Even the ‘best of minds’ cannot be faulted for being somewhat confused by what is happening currently on the international political and economic scenes. There ought to be a widespread feeling that ‘things are falling apart, the centre cannot hold’ and on the face of it, this assumption seems to be right.
Before we go any further on this theme, it would be best that the observer ascertains the more prominent historical developments over the past 30 years. The turning point in international politics came at the beginning of the nineties.
That was the time international politics, as the older generation knew it, came apart. The Cold War came to a veritable abrupt close with the collapse of the Soviet Union. Communist totalitarianism was judged by its own subjects and found badly wanting, aided amply by the ‘democratic’ West. Violence was unleashed over the length and breadth of the Western half of the communist world and the regimes which were committed to the ‘hammer and sickle’ were battered down by freedom-loving ‘nations’. It was epitomised by the demolition of the Berlin Wall by the German nation that was kept divided in two since the Second World War and the ideological baggage it thrust on the shoulders of the world.
It seemed as if ‘Western democracy’ and free market economics had triumphed over communism and the socialist, state-centred path to development preached by the Soviet Union, its satellites and allies. In other words, the West had won the long-drawn Cold War against the East. This euphoria was so overwhelming that some Western scholars were prompted to proclaim that the world had arrived at the ‘End of History’. ‘Liberation’ in all its dimensions was to reign forever more and the conflictual nature of the world had drawn to an end. Until that juncture in the affairs of the world, ‘history’ was mostly synonymous with the Cold War and its questions.
The ‘triumph’ of the free market meant that economic growth, in the main, could come primarily from countries penetrating the markets of the world and making most of them. This, in essence, is economic globalization. It came to be theorized that a country’s economic well-being is determined by the degree to which it integrates its economy with those of the world. Concomitantly, the world was expected to be open to unfettered trade, commerce and investment. All the world is a market. This is the mantra of progress.
However, some 30 years into economic globalization, the outlook for the world could not be said to be exceptionally rosy. Rather than usher in global economic integration and its concomitant, economic interdependence, what we have is a strong international trend in the direction of economic protectionism and nationalism.
We are back again with the issues that have been troubling the world since the dawn of the modern age, particularly with regard to which economic system is best. Communism arose as a reaction to the excesses and irregularities of capitalism. However, the anomalies of the former, in turn, bred a reaction to it, which has, apparently, brought human kind back to where he began in this search for which system is best, now that a headlong return to the market system has not produced the best results. The economic crisis which devastated the West in 2008 is the best proof of the inadvisability of accepting market liberalization without reservations.
If in the face of these conundrums, rather than opt for increased multilateralism and international collaboration, countries are going in a big way for regionalism or the grouping together of countries from the same region and neighbourhoods for the purpose of economic interaction, collaboration, cooperation and growth. Internationalism is increasingly restricted in the name of regional economic integration. Thus, is economic globalization being rolled back.
The travails suffered by the global South in international organizations, such as the WTO, drive home the reality that market liberalization helps the more powerful economies at the expense of the weaker economies, in particular, of the South. This realization, among other factors, is driving the current wave of regionalism.
In this context, the poser may be prompted: Is not SAARC a relatively early manifestation of regionalism? If regionalism is working for some groups of countries and is the ‘in thing’ with regard to workable international economic arrangements, why is SAARC seemingly dormant and quite ineffective?
To be sure, SAARC is currently proving an exception to the norm in the context of regionalism’s seeming successes. However, the prime issue with SAARC is that it is not based on South Asia’s economic complementarities. For example, meaningful trade and commerce cannot take place among the SAARC Eight on a sustained basis because they produce almost the same commodities. Accordingly, no substantial economic exchanges could take place.
In contrast, ASEAN is a roaring success. The reason is because ASEAN countries interact on the basis of complementarities and the latter are numerous. We need to watch India’s moves in this connection. India is in the process of integrating her economy with those of ASEAN and East Asia and we would be stating the obvious by saying that such moves are helping India in a major way. It is reported that, for instance, one third of India’s world trade comes from the ASEAN region and East Asia. And without substantial international trade a country cannot survive.
Such lessons are also being learnt by no less an entity than the Trump administration. President Trump may seem to be shunning multilateralism in a big way but he is all for a renegotiated NAFTA. This is mainly because, like India, the US values economic pragmatism greatly. This has always been the case with the US, but India came to appreciate the value of economic pragmatism relatively recently. For instance, until the early nineties India stood by a socialist development model which had a bias against economic liberalization and market reforms.
However, India has scored above most other Southern states by going about economic liberalization in a studied fashion. Rather than dive blindly into market reforms she has brought successful regional organizations under her lens and figured out how well she could benefit by integrating with them. Thus, has economic pragmatism triumphed while using the more positive features of globalization.
