The state of Play for Globalisation in 2022
Updated March 2022
Russia, Ukraine and Globalisation
One of the challenges that is facing globalisation in 2022 is the new geopolitical reality of Russia invading Ukraine, the belligerence of other states particularly the NATO grouping towards trying to find a solution. In addition, the interconnectedness of the global energy system particularly the reliance of Western Europe on energy supply pipeline from Russia has had wider impacts on the system of government, perception of how governments are viewed both from a disinformation and information social media perspective as well as some key disruptions around the capitalism led free trade model of globalisation.
This article on Bloomberg, highlights some of the challenges facing economic liberalism particularly when you have countries that are not politically free having a large share of global GDP. In addition, this argument explores some of the entrenched geopolitical positions that many states have now found themselves in due to the current war in Ukraine.
The effect of the disruption between Russia, Ukraine and the rest of the world seems to be heralding the end of globalisation if one is to believe Larry Fink of BlackRock. The CEO of BlackRock is basing this discussion on the unprecedented unity of countries placing economic sanctions on Russia or in his words launching an’’economic war’ on the country, which has the potential to polarise the world into two separate camps similarly to the geopolitical position before the beginning of the Second World War. This article also looks out the rise of crypto currencies/ other virtual currencies having an impact on the global economy.
Defining Globalisation
Globalization or globalisation is the process of interaction and integration between people, companies, and governments worldwide. The federal reserve calls it “a phenomenon of increased economic integration among nations, characterized by the movement of people, ideas, social customs and products across borders“.
The waves of Globalisation
There are currently 4 waves of globalisation that have been driven by technology disruptions.
The First wave starting circa the 1870s relied on steam and mechanisation to power the industrial revolution.
The Second wave of globalisation became more distinct at the end of the Second World War, when the Bretton Woods agreement post 1944 became the basis of rebuilding of the global economy and the pegging of the currency system to the hegemony of the US dollar.
The Third wave of globalisation starts from the beginning of the 1970s when the speed of technology and convergence of telecommunication starts to create the possibilities for global business as well as integration of global economy. But some authors would like to believe that the end of the Cold War and the crumbling of the Berlin wall defines the third wave of globalisation.
The Fourth wave underpinned by Industry 4.0, is forcing us to rethink the interface between humans and AI.
The video below from the council for foreign relations show experts discuss broader global economic trends, such as the global labor market, China’s changing role in the world economy, and the backlash against globalization, in this special edition of the Council’s signature World Economic Update Series.
Is Globalisation good ? You can read an account of the positive and negative effects of globalisation.
Defining Globalization
”Depending on the focus of the discussion, globalization can be defined in several ways¹. One broad definition is: A complex web of social processes that intensify and expand worldwide economic, cultural, political and technological exchanges and connections. (Campbell, MacKinnon, & Stevens, 2011, p.4). Globalization ¹can also be simply described as the movement of goods, ideas, values, and people around the world. The term was first used in the early 1950s to recognize the increasing interdependence of economies and societies around the world. Globalization, however, has existed for centuries by way of evolving trade routes, including the slave trade, colonization, and immigration”
”The truth is, we live in and depend on a highly interconnected world made up of many distinct but related systems — environmental, social, economic, technical, political, cultural and so on. This global interconnectivity means that damaging one element may cause unexpected impacts elsewhere. The recent global financial crash and the aviation chaos caused by an Icelandic volcano demonstrate how sudden breakdowns in one area can affect whole systems. This interconnectivity is often referred to as ‘globalisation’ and it’s not a new phenomenon”² ”Many regard the interrelated global processes of globalisation and global economic governance as leading catalysts of change in the world economy (see Ohmae, 1995: 7; Held & McGrew). The economic doctrines and beliefs of multilateral institutions like the International Monetary Fund (IMF), the World Bank (WB) and the World Trade Organisation (WTO), all central pillars of contemporary global economic governance, are becoming ever more influential in the international environment (Varma, 2002: 1)”³
Economic integration
Economic integration across history has been linked to technology innovation and diffusion and is claimed by Angus Maddison to have been sustained by three interactive processes:”
(1) the conquest or settlement of relatively empty areas that had fertile land, new biological resources or a potential to accommodate transfers of population, crops and livestock;
(2) international trade and capital movements; and
(3) technological and institutional innovations.
Although, historically, various forms of “globalisations” have been identified, we look mostly at Contemporary globalisation: contemporary globalisation encompasses a host of interwoven processes, which include: the increasing transnational movement of capital, goods, and people; closer ties via new communications technologies; a rapid turnover of patterns of objects of consumption; a growing awareness of the risks and dangers that threaten the world as a whole”³. The World economic forum has a brief introduction into globalisation <ClickHere> that traces its origin from Xi’an in China.
Contemporary globalization
Although, historically, various forms of “globalisations” have been identified, we look mostly at Contemporary globalisation: contemporary globalisation encompasses a host of interwoven processes, which include: the increasing transnational movement of capital, goods, and people; closer ties via new communications technologies; a rapid turnover of patterns of objects of consumption; a growing awareness of the risks and dangers that threaten the world as a whole”³. The World economic forum has a brief introduction into globalisation <ClickHere> that traces its origin from Xi’an in China.
Globalization 4.0
Today, we can see an interplay of globalisation and the forces of the fourth industrial revolution as Globalisation 4.o takes hold. This does present unforeseen challenges as follows:
(1) Governance: Klaus Schwab informs ‘‘The forces of the Fourth Industrial Revolution have ushered in a new economy and a new form of globalization, both of which demand new forms of governance to safeguard the public good” .
(2) It also has brought critical debate around the perceived economic benefits of globalisation, the advantages of digitalisation and global trade
(3) The benefits of cultural globalisation
(4) A continued rising global inequality that places poverty within a new paradigm- that of marginalising many communities.
The End of Globalisation?
One of the key challenges as we began 2022 was the aftermath of Covid 19 and the forced lockdown of the global economy. To these destruction, vaccine nationalism, vaccine inequality, societal fractures and geopolitical tensions have complicated the story of globalisation as we know it. The world economic Forum in its global risk report calls this global divergence-a major factor that can cause the retreat of globalisation.
Perhaps we might see a transformation of globalisation into something new according to economist Mike O’Sullivan. In this video, Mike traces the historical success and failures of globalisation and hints at some aspects of the failure of global governance as we see in the Russian/Ukrainian conflict as a beginning of a new world order where geography and territory may become irrelevant.
This is also supported by Catherine Mann who looks at Trade protectionism and some of its impacts on globalisation and interconnectedness.
Further Reading
The World Is Not Global, It’s Local | Globalization: Myth and Reality | Globalisation and global economic governance| The Debate on Globalization, Poverty, and Inequality : Why Measurement Matters | Globalisation. Myth or Reality? | Robots and carbon targets may signal the end of globalisation | The Globalisation Debate| Globalisation: Meaning, Arguments for and Against | Crossing Borders: The Globalization Debate |
|The Three Waves of Globalisation|
For a reading on Archaic Globalisation, click here.
Data sources for this page
3.Van Niekerk, A. (2014). Globalisation and global economic governance: Contextualising the interpretations and the debate. A review of literature. South African Journal of Economic and Management Sciences, 10(4), 544-557. doi:https://doi.org/10.4102/sajems.v10i4.1065
4. The Global Risks Report 2022 17th Edition. World Economic Forum. https://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2022.pdf