The book begins from the time various countries got together to foster free trade with liberalism at its core. This helped to bring about economic recovery in the countries affected most by the wars.
Book: The Global Trade Paradigm: Rethinking International Business in the Post-Pandemic World
Author: Arun Kumar
Publication: HarperCollins
Pp 352, Rs 699
Arun Kumar has written an insightful book about the changing dynamics of global power over time. A global executive with multifaceted experiences, including working with the US government, the author has dwelled upon the changes in dynamics starting from the Bretton Woods agreements.
The book begins from the time various countries got together to foster free trade with liberalism at its core. This helped to bring about economic recovery in the countries affected most by the wars. But things have changed in the past decade and half, driven by various factors, including politics as well as Covid, where the world has gotten more polarised. The dogma is now turning inwards and working more for individual fulfillment, which in a way has made globalisation secondary to the growth doctrine adopted by various countries.
America was the dominant force post the World War and has driven the global agenda and brought about multifold growth not just in global trade but also GDP of participating countries. Kumar uses the concept of total trade to GDP as a measure of openness of any country. This can be measured on a relative scale, not just with other countries but also over time. Hence benchmarking can be done both ways. These ratios tended to increase until 2008 or so when the Lehman crisis struck followed by the Euro crisis, which in turn caused countries to go several steps back.
The major challenge for the West has come from China, which has both the technological and financial clout to drive not just global trade but also alliances with various countries driven partly or largely by political aspirations. There is an overt sense of conscious expansion in this area as it seeks to gain ascendancy as a global power. Here it is pointed out that in the course of these couple of decades, the West has also increased its dependence on China with high levels of investment in the country. The open policy and quest for faster growth in China had made it a favourable destination.
The author provides the historical context of each of the major countries or blocks that he sees as driving this agenda. In this journey he takes us through the British Empire which dominated the world prior to the world wars right from the time of the East India Company. But subsequently it lost its power and USA, Germany, Japan and Germany became major economic powers. Britain, in fact, is turning inwards with Brexit which means that they are out of the EU. This kind of non-alignment is gaining pace across the world, with the USA when it was under Donald Trump also talking a lot of USA for Americans.
Europe has been different and worked hard for the integration of the region and creation of the EU. The concept of euro is the final frontier crossed where several nations have a single currency which helps them take advantage of each other’s strengths to grow faster. In this context the author points to the initiative taken by China to establish the Belt and Road Initiative (BRI), which, while sounds good from the point of view of global integration, can be interpreted as another attempt made by China to establish its hegemony in this region. The present Ukraine-Russia war with China giving support to the latter will dampen and probably erode this initiative in the next couple of years.
The author sees a lot of potential in India playing a major role in driving the world economic agenda. Here he brings in political strategy shown by the country, where India is now seen as a friend-shoring location, with the advantages of a democracy and free economy, which is seen as a valuable ally by all nations. This is where political diplomacy has played a role in strengthening this view. India, he believes, can be an integral part of the global supply chains for an environment that has been crafted where corporations all over seek to create sources of supply. The author is impressed by the initiative taken by the government to give a big thrust to manufacturing, saying this is the sector that can provide a delta to the rest of the world in terms of integration of supply chains and growth. The PLI scheme is hence a very good example of what is being done to further this cause.
The surprise package will be Africa, which is referred to as a sleeping giant. A continent that is as large as USA, China and India with a population close to that of India has argumentatively been on the table for a long time. Unfortunately, the continent is a union of several countries that have low levels of governance and are stuck in the quicksand of unstable dictatorial governments that are self-serving. Hence a resource-rich set of nations remains the poorest by any standard. He points to improvement of logistics trade boundaries, but this may be inadequate in the absence of governance.
Arun Kumar’s belief in free trade and globalisation as a vehicle to faster growth cannot be contested. This has been proved in the past. But the changing face of politics in all nations has changed, which is making them all look inwards. Here the reader can differ with the utopian picture painted by the author. Coming from an expert practitioner, there is a lot of wisdom in the book, but political ideology needs to go back to the pre-2008 days for this plan to replay.
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