How to defend and stabilise globalization?

“Asia should take more of a lead”

  1. Prof. Narlikar, globalization is in crisis. What are the main causes, and which measures would have to be taken to again receive higher acceptance?

    Prof. Narlikar: There are two reasons why globalization finds itself in crisis today: increasing inequality and inadequate narratives. First, it is clear that globalization has benefited countries in aggregate, and international trade has been indispensable in raising millions out of poverty. But the impact of globalization within societies has been mixed – in many countries the gap between rich and poor has been increasing. Often, causes include inadequate welfare mechanisms, technological change etc. But it is easier for politicians like Trump to blame international trade, migrants, and outsourcing for job losses, than to build better social safety nets, or improve training. Second, the global elites are also to blame. While populist leaders from the Right, Left, (and sometimes the Greens) have built convincing narratives about the costs of globalization, the global technocratic elite and centrist/liberal politicians have done a poor job in explaining its gains. Examples are the success of the Brexit campaign to “Take back control” or Trump’s promise to put America first, in contrast to the lackluster “Remain campaign” in the UK. If globalization is to become legitimate again, it will need fundamental reforms to become more inclusive and sustainable. And supporters will need to develop more convincing narratives by reaching out to people domestically and forming transnational coalitions.
  2. Due to the US blockade, the WTO seems to fail in terms of settle trade disputes between countries. What would be the consequences? Are there alternatives to the WTO’s Dispute Settlement Mechanism (DSM)?

    Prof. Narlikar: The paralysis of the WTO’s DSM is serious, and has adverse consequences for the functioning of the system. But it is important to note that the problems of the WTO predate Trump’s arrival on the scene. As the many years of the Doha round deadlocks illustrate, the WTO is in urgent need of reform. Attempts by the EU and others to create a parallel system of dispute resolution, or to liberalize trade via bilateral and regional trade agreements, are no substitutes for the gains that reformed trade multilateralism could produce for all parties.
  3. Asian countries have benefited from the Western order in their rise. This order has lost much of its reliability. Do you see Asian approaches as contributing to a stabilization of the world economy?

    Prof. Narlikar: Asia could and should take more of a lead in rescuing the system. Thus far though, mainly China has presented itself as a defender of globalization. This is ironic as China must share a good deal of blame for the Damage inflicted on the system. This damage has occurred via China’s misuse of WTO rules, or at least their spirit – via forced technology transfer, local content requirements or violations of Trade Related Intellectual Property Rights. There is common ground for cooperation between Europe and other Asian countries such as Japan and India, which have an interest in preserving trade multilateralism. A core group to work together on trade issues could be constituted via Heiko Maas’s idea of an “Alliance for Multilateralism”. Especially in an age of weaponized interdependence, where there is increasing likelihood of de-coupling between rival systems, such cooperation between liberal, free-market oriented, democratic countries will be key to the preservation of prosperity and development.

Amrita Narlikar

Amrita Narlikar is the President of the GIGA German Institute of Global and Area Studies and Professor at the University of Hamburg.