In a span of twenty years, the idea that propelled the world community with a vision to alleviate inequalities and injustices reached major crossroads where all achievements of the community of nations and the commitment to the Millennium Development Goal (SDG) were challenged, even threatened. It became evidently clear at the World Economic Forum (WEF) at Davos that the protagonists of "nationalism" and "protectionism" took the centre stage and the liberal and multinational groups were unable to defend the vision of globalisation in its true perspective.
The select economic confab in the Swiss alpine retreat of Davos has never had such a challenge to its central theme that globalism benefits the wealth and well-being of the planet, as the forces against globalisation have moved from the political fringes to controlling the world's most powerful economy in the midst of tensions about inequality, unemployment and migration - often seen as by-products of freer global trade - boiled over, delivering stunning defeats to the political establishment in the US presidential election and the UK's Brexit referendum.
Is this the great unravelling of globalisation? Or, can it still be fixed to make sure it works for many, not just the few? That's a question to be answered. "In aggregate terms, the human race has never had it so good. Life expectancy has risen by more in the past 50 years than in the previous 1,000. When the Berlin Wall fell, two-fifths of humanity lived in extreme poverty. Now it's one-eighth," wrote Ian Goldin and Chris Kutarna of Oxford University.
But this is not to say that there haven't been problems along the way. Yes, many people have gained immensely from globalisation. But others have been left behind. And no amount of data on the so-called benefits of a more connected world will make them feel better. "Statistical proof of overall well-being is cold comfort to a middle class whose real wages have stagnated, or to poor people in the US and other so-called 'rich' countries whose poverty has deepened," Goldin and Kutarna argue.
Since the World War II, economies were managed with structural flaws and while some corrections were made in the developed economies, faulty and archaic structures continued in the nascent economies to the detriment of resource management, capital mobilisation and general well-being of the citizenry. "We've never had a democratic globalisation. The lack of transparency and openness has meant that we've wound up with a form of globalisation that works for a few, but not for all of us," Nobel laureate Joseph Stiglitz argues.
The critics of globalisation raised intense political activism against globalisation driven by equating globalisation with international trade liberalisation advanced by the West. But Peruvian economist and author, Hernando de Soto argued in his twenty years of research showing that economies prosper only in places where widespread personal property ownership exists coupled with inclusive, efficient and transparent business and property law, and demonstrated how the West successfully revolutionised its legal systems, property laws and developed the modern corporation. Other nations that have instituted private property and business reforms, such as post-World War II Japan and present-day China, have seen their economies take off and their middle classes grow. Globalisation is the new civilisation. But unless we include the 80 per cent of humanity currently excluded from the system, they will bring civilisation down, as they have brought down other civilisations in the past.
But now, "the biggest business idea of the past three decades is in deep trouble," said The Economist. Sam Palmisano, former IBM CEO, pointed out that the world stands at major crossroads, "A rising chorus of nationalism echoes across developed countries; it calls for tighter borders and restrictions on immigration. Global trade negotiations have essentially ceased, and regional trade deals face strong headwinds of opposition." The US, the UK and much of continental Europe are convulsed by a "more-or-less generalised anger against globalisation," wrote Pankaj Ghemawat, the Indian-born economist known for his works on globalisation. Whether we like it or not, he wrote, "The anger is real, and its possible implications are too threatening for us to simply wait for it to dissipate by itself… And although purely economic countermeasures are important, they are unlikely to suffice because emotions, not just economics, are involved."
This pain was expected but never explained by the global leaders and, in particular, the leading economists who were the main advocates of globalisation and liberalisation. The spun from the new world order caused many institutional changes and public policy frameworks in the less developed countries in anticipation of creating more wealth and growth to break through the poverty trap that was left behind as a legacy of colonial rule. The time and cost for globalisation committed by the developed West is now on the wane, and general public dissatisfaction let the old-style demagogue protectionists to overthrow the new order.
Geopolitical ambitions and multinationals' interest in supply chain control and inappropriate ventures to continue cold war conflicts have given rise to neo-fascism. It seems that newly emerging nations are needed to be punished for transforming world trade and for trying to adapt to newer challenges.
However, as Laurence Neville wrote in Global Finance in 2013, despite strong headwinds , there are many reasons to continue to be optimistic about the outlook for emerging markets. De-globalisation of economic activity and financial markets would have dire economic consequences. Given that so much rests on continuing globalisation, 'any prediction of its demise looks premature'. The coordinated response of the global leaders to the financial crisis indicates that they are unlikely to risk embarking on a course that could result in a depression. "Measures to increase flexibility can help economies transition from export-led to domestic, demand-led growth smoothly, by enabling resources to move quickly from less-to-more-productive uses," says Dehn Ashmore, head of research of the Ashmore Group.
