Can globalization be stopped?
November 15, 2009
Current economic slump may slow down the globalization but it will not stop it. Though G20 countries may increase protectionism they cannot reverse the globalization trends. If they try to reverse then it would have negative impacts on their economy like increase in layoffs, increase in price for goods and services, etc. For example President Bush introduced steel tariffs and lifted it couple of years back due to protection from WTO. But it does not save the US steel industry; in contrast it affected the US automobile industry directly. Since the US car makers need to pay more for the steel than their foreign competitors they increased the price and customers bought more imported cars.
Globalization of Goods and Services
Growth in the globalization of goods and services may slow down due to government putting protective measures to free trade liberalization. For example, President Obama’s comments on punishing companies that create jobs in Bangalore but not in Boston may affect US based multinationals in short-term. Again President Obama made the comment several months back and did not talk about these issues ever again. In fact when addressing university students in Moscow President Obama praised the free market and addresses the advantages of globalized economy.
One of the major impact of the globalization is the interconnected global economy, financial crisis that started in US affected the entire world. Both politicians and economists argued that the globalization made the financial institution failures cascades to all the business sectors all over the world. Politicians may put financial regulations that may put capital control restrictions on the companies. But this will not adversely affect the financial globalization trends.
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Knowledge worker globalization
Governments in the developed countries may put restrictions on knowledge worker visas to satisfy the local population for now. But as the global economy improves they have to relax the immigration laws to attract foreign workers. At present in US there are no new restrictions on H1B, L1 work visas and the US congress is busy in fighting the Health care reform bills, there will not be any changes in the legal immigration laws. Even if the US congress passes any visa restrictions it will only be there for a short-term. Once the US economy fully recovers and as the Gen-X workers goes for retirement US need the knowledge workers to fill the gap.
Due to current deep recession, developed and developing countries may put some restrictions on the globalization but it cannot be stopped. Eventually the world economy will be recovered fully and the restrictions will ease, paving path to complete globalization.