Europe is still teetering in the recent decision of the United Kingdom to exit the EU, which many conservatives think was due to the populist support on anti-immigration sentiments and also as a backlash against Muslim migrants entering Britain. From a global perspective, Brexit may be a definitive symptom of anti-globalization leading to‘deglobalization’.
In the meantime, other European countries like France, Greece, Spain and Denmark witness the strengthening anti-EU forces and populist movements that are spreading in ranks and influence of political parties.
This sentiment likewise explains the unstoppable rise of Donald Trump as the US Republican presidential candidate despite the politically incorrect statements he utters, most common of which are the narratives of anti-immigration, anti-Muslim, and anti-outsourcing.
In Asia, Indian Taxi aggregator Ola recently battled it out with Uber on online turf over ‘nationalism’. Meanwhile in Malaysia, more than 200 taxi drivers held a 4-hour protest against Uber and Grab, while neighboring Indonesia has seen a huge mob of 10,000 angry cabbies bringing the capital, Jakarta, to a standstill in March. Sabah, on the other hand, temporarily banned Uber. Are these signs of technological protectionism?
In the midst of all these, the global GDP is slowing down despite trillions of dollars of “stimulus” around the world and hundreds of central bank rate cuts. In fact, the IMF expects the global GDP to grow 3.2 percent in 2016, versus the average growth of 3.6 percent over the past 25 years.
Are we witnessing symptoms of deglobalization?
Deglobalization is the process of diminishing interdependence and integration between and among nations in terms of trade, investment, movement of people, and even the exchange of technology. It stands in contrast to globalization, in which nations become increasingly integrated over time.
Similar to globalization, deglobalization manifests in different ways, centering on four main economic flows:
Goods and services, e.g. exports plus imports as a proportion of national income or per head of population.
Labor/people, e.g. net migration rates; inward or outward migration flows, weighted by population
Capital, e.g. inward or outward direct investment as a proportion of national income or per head of population
Technology restrictions and protectionism such as adoption of digital technologies
Economists believe that Brexit is the first step toward deglobalization and that the short-term impact is limited to financial markets, especially the ones in a bubble state.
The ultimate turning point, according to experts, is that if Donald Trump is elected as US president, globalization is finished.
While the Philippine economy has good fundamentals that would insulate it from Brexit’s immediate effects, it should brace to protect itself from the potential medium and long-term impact of deglobalization. In the short term, fiscal and monetary policy tools should be implemented to help maintain and stabilize the financial markets and keep the economy robust. The new administration should develop, through structural reforms, a more sustainable economic model that can better respond to changes triggered by deglobalization. Key focus areas should include developing local industries and spurring domestic consumption, developing micro, small and medium enterprises and staying competitive for foreign direct investments.
The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX. The writer is a senior executive in the information and communications technology sector. He also teaches strategy, management and marketing courses in the MBA Program of the Ramon V. del Rosario College of Business, De La Salle University. His email: firstname.lastname@example.org and website: www.reylugtu.com