The Rise of Protectionism and What it Means for Globalization

Globalization gone too far?

Many experts believe that the pace of globalization had accelerated so much in the period starting from 1990 to 2007 that the global economic crisis that happened in 2008 revealed the drawbacks of too much integration, interconnection, and interdependence. This is seen by many as the inevitable consequence of globalization going too far and hence, there are a need for greater autonomy in the countries affected and a need for local and less global structure of the economy.

The Rise of Protectionism

This has naturally drawn a backlash from those affected by foreign competition and the sudden flight of capital in the aftermath of the crisis.

Further, the fact local industries were dying as result of the skewed playing field that proved to be advantageous to foreign companies instead of local companies meant that the domestic industry and the workers employed in them were being hit.

Naturally, the backlash against globalization was severe in most Asian countries except China, which anyway has an authoritarian regime where such protests are either not allowed or reported in the media.

Further, there were many who pointed to a select few benefiting at the expense of the many and hence called for greater protection to local companies and local industry and not for foreign companies alone.

Some Examples

The most glaring example of the rise of protectionism is the decision of the United States government to impose tariffs on imports of Tires from China. This they believed would stop the domestic tire manufacturers from going out of business as well as provide the workers with employment opportunities that were otherwise resulting in layoffs and downsizing.

In Asia, the recent fight over FDI (Foreign Direct Investment) in key sectors of the economy including retail was an indication of the level of antagonism that globalization has engendered among key sections of the populace.

Whither Globalization ?

However, this is not to say that globalization would wither away as many opinion makers across the world are bullish on globalization wherein they believe that it is the best bet against declining growth and stagnating economies.

Further, despite opposition from the farmers, small businesspersons, and traders, the educated youth in many countries welcome globalization for the opportunities it provides them and for the way in which the process has benefited many skilled and educated workers over the last two decades.

Closing Thoughts

Protectionism and globalization have to be balanced for economies to grow and without either driving away foreign companies or letting local companies go bust.

The ideal mix of how much foreign investment to be allowed and how much protection that the government must extend to local companies must be decided judiciously by the policymaking elite in the countries that are witnessing protests.

In conclusion, it is definitely the case that neither globalization nor protectionism is the answer and hence, there needs to be moderated and gradated approach to these phenomena.