk 6). Moreover, this era was characterized by many inventions in the fields of science and technology. Mechanization of the production process was slowly adopted, and thus there was a significant growth of economies in Europe, USA and Asia (Kose and Ozturk 6). Another important occurrence before the 1980s was the continued interdependence of economies as cross-border trade started to rise. More countries opened their borders to trade. This phenomenon is evident in the definition of globalization from the liberalization perspective, where there is the removal of limiting regulations of cross-border trade (Scholte 10). International economic relations were improving with more countries opening their borders for trade. The cross-border trade became possible through the improvement of transportation and communication technologies, which allowed for quicker movement of goods and services (Kose and Ozturk 7). With more players getting involved in international economic relations, more countries were getting independent, and the global economy was slowly becoming the norm (Kose and Ozturk 7). Similarly, internal economic relations were getting stronger, since the adoption of globalization in the economic front yielded greater results compared to a nationalized economy.
This moment of interdependence saw countries become highly dependent on external economies. This change is captured under the internationalization approach to globalization. The argument is that globalization usually leads to a lot of interdependence among countries (Scholte 9). It is this collaboration that saw the rise of international economic relations. The production process and structure were changing in different countries as they were conforming to the demands of the international economic relations. However, the outcomes have not always been predictable. The accompanying interdependence among the economies has also brought some repercussions to many countries. They were especially evident where there were recessions in 1982, 1991 and recently in 2009 (Kose and Ozturk 9). This effect is captured by the internationalization definition of globalization, where there is a high level of interdependence among economies (Scholte 8). This extreme interdependency means that a positive phenomenon within the global economy is felt across the constituency markets, and the similar case holds when there is a negative occurrence. In the same line of thought, the recessions brought a lot of economic disruptions all over the world. As a result, emerging economies were experiencing financial crises, particularly in the 1980s and 90s. Other effects of internal economic relations after the 1980s were inequality and poverty. For example, in 1981, the number of people below the poverty line was half in the upper, middle and low-income economies (Kose and Ozturk 10). These were some of the challenges of the high economic interdependence among different nations under the umbrella of international economic relations brought about by globalization. These obstacles brought the need to enhance internal economic structures as a means of cautioning from the negative effects of economic interdependence. As a result, there was a shift in nature and structure of production, and differentiation became and remains a tool of competitive advantage that saves a country from disruptive dynamics. Moreover, there was the formation of a central body (IMF) that would be mandated to analyze the global economy and ring the alarm when there was an imminent danger (Kose and Ozturk 11). Moreover, due to the cross-national inequality, Western countries managed to gain more out of the global economy and still continue to gain more. Thus, countries have become appreciative of the need to safeguard own economy from the influx effect of westernization. The emerging economies are especially exposed to danger, as there globalization is perceived as the adoption of western cultures/colonization (Scholte 13), an undertaking that has brought about the ideology of de-globalization.
De-globalization in a new norm in the world economy where countries aim to ensure that their economies are less dependent on the global economy. The intention is to empower the national economy to fight the detrimental effects of the global exposure. In other words, this undertaking keeps national interest above the common good under the global platform. For example, a national administration can pass a law limiting the global players in a particular sector as a means of ensuring more robust roles of national-based players. As a result, there is a noticeable decline in inter-country trade and investment. The question therefore is: are de-globalization effects already underway?
It is clear that after the financial crisis that has caused global recessions, efforts towards improved integration of global economy have declined (Weldon). After the economic downturns of 1982 and 1991, there has been a deliberate decision by many nations to concentrate on building their economies rather than upholding the spirit of globalization. The British also followed this choice in the 1870s when the lawmakers discovered a declining pattern in the UK’s economy accompanied by the rise of other economies where there was an intentional closure of open-ended business model (Weldon). Similarly, more efforts are now aimed to safeguard the interest of a nation before becoming a player in the global economy. Thus, there has been a ripple effect in the global economy. The 2016 report of the Word Bank Group indicates that there are reduced growth prospects in the global economy (World Bank Group 3). One of the key findings is a huge decline in investment in the exportation of commodities. This phenomenon is found to be emanating from tightened domestic policies (World, Bank Group, 3). This is a clear indication that de-globalization is taking place. The main threat is the presence of identified anti-globalization domestic policies that are affecting global economy, especially the exportation front. This outcome is highly evident in Brexit where the Britain voted to leave the EU’s common market (Wheeler and Hunt). Besides, in the current USA election campaign, there is a constant emphasis by the Republican candidate on the need to bring back the “American” jobs back to the USA, particularly those outsourced to China (Wheeler and Hunt). The findings by the World Bank, the Brexit vote, and US election debate call, all point out that indeed de-globalization efforts have been started, and countries are more focused on the self-interest than on the global economy.
It is evident that global economy is characterized by interdependence among different economies where there is an exchange of good and services across national borders. It is also clear that the global economy before 198os can be characterized by a massive boom. Many countries have thus decided to realign their nature and structure of production to better serve this form of interaction. However, it is also clear that extreme economic interdependence among different countries may lead to adverse effects in time of global recession. Moreover, under global economy, there has also been a huge increase in transnational inequality and poverty levels. As a result, a new trend called de-globalization is taking place as countries are focused on safeguarding their own economies at the expense of global progress. All things considered, de-globalization will soon be a norm, as seen in the insights from Brexit and the US election.