INTERNATIONAL RELATIONS & THE GLOBAL ECONOMY-Report Overview

Introduction:

This essay will argue on the diminishing drivers of economic globalization, which has weakened in the past decade and led to modifications in international trade and economic relations. Economic globalization is the phenomenon of the interdependence of international economies over one another due to the increasing number of cross-border trade of products and services, widespread advancing technologies and flow of international capital[1]. However, economic globalization has not diminished completely but went through significant changes due to various complex factors. Globalization has slowed down but not reduced, or in other words it could be in a phase of 'slowbalization', de-globalization or even secular stagnation[2]. There can be many factors including trade liberalisation, advancements in technology, the role of multinational corporations (MNCs) etc. Furthermore, with the rise of nationalism in today’s, shifts in global supply chains, the rise of protectionism, geopolitical tensions, the COVID-19 pandemic and the fundamental necessity of regionalism will be highlighted and critically analyzed in the context of globalization, where it is possibly not diminishing but its momentum and characteristics are evolving, leading to new challenges and ideals in economic practices on a global scale[3]. The essay will provide literature on economic globalization and engage with case studies of significant events reflecting such changes.

The Diminishing Drivers of Economic Globalization

The essay highlights the fact that the drivers of economic globalization have been significantly diminishing and the factors have collectively challenged the basic principles of globalization. While many aspects of international trade and economic integration prevail, the overall momentum towards a more integrated global economy has weakened, which may lead to fragmented and localized economic structures[4]. One of the major factors of economic globalization is trade liberalization, that helps the countries to engage in trade with lower tariffs, enhancing economic ties and relationship between the nations. However, many countries have implemented nationalist policies as India's increased tariffs for international products to boost the local business[5].

 There are trade wars, most notably between the United States and China, as the tariffs imposed during the U.S.-China trade war is the example of deviation from the trade liberalization, that was international trade agenda since the World War II[6]. The World Trade Organization (WTO) states, that global trade growth is going under stagnation due to the protective and nationalist policies of the major economies[7].Over the last decades where many countries have shifted towards nationalism and protectionist policies. Particularly major economies, especially after the U.S.-China trade tensions, where both countries-imposed tariffs on each other's products. This trade war highlights the phenomenon where countries prioritize their domestic product to boost local economy rather than enhancing global economic cooperation, as this economic nationalism is a backlash against shortcomings of globalization including concerns over income inequality and employment issues in developed nations[8]. The protectionist policies not only disrupt the established trade relationships but also cause them to step back from the practice of free trade that has established economic globalisation[9]. The World Trade Organization (WTO), has been unable to solve the disputes as often these disputes have political agendas and have failed to facilitate new agreements that has caused to stagnate global trade liberalisation[10]. This stagnation is evident is from the U. S’s withdrawal from the Trans-Pacific Partnership (TPP) and the renegotiation of North American Free Trade Agreement NAFTA into the United States-Mexico-Canada Agreement USMCA. This was done by lowering tariffs and reducing some of the non-tariff barriers, such as Mexican local-content requirements, NAFTA caused a surge in trade and investment[11]. Then regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP), the free trade agreement between Asia-Pacific countries have shown rapid growth, indicating a realignment rather than diminishing of global economic trends [12].

[1] Jeanne, L. et al. (2022) 'Economic globalization and the COVID-19 pandemic: global spread and inequalities,' GeoJournal, 88(1), pp. 1181–1188. https://doi.org/10.1007/s10708-022-10607-6.

[2] Olivié, I. and Gracia, M. (2020) 'Is this the end of globalization (as we know it)?,' Globalizations, 17(6), pp. 990–1007. https://doi.org/10.1080/14747731.2020.1716923.

[3] Wang, Z. and Sun, Z. (2020) 'From globalization to regionalization: the United States, China, and the Post-COVID-19 world Economic order,' Journal of Chinese Political Science, 26(1), pp. 69–87. https://doi.org/10.1007/s11366-020-09706-3.

[4] Mansfield, E.D., Milner, H.V. and Rudra, N. (2021) 'The Globalization Backlash: Exploring new Perspectives,' Comparative Political Studies, 54(13), pp. 2267–2285. https://doi.org/10.1177/00104140211024286.

[5] Kumral, Ş. (2022) 'Globalization, crisis and right-wing populists in the Global South: the cases of India and Turkey,' Globalizations, 20(5), pp. 752–781. https://doi.org/10.1080/14747731.2021.2025294.

[6] Fajgelbaum, P. et al. (2024) 'The US-China trade war and global reallocations,' American Economic Review Insights, 6(2), pp. 295–312. https://doi.org/10.1257/aeri.20230094.

[7] WTO | Publications - WTO Annual Report 2019 (no date b). https://www.wto.org/english/res_e/publications_e/anrep19_e.htm.

[8] Castañeda, E. and Shemesh, A. (2020) 'Overselling globalization: the misleading conflation of economic globalization and immigration, and the subsequent backlash,' Social Sciences, 9(5), p. 61. https://doi.org/10.3390/socsci9050061.

[9] Devetak, R., George, J., & Percy, S. (2017). An Introduction to International Relations. Cambridge University Press.

[10] Stiglitz, J. E. (2013). The Price of Inequality. W. W. Norton & Company.

[11] Arnaud, L. (2023) 'From NAFTA to USMCA: revisiting the market access – policy space trade-off,' New Political Economy, 29(3), pp. 356–369. https://doi.org/10.1080/13563467.2023.2260986.

[12] Chatzky, A. (2020) 'NAFTA and the USMCA: Weighing the impact of North American trade,' Council on Foreign Relations, 1 July. https://www.cfr.org/backgrounder/naftas-economic-impact.