Positioning Africa in the new Globalization Strategy

From Guangdong and Oregon to Durban and Dubai to Rennes and Punta Arenas, globalisation is known as the phenomenon of the world becoming interconnected by the exchange of goods, services, people, trade, culture, money, ideas, technology, and policies. It refers to the interdependence of human resources, corporations, and governments across the world. As a phenomenon, trend, and concept, globalisation has generated disputes among scholars and commentators. The international community has been inundated with painful occurrences that illustrate how important it is to avoid fragmentation and foster international cooperation and coordination. Many analysts say 2020 will be the year of irreparable shock. shock to systems, livelihoods, and economies. In a time riddled with crisis, tension, and uncertainty, people had to rely on the new fundamentals of survival. Global leaders had to reconsider how to handle globalization. Experts and policy leaders addressed socio-economic risks, and the vulnerability of global society was revealed. Leaving millions of people around the world conflicted, confused, and isolated

Is globalisation truly gone? No. “Introducing Re-Globalization, the newest iteration of the phenomenon driven by modifications to supply chains and trade agreements,” The idea here is that globalisation could never have been a monolith—a self-sustaining whole—but rather something that is interrelated with local and regional needs. Regional hubs will create a world led by two nearly equal powers, surrounded by trade satellites. The term “globalisation” has achieved many great things, from creating a middle class in developing markets to keeping prices down in rich ones. Since the advent of globalization, the country depends on other nations to manufacture products at a lower cost. It is inefficient to produce everything in-house. For example, China cannot develop in isolation from the rest of the world, nor can the world as a whole maintain peace, development, prosperity, and stability without China. In 2019, China’s President Xi Jinping said that the country will promote the globalisation of Shanghai’s financial markets through the Belt and Road Initiative and that the city should strive to master the core links of the industry chains. “It is true that economic globalisation has created new problems.” But this is no reason to abandon economic globalisation entirely,’ China’s President Xi Jingping said in Davos in 2017.William Jones, Washington Bureau Chief at Executive Intelligence Review, believes the new type of globalisation supported by China better caters to the world’s needs, in which “countries can work together as equal partners with mutual benefit.” Otherwise, decoupling and small groups based on so-called “values” will lead to disaster economically, politically, and even militarily.

Former British Prime Minister Theresa May said in 2017 that multinational businesses must avoid short-term thinking and show leadership to help restore faith in globalisation among citizens who feel left behind by the pace of economic change. Protectionism is gaining ground and globalisation is losing its appeal, but India is open for business, Indian Prime Minister Narendra Modi told the World Economic Forum in 2018. The global economy is experiencing a “synchronized slowdown,” the head of the International Monetary Fund said in 2019, warning that it would worsen if governments failed to resolve trade conflicts and support growth. “At this point in time, globalisation as we know it will not continue,” European Central Bank president Christine Lagarde said last year. “It will take a different form, and that is probably for the better.” Despite the progress recorded in the past two decades in Africa, the continent remains weakened by the persistence of various intra-state crises and conflicts. Interregional interference, amplified by globalisation, promotes the proliferation of new threats that further fuel violence and draw the region into a vicious circle. Since COVID-19, we have seen that supply chains are shortening and coming closer to home. Yet, many businesses across the globe need to take the proper steps to ensure they can continue business for their clients in a resilient manner. The COVID-19 pandemic demonstrated that even the most dramatic shock to our systems cannot dislodge the relentless flows that make up globalization, writes Afshin Molavi.

Into a Cocoon State

“The first years of this decade have heralded a particularly disruptive period in human history,” according to the World Economic Forum’s Global Risks Report 2023, “as the return to a “new normal” following the COVID-19 pandemic was quickly disrupted by the outbreak of war in Ukraine, ushering in a fresh series of crises in food and energy and triggering problems that decades of progress had sought to solve,” the report adds. For instance, in sub-Saharan Africa, just as the continent was gradually recovering from the pandemic, this crisis threatens that progress. The International Monetary Fund (IMF) says many countries in the region are particularly vulnerable to the war’s effects, specifically because of higher energy and food prices, reduced tourism, and potential difficulty accessing international capital markets. However, the report notes that net exporters of crops, including Turkey, Brazil, and India, and of fossil fuels, such as Nigeria and countries in the Middle East, see a surge in their exports, attenuating the negative effects of the war. The economic shock waves are moving through five channels: commodity markets, logistics networks, supply chains, foreign direct investment (FDI), and sectors such as tourism.

At the same time, the war in Ukraine has exacerbated a fragile geopolitical and security landscape. Bold leadership is required not only to restore peace and security in Europe but also for the world. As globalisation evolves, the big winners include Asian economies—such as Vietnam, India, and Thailand—that are cutting into China’s share of exports to the U.S. Clyde Prestowitz stated in an article titled “Davos: Nice But Not Real; A Great Party But Don’t Take It Seriously” that globalisation made possible the Russian attack on Ukraine. The globalists thought it was perfectly safe for Germany and much of the rest of Europe to become heavily dependent on Russian natural gas. Indeed, they thought this would tend to democratise and liberalise Russia. They thought that investment in China, the transfer of technology to China, and the transfer of jobs to inexpensive Chinese labourers would liberalise China both economically and politically and make it a “responsible stakeholder in the liberal, rules-based, global order.” according to the former U.S. Trade Representative, former Deputy Secretary of State, and former World Bank President Robert Zoellick. They also thought that these transfers of jobs, skills, investment, and technology to China would not only have no negative impact on the U.S. economy but would actually be good for it. If you lost your job at Ford because it switched its production to Mexico or China, not to worry. There would be plenty of jobs in Silicon Valley. Of course, dog houses there go for $1 million a pop, but hey, the weather is warmer than in Michigan.

The impact of technology on inequality holds significant importance for many, and now it has become an active public debate. When you look at the distribution of income among and within countries, you see that wealth is concentrated at the top. It is also important to note that technology has impacted inequality more than globalization. Presidents Donald Trump and Joe Biden both embraced barriers like tariffs as a U.S. response to technology and globalization. Former White House economic adviser Glenn Hubbard argues that such strategies will fail. But policymakers can do more to take care of those left behind. Bill Emmott contends in “The Fate of the West” that the system of political and economic openness built after World War Two is under threat. When it comes to economic globalization, consensus is sorely needed. A fading consensus on economic globalisation is harming the world economy. It is hoped that global elites will restore faith in economic globalisation to a befuddled world.The reconstruction of the world order is accelerating amid the COVID pandemic and the Ukraine crisis. Although globalisation will not end, it has become a consensus that globalisation has entered a period of in-depth adjustment.

John Ross, a former director of the Mayor of London’s office of economic and commercial strategy, asserts that “The U.S can create a bit of chaos, but it’s not strong enough to stop what the rest of the world wants. It’s only 15% of the world’s economy now.” The success of human race can not be unlinked to the industrial revolutions which birthed the railway system itself and as you so well pointed out; the railway tracking was influenced by the conditioning dictates of the past, another observer remarked.

The US push for a technological “decoupling” and abnormal transfer of industrial chains is “killing” globalization, causing fragmentation of the global supply chain and trade, which is bound to seriously affect the global economic recovery. Countries like China and Russia present a profound threat to the current global order. The urge among Western democracies to hobble adversaries economically to diminish such dangers is understandable. But it will have huge costs. In an interview at the 2023 World Economic Forum, Bob Moritz, global chairman of PwC, says he is bullish on the economic outlook of China, given its strong consumer base, technological advancement, and top exporter’s position. Moritz also emphasised the importance of globalization, as more trade and business cooperation between China and the rest of the world will be needed.

Speaking during a luncheon held by the economic team in Davos, Switzerland, for him and the Philippine chief executive officers (CEOs), President Ferdinand R. Marcos Jr. of the Philippines gives advice to the developing world, including Africa, noting that the pandemic brought the country back to the basics, in which it could no longer depend on imports to survive. “We have to strengthen our own local economy to be able to withstand future shocks such as the pandemic or Ukraine, and there is an element, a tendency of protectionism in that because we take care first of our own businesses, first of our own industries, first of our own economy,” President Marcos explains.Although there are some disruptions, which he described as “a very big bump on the road,” the leader of the Philippines foresaw that the world would find itself on the path towards globalization. “I think the tendency will start after things have settled, after countries such as the Philippines have put in place the elements of policy and the elements of legislation that are necessary to be able to adjust to the new economy, once that is in place. We will start to return to the tendency of globalization.” “I think it is inevitable.”

To put it another way, the global economic ties haven’t ended; they are being rerouted, with widespread implications. The lost efficiencies mean higher costs for households and businesses and profit margin pressure for companies. In boardrooms, it means more attention needs to be paid to risk and a widening landscape of potential crises. For politicians, it will accentuate the struggle to balance economic growth and low inflation against the demand to defend national interests. Today’s economies are more globally entwined, financially leveraged with foreign exchange trade and inter-supply funnels, and carbon constrained. Growth in the current era is debunking previous precedent and set to change the future narrative of progress and peace. This decade’s global growth has brought new challenges of disrupting established economies, new players emerging to secure positions at the global table, and more intertwined trade-driven economies to the fore.

Without a doubt, globalisation and industrialization have had a significant impact on the face of international trade. They have increased the volume and diversity of goods and services that are traded globally and have led to the growth of free trade agreements and multinational corporations. While these changes have brought about both benefits and challenges, they have also contributed to the overall growth and development of the global economy.

Even with the negative effects of globalisation on emerging nations, including those in Africa, the African Continental Free Trade Area (AfCFTA) would provide a strong basis for the industrialization and structural transformation efforts in Africa as it would boost intra-African trade and the continent’s industrial content. AfCFTA, a free trade area encompassing most of Africa, was founded in 2018, with trade commencing as of January 1, 2021. According to UNCTAD’s “Economic Development in Africa Report 2021: Reaping the Potential Benefits of the African Continental Free Trade Area for Inclusive Growth,” members of the African Continental Free Trade Area include both resource-rich and resource-poor countries, least developed countries, and middle-income countries.The process of trade integration and the elimination of tariffs will thus affect these countries differently, both within and among them, and potentially create distributional effects if these asymmetries are not accounted for. “To realise this potential, African countries must actively carry out complementary structural and policy reforms to foster long-term peace and security, address the supply-side constraints, and mitigate the short-term fiscal adjustment costs of the trade agreement to set the continental trade integration project on a successful implementation path for a win-win continental trade integration outcome,” according to the Brookings Institution, an American think tank.

“The entire field of sustainability, underpinned by technologies, will play a monumental role in 2023,” says Abishur Prakash, co-founder and geopolitical futurist at the Center for Innovating the Future (CIF), in Toronto, and author of “The World is Vertical: How Technology is Remaking Globalization.” “Clean energy projects, like those taking electricity generated by solar power from Africa to Europe, will advance in 2023, adding a new dimension to the global energy war.” Considering the future, China needs greater productivity growth. Higher productivity growth in China requires a level playing field between private and public enterprises.

IMF’s Gita Gopinath shares that fragmentation risks are a persistent challenge. Indian Prime Minister Narendra Modi says that developing countries were “united in believing that the developed world has not fulfilled its obligations on climate finance and technology.” “To address this geopolitical fragmentation, we urgently need a fundamental reform of the major international organisations, including the United Nations Security Council and the Bretton Woods institutions.” “These reforms should focus on giving voice to the concerns of the developing world and reflect the realities of the 21st century,” Modi argued, repeating India’s long-standing championing of reforms for the United Nations. Against a backdrop of intensifying geopolitical polarization, countries in the Middle East and North Africa have attempted to insulate themselves by pursuing nascent dialogues, fostering economic cooperation, and striving to avoid choosing sides between the great powers. The system we currently have for resolving the debts of poor countries is not, as people say, “fit for purpose.” The same is true for helping poor countries through adverse shocks and towards sustainable development. Change is urgently needed.

Oyebamiji Adesoji

Writer and researcher at Alafarika for Studies and Consultancy.