Globalisation or Regionalisation?

COVID has been a learning experience for all countries across the globe. There is not a single country which was not negatively impacted; mostly in the form of supply-chain disruptions. As a result, countries have been focusing on domestic markets on both sides; demand and supply sides. So at present, their focus is revolving around increasing domestic production as well as consumption. This is more true in emerging economies like India, China, Brazil and South Africa. China is working on increasing domestic consumption while India, South Africa and Brazil are tirelessly working to increase manufacturing in their own domestic markets. However, all four countries of the BRICS bloc are working to increase their export share in global trade and this is pushing the globalisation movement forward.

However, since COVID supply-chain disruptions, many intellectuals have been talking about de-globalisation and predicting that de-globalisation would soon become a new phenomenon. It is quite possible that in the future de-globalisation may become more evident than today, but at present de-globalisation seems to be just another phrase being overused by academia! At least, the data says so.

According to the first chart of the following picture prepared by the Harvard Business Review using the DHL Global Connectedness Index 2022, the average distance of international flows of trade, capital and information has been increasing for years. The only exception to this trend is the movement of people. The movement of the people has gone down in the last few years and the reason for this fall in the movement of people is possibly the travel restrictions due to the Coronavirus pandemic.

DHL Global Connectedness Index tracks and measures four aspects of the movement which include average distance travelled by goods and services, capital, information and people.

Looking at the second chart, it is clear that there is some increase in the regional movement of people, trade and capital in the last five years and the bilateral trade agreements and regional blocs do have some positive impact on this movement of people, capital and trade. But when it comes to the movement of information, it has fallen in the last few years. It should be noted that information has one of the most critical aspects of the business and business in itself.

So from the two graphs, it is evident that there is an increase in the regional movement of people, capital and trade but not at the cost of globalisation. Rather, it seems both globalisation and regionalisation can walk together hand in hand.
Rajeev K. Upadhyay

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