Opinion: Seeking A New Balance In The Global Economy

It has become a cliche to suggest that the world is at an inflection point. Shifting global balance of power is often identified as the key variable driving this change. A perceptible inward orientation in the US foreign policy outlook, complemented by a rising and aggressive China, is resulting in some fundamental reordering of the international architecture.

The rise and fall of great powers continues to be one of the most significant causes of changes in the global order. A rising China is defining its interests in more expansive terms and is demanding a greater voice in international outcomes. A relatively weaker US is pushing back to retain its own space in the inter-state hierarchy. This back-and-forth is reshaping the way foreign policies of various nations are being conducted and operationalised.

The rise of China, for one, has been a persistent theme of the past two decades. But, it was the failure of the international order in the recent years to respond to China's rise that has made many of today's challenges more palpable. After years of living in denial about the China problem, major powers today appear ready to take the issue head-on.

While this structural change has, for obvious reasons, been the focal point of global conversations for some time now, there is another, equally important structural shift that is also reconfiguring international outcomes. Attempts by key global actors towards trade and technological decoupling/derisking is setting the stage for a conflict that is challenging the fundamentals of globalisation as we have known it since the early 1990s. An ongoing backlash against globalisation continues to gain momentum, especially as the costs of global integration are seemingly rising by the day. Already, there is a recalibration across the West where even mainstream political parties have been changing their long-held positions on issues such as trade and migration. It is unlikely, however, to be restricted to the West. As the world becomes more fragmented - from supply chains to connectivity initiatives - shoring up support for globalisation will only become more difficult. Today the American corporate sector is souring on China with the targeting of businesses on spurious grounds becoming the norm.

Geopolitics is back in the driving seat as trust becomes an essential factor in shaping economic decisions. As Washington makes policy moves to deny China access to critical technologies and to restructure supply chains away from overdependence on China, it recognizes the need for new partnerships with like-minded states. But, with Washington pushing for supply chain restructuring in critical industries due to foreign policy and national security concerns, this is certainly ushering in a new phase in globalisation.

The forces of untrammeled economic globalisation, once viewed as a panacea for all global problems, are now under retreat. Mutual dependencies are being weaponised, further undercutting the foundations of a globalised world. And if emerging technologies are going to determine the next phase of geopolitics, then the polarisation of supply chains is the new reality that policymakers and market forces will have to contend with.

This fragmentation will influence the future of global multilateralism. While most nations continue to profess their abiding faith in multilateralism, the institutional manifestations underpinning the extant order are hobbled by their internal contradictions. Indeed, a global health pandemic should have been the high point of the search for a collective solution; instead, it has turned out to be its nadir. Not only is China challenging an order that it believes was created in its absence, but even the US, which was its most important founder, seems dissatisfied with the status quo. The same liberal order that has arguably been central to maintaining peace and prosperity worldwide for more than seven decades is proving incapable of finding equitable and effective solutions to today's common challenges. This signals a remarkable retreat - a fragmented global order is emerging not only in traditional spheres of global governance but also in those areas where new norms are needed to be set - such as space, cyber and emerging strategic technologies.

Across the world, democracies are facing challenges and states are leaning towards autocracy as a more efficient model of political governance. To be sure, the democratic world has been facing difficulties even prior to 2021. Economic stasis, ineffectual leadership, and political fragmentation have all contributed to the heightening sense of discontent with the state of world's democracies. Technological shifts have ushered in a new era of social dislocation and disinformation campaigns where the open landscape of democracies has been exploited by the authoritarian world in their battle of narratives.

Speaking to NDTV, External Affairs Minister S Jaishankar remarked that the "old world order favored some countries and companies. We [Indians] don't want that order." For New Delhi, which has been a beneficiary of the forces of economic globalisation, a reconfiguration of those forces isn't necessarily a bad thing. As a new framework comes into being, India seems to be calling for a more balanced approach where not only a few benefit but the advantages are spread out much more equally within societies as well as among nations. 

As India hosts the G-20 summit this week, this is also a message that New Delhi would be hoping to send out with its Presidency of this platform.

(Harsh V. Pant is a Professor of International Relations at King's College London. He is Vice President - Studies and Foreign Policy at Observer Research Foundation, New Delhi. He is also the Director (Honorary) of the Delhi School of Transnational Affairs at Delhi University.)

Disclaimer: These are the personal opinions of the author.