Economy

De-globalization, this empty refrain

De-globalization, this empty refrain
Written by on100dayloans

If globalization is defined as the free movement of goods and services, capital, men and women, and finally technologies, then it has a bright future ahead of it. After all, this phenomenon has lifted millions of people out of poverty in the countries of the South, while allowing the United States and Europe to enjoy imported products at low prices.

Read also: The end of globalization at bargain prices

Imagine for a moment that in the next world, production takes place where it is consumed. For example, the iPhone will be manufactured in the United States, possibly in Mexico, or even in Brazil. In the Americas so to speak. With 1150 components from 72 countries, it is now assembled in China and India. This allows it not only to take advantage of an available, skilled and cheap workforce, but also to sell millions of copies on the huge Asian market.

Let’s say Apple takes up the relocation challenge and settles for its pool regional. That is. But it is mass production for a global clientele that allows economies of scale. Otherwise, the cost price in Boston, São Paulo or Mexico City will be higher than when leaving the factory of the Taiwanese subcontractor Foxtron in Shenzhen or that of Wistron in Chennai, India. It is feared that making iPhones for a regional basin is not economically and socially viable. Because consumers will have to pay much more for the products.

Also read: De-globalization, this illusion

The free movement of capital is still not fully achieved in the world, but a long way has been made to reduce regulatory barriers to facilitate flows. It has only been two years since Beijing has allowed foreign banks and insurance companies to operate without a local partner on its territory. But as China opens up, the United States is gradually closing Wall Street to Chinese companies. Mainly political decisions.

And also: Southern countries love economic liberalism

But in any case, the cross-border movement of capital does not stop. In Switzerland, Chinese investors bought or took a stake in 9 companies in 2021, one more than in 2020. For an amount of 96 million dollars. Europeans cry out loud when investments come from the Middle Kingdom. And yet, the Chinese brought fresh capital to 155 companies compared to 132 in 2020, for an amount of 12.4 billion dollars compared to 1.5 billion.

Bridging the demographic gap

The free movement of people is another face of globalization that skeptics rarely deal with. It is a politically sensitive subject in the United States and Europe. And yet. The low fertility rate in the United States and Europe does not ensure the renewal of skilled and unskilled labour. This is why every year, thousands of foreigners are welcomed to perform necessary tasks in the fields, roads, factories, hospitals, banks and laboratories.

Technology knows no borders

Who can stop the free flow of technology? In the name of national security, the United States has banned dozens of Chinese companies, starting with Huawei, accusing it of spying on behalf of the Chinese Communist Party. But innovation knows no borders. Especially since in the four corners of the world, electronic commerce, financial markets, payment systems and communication systems are already interconnected and are set to develop further.

Virtuous but unrealistic

Finally, in another register, the advocates of de-globalization plead for Western companies to withdraw from autocratic countries. The intention is virtuous, but unrealistic. A recent study by Credit Suisse claims that a third of the goods imported by liberal democracies come from countries with less respect for human rights. One in two t-shirts worn in Europe was made in countries where employees have few rights. The “autocratic” world (China, Vietnam, Saudi Arabia, Turkey) now represents more than 30% of the world production of goods.

And according to the latest news, the United States and the European Union are seeking to break their energy dependence on Russia, by buying oil and gas from Saudi Arabia, Iran, Qatar and Venezuela.

In short, it’s easier to talk about de-globalization than to stop the train of globalization, which is undoubtedly not without flaws.

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