Little more than a decade ago, a global financial crisis
engulfed the global markets. The impact of the crisis on financial markets was
mitigated in couple of years by collective efforts of the governments and
central bankers. However, the social, geo political and economic impacts of the
crisis largely remain unmitigated.
The "Reset" button pressed by the crisis has resulted
in widening of socio-economic divide across the world. The geo political
tensions have intensified materially. The rise in protectionism has adversely
impacted the global trade. The rising unemployment in Europe and most commodity
dependent economies in Asia, Africa and Latin America, declining growth in
China, substantial cut in developmental aid to least developed nations due to
fiscal pressures, has caused widespread human suffering for over a decade now.
The onslaught of novel coronavirus (COVID-19), in my view, will
accelerate the "Reset" process leading to a new global order in next
5 years. But for COVID-19, the process might have taken 10-15 years.
I have written this before, but it would be in order to
reiterate a brief account of the changes in world order that have taken place
since advent of 20th century.
In 1917, Russian revolution successfully dismantled the Tsarist
autocracy and laid the foundation of USSR. In the following decades, many
smaller independent European states became subservient to a mighty Russian
socialist army, and together formed one pole in the emerging bi-polar world,
forever shrouded by the specter of cold war.
In the same year, USA decided to join the War as an associate of
the Allies - a development that tilted the scale in favor of the Allies,
bringing the War to an end in 1918. In the following decades, USA evolved into
a formidable military and economic power that lead the democratic allies to
become the second pole in the emerging bi-polar world.
The imperialist global order that existed in preceding centuries
began to dismantle. Many colonies of European empires gained freedom. The
British Empire that was built in three centuries and covered almost one fourth
of the world population and area before the War, was completely dismantle in
the following three decades.
It took three decades for the new order to consolidate. The new
order was characterized by UN, NATO, WARSAW, Mao, Israel, NAM, Bretton Woods,
World Bank, Cold War, energy cartel (OPEC), et. al. The globalization that was
a norm prior to the first War was completely overpowered by the forces of
nationalism and protectionism.
The post WWII order lasted till the German Wall fell and USSR
disintegrated in early 1990s. This unleashed a new wave of globalization.
Global Trade (WTO), Internet, dematerialization of assets, Europe integration
into a single market, China's entry into mainstream global trade (through WTO),
free flow of capital, G-20, BRICS, numerous FTAs, global war on Islamic
fundamentalism, energy security, climate control and global financial crisis,
dominated this phase.
After three decades, we are on the threshold for a fresh reset
in the global order. I do not subscribe to the ideas that the process of
globalization is reversible. I am therefore not anticipating that the emerging
world order will be based on localization of trade and closed borders.
Tomorrow, I shall share my thoughts on the likely shape of the
emerging global order and likely opportunities in post COVID-19 induced
lockdown world.
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