Hyperglobalisation has been used to describe the dramatic increase in international trade witnessed for about a decade and a half from the early 1990s up to the global financial crisis of 2008. The imagery intended is one of an increasing connectedness among nations leading to a virtuous cycle of economic expansion.
By a trait common to every generation, we tend to assume that ours is somehow unique, in this case with respect to globalisation. However, if we are to take the long view, we would find that this is no more than a conceit. Starting some time in the last quarter of the 19th century, for close to 50 years, the world saw an expansion in trade that was actually as great or even greater than during the recently concluded phase. Then had also occurred an unprecedented movement of capital and of people. British capital flowed into building the railways across the world, immigrants moved from Europe to the United States and Asian labour was moved to the sites of deployment of western capital.
End of a phase
So, the facts are that the world has seen the waxing and waning of global traffic in goods, capital and people.
To be precise, the phase of high trade starting 1870 came to an end with the First World War and was to revive, slowly, only after the Second. Then, following the collapse of East European communism in the early 1990s, there was a resurgence in global trade. Now even this phase has somewhat abruptly ended with the global financial crisis.
Economists who study trade flows have gone to the extent of claiming that hyperglobalisation was a one-time event unlikely to be repeated. Though some may hold that we ought to shun economists offering predictions with as much diligence as we should beware of enemies bearing gifts, it may pay us to heed their prognosis, for were it to be true, it has implications for economic possibilities in India.
Note that even if vigour were to return to the global economy 25 years from now, that would still account for a significant chunk of the working life of an Indian, for which period alternative economic opportunities would have to be found.
Role of technology
What underlies the scepticism expressed regarding a revival of global trade?
The view is based on the observation that especially 19th century globalisation was underpinned by technological advances that facilitated trade. The advent of the telegraph is alluded to along with the invention of the internal combustion engine. The former enabled the communications infrastructure intrinsic to trade and the latter enabled the fast, reliable and cheap transportation of goods across seas. These advances, we are told, dwarf anything since, including the Internet, in terms of their capacity to expand trade. And, none is foreseen in the immediate future.
This account of how advances in technology fueled trade is of undoubted relevance but remains partial in that it leaves out the role of the growth in demand for these technologies. It was, after all, the growing market for British goods as Indian manufacturing was dislodged following military conquest and as British capital flowed into the laying of a rail network in parts of Latin America and Africa that provided the demand for development of cheaper communication and transportation technology.
Therefore, it may as well be said that trade expanded as the demand for goods grew. However, it is yet true that when global demand expands, countries can exploit the trade route to grow their economies. This was the great promise of globalisation held out to the developing countries in the 1990s. Now, what does all this have to do with us in India today? A great deal, actually.
The slowdown and India
If the world economy is set to grow slowly for the foreseeable future, a premise of much of the economic policy in India since 1991 would have to be replaced. It had been assumed then that globalisation was here to stay and India had only to hitch onto its current to ride to prosperity.
This India has even successfully done in phases since. Now, however, we need to recognise that the game may have changed substantially — even if not irrevocably, as the experts claim. The shift that has taken place is visible most in the IT industry. Quarterly growth only inches forward there and insecurity grips its particularly young workforce.
In retrospect, we can see the hollowness of the boast that had made the rounds a decade ago that India need not bother with manufacturing when it could leapfrog into a service economy led by IT exports. Now, “bricks and mortar” is no longer something to be spurned and soiling our hands may be part of the business of earning our living for some time to come.
Recognising the diminished tempo of globalisation, India’s economic policymakers must address the growth of the home market, which is the demand for goods and services emanating from within the country. The immediate points of action and the appropriate instruments can be identified without much strain on our ingenuity. In the short run or the present, when the global economy is sluggish, only domestic investment can move demand.
In India, we have been witnessing slowing or depressed private investment for close to five years by now. There is a view that this has to do with tight monetary policy. It is true that the real lending rate for firms has been rising as inflation is falling. Such a policy stance can be justified only by resorting to the claim that the Reserve Bank of India knows something about future inflation that we don’t, in particular that inflation is set to rise again soon.
Barring this possibility, there is a case for cutting the repo rate now, and there is a clamour for this. But there are reasons to doubt the potency of such an action, one each from the supply and the demand sides. Given that they hold non-performing assets, the banks are extremely wary of lending. Any significant resumption of lending by banks may be hostage to their first resolving the bad loans problem. Ditto with the firms, which are themselves debt-laden. Are they likely to take on more of it, just because it is offered at a lower rate, before cleaning up their balance sheets?
On public investment
Independently of the ‘twin balance sheet problem’, Keynesian economics has long recognised that lowering the rate of interest may not do much for private investment if the expected rate of return is depressed.
The slowing of both global trade and domestic manufacturing may have had precisely this effect by lowering the long-term expectations held by private investors. We do, however, know how to buoy up flagging demand. You do this through public investment.
In response to the argument heard at the highest level of policymaking that there are no viable projects to be had, one need only refer to a recent news report on the state of our roads and bridges.
It is reported that 23 bridges and tunnels on India’s national highways are over 100 years old, of which 17 require rehabilitation or major maintenance. As many as 123 other bridges in the country require immediate attention and 6,000 are “structurally distressed”.
Infrastructure is unique in that spending on it raises aggregate demand and when it actually comes on stream, it raises the productivity of investment elsewhere in the economy. ‘Roads and bridges’ are a metaphor for the public infrastructure that the Indian economy can fruitfully absorb today.
Darknet, also known as dark web or darknet market, refers to the part of the internet that is not indexed or accessible through traditional search engines. It is a network of private and encrypted websites that cannot be accessed through regular web browsers and requires special software and configuration to access.
The darknet is often associated with illegal activities such as drug trafficking, weapon sales, and hacking services, although not all sites on the darknet are illegal.
Examples of darknet markets include Silk Road, AlphaBay, and Dream Market, which were all shut down by law enforcement agencies in recent years.
These marketplaces operate similarly to e-commerce websites, with vendors selling various illegal goods and services, such as drugs, counterfeit documents, and hacking tools, and buyers paying with cryptocurrency for their purchases.
Anonymity: Darknet allows users to communicate and transact with each other anonymously. Users can maintain their privacy and avoid being tracked by law enforcement agencies or other entities.
Access to Information: The darknet provides access to information and resources that may be otherwise unavailable or censored on the regular internet. This can include political or sensitive information that is not allowed to be disseminated through other channels.
Freedom of Speech: The darknet can be a platform for free speech, as users are able to express their opinions and ideas without fear of censorship or retribution.
Secure Communication: Darknet sites are encrypted, which means that communication between users is secure and cannot be intercepted by third parties.
Illegal Activities: Many darknet sites are associated with illegal activities, such as drug trafficking, weapon sales, and hacking services. Such activities can attract criminals and expose users to serious legal risks.
Scams: The darknet is a hotbed for scams, with many fake vendors and websites that aim to steal users’ personal information and cryptocurrency. The lack of regulation and oversight on the darknet means that users must be cautious when conducting transactions.
Security Risks: The use of the darknet can expose users to malware and other security risks, as many sites are not properly secured or monitored. Users may also be vulnerable to hacking or phishing attacks.
Stigma: The association of the darknet with illegal activities has created a stigma that may deter some users from using it for legitimate purposes.
AI, or artificial intelligence, refers to the development of computer systems that can perform tasks that would normally require human intelligence, such as recognizing speech, making decisions, and understanding natural language.
Virtual assistants: Siri, Alexa, and Google Assistant are examples of virtual assistants that use natural language processing to understand and respond to users’ queries.
Recommendation systems: Companies like Netflix and Amazon use AI to recommend movies and products to their users based on their browsing and purchase history.
Efficiency: AI systems can work continuously without getting tired or making errors, which can save time and resources.
Personalization: AI can help provide personalized recommendations and experiences for users.
Automation: AI can automate repetitive and tedious tasks, freeing up time for humans to focus on more complex tasks.
Job loss: AI has the potential to automate jobs previously performed by humans, leading to job loss and economic disruption.
Bias: AI systems can be biased due to the data they are trained on, leading to unfair or discriminatory outcomes.
Safety and privacy concerns: AI systems can pose safety risks if they malfunction or are used maliciously, and can also raise privacy concerns if they collect and use personal data without consent.