De - globalisation and the cycle of poverty

    The world has prospered much and inequality reduced to a certain extent by reducing poverty due to globalisation. But today countries are taking to protectionism and if sustained, it might create a vicious cycle of poverty among the masses.

    After independence, India adopted a sort of trade protectionism so as to protect the infant domestic industry which was just budding from the unfair competition of foreign companies. It further went on to nationalise the banks and created Public sector undertaking to distribute the benefits  development to everyone and to tackle poverty. But soon, in the 1980's, it slowly came to be realised that there was not much growth that can happen by isolating itself from the world economy. In this light, India went a slew of economic reforms which envisaged liberalisation, privatisation and globalisation popularly termed as LPG. From then onwards, India has been generally liberalising for private investments, globalising by reducing hinderance to the movement of money, personnel and goods and privatising by opening more sectors of the economy for private investment.

    Liberalisation and globalisation involves the reduction  of taxes for the goods coming from other countries so that it becomes competitive in the domestic market. Because of liberalisation and globalisation, goods and services from foreign markets are able to enter our country and provide options for the consumer. So because of this competition with the domestic market, the value of the goods have reduced considerably making even the poor to afford goods and services. Because of this easy and cheap access of goods, poverty has reduced among the masses to a great extent. We are able to wear clothes, enjoy cuisines, buy products from far off lands because of this globalisation. It has increased the choice and variety among the consumers. Companies can now extract benefit of profits from the whole world. But of course there is the disadvantage for the domestic industry of competition from the global market, pollution and over work load.

    Today, there is a threat to globalisation and liberalisation. Big economies like USA and UK are looking inwards. On top of that USA and China are involved in a trade war which is affecting the world economy. USA and UK have been restricting the entry of personnel and the recent ban on H1B1 visa by USA is a case in point. The pandemic has further aggravated the situation by displacing millions of people out of their jobs and triggering the emotions of the people to further protectionism in order to secure jobs for its own citizens. While there is nothing wrong to thing about the welfare of its own citizens, it will become dangerous if this trend continues.

    If the countries perpetuate protectionism, then the domestic product might get promoted, but there is no guarantee that the poor can afford goods and services without completion from outside. Too much regulation of price from the government side will not be appreciated from the industry and will lead to lobby of the industry and suffering of the poor. Moving further, all countries especially USA has to realise that USA has become great in part because of globalisation, because of the movement of money, goods and people. De - globalising the economy and sustaining it might increase poverty which is against the sustainable development goals and going to a past where the rich become richer and the poor become poorer.