Globalisation and Its Decline

Globalisation, often associated with liberalism, democracy, and global cooperation, is now perceived as a political system that defined market and societal governance, along with international engagements. However, this system is currently facing challenges and is seen as over.

Shift from Globalisation to Mercantilism

• Bilateral negotiations, such as those by U.S. President Donald Trump with India, reflect a shift towards mercantilism—viewing trade as a tool of state power.
• The current global economic landscape emphasizes surpluses as strength and deficits as weaknesses.

Historical Context and Developments

• Early globalisation was characterized by forceful economic practices, resulting in wealth accumulation in industrialized nations at the expense of resource exploitation.
• Post-World War II, a new order emerged with global institutions providing a normative framework for international affairs.
• This system relied on political assumptions like open markets and cross-border enforcement of contracts, which led to economic growth and poverty reduction in many regions.

Unintended Consequences and Political Shifts

• Disparities between capital returns and wage increases, along with migration trends, fueled populist politics.
• China's rise presented a challenge to the multilateral order by achieving economic growth with state control, affecting other nations' industrial aspirations.
• As major economies reassess globalisation, sovereignty is prioritized over liberal values.

Implications for Developing Countries

• With declining global cooperation, developing nations face challenges in negotiating on issues like climate change and illicit financial flows.
• International aid now aligns with donor countries' national interests.

India's Position and Challenges

• India, a significant player in the global order, faces internal challenges due to stratified social structures and underutilization of its demographic advantage.
• Potential growth areas include digital public infrastructure, renewable energy, and democratic decentralization.
• However, economic growth lacks corresponding investment in health and education, risking long-term irrelevance.
• India requires stronger state capabilities and social cohesion to achieve its aspirations of being a Vishwaguru.

In conclusion, the transition from globalisation to a more mercantilist world order presents significant challenges, especially for countries like India, which need to enhance state capacity and societal integration to thrive in this new context.