Does Globalisation Need To Change?
A connected world has delivered many decades of economic growth, higher living standards and a valuable exchange of culture and innovation. But the costs have been significant, amplified by the deadly Covid-19 pandemic and growing geopolitical tensions such as Russia's invasion of Ukraine and the Israel-Hamas war.
These factors have resulted in disruptions to multi-continent supply chains and fear of economic slowdown across the globe. Now, the outlook for the global supply chain is marked by a degree of uncertainty and complexity. Several positive and negative trends are shaping and reshaping global supply chains, leading to a mixed scenario.
Experts noted that sectors such as manufacturing, IT and ITeS are likely to benefit from the growth of global trade and the adoption of digital technologies. In contrast, sectors like agriculture and energy are more susceptible to climate change, geopolitical tensions and higher duties/taxes to protect national interests.
“Globalisation needs a reset and the next chapter must be fairer, more inclusive and more sustainable. Despite complex issues, business leaders are overwhelmingly in favour of globalisation– more resilient and inclusive trade, greater capital flows to bridge funding gaps in growing markets, and more people to benefit from technological progress," said Bill Winters, Group Chief Executive, Standard Chartered in a report.
He added that businesses need to enable a just transition to achieve our collective sustainability goals and ensure continued economic development. The solutions to our shared challenges can only be found in collaboration and connection, not in fragmentation and isolation.
Currently, the question of equality also looms large, with many developing markets and smaller businesses unable to fully realise the advantages of globalisation. Despite these challenges, preserving an open, collaborative world order is crucial to tackling borderless challenges such as climate change, which require a global response.
"We advocate a reset to a more inclusive and sustainable model of globalisation, based on transparency and fairness, building trust, and the exchange of views and innovation. In this model, we see a balance the world so urgently requires," Winters added in the Standard Chartered and Bloomberg Media Studios' joint report.
The report titled 'Resetting Globalisation: Catalysts for Change' asked some of the world’s most influential business leaders their views on the free movement of capital, trade, technology, people and culture, and on achieving global sustainability goals.
According to business leaders, global capital has delivered tremendous growth and can continue to be transformational, however, there is a need to do more to connect it to sustainable development projects and bridge funding gaps in growing markets.
For instance, closing the USD 15 trillion global infrastructure finance gap could address many development deficiencies. Innovative approaches such as the use of blended finance to reduce investor risk through partnerships between the public and private sectors work well to ‘crowd-in’ investment.
Over the next decade, global trade will reach USD 32.6 trillion, continuing to drive growth and employment. There is also a need to ensure smaller businesses, particularly in developing markets, can participate in global supply chains and benefit from this growth.
"Digital supply chain finance platforms will play a game-changing role, improving inclusivity by making financing more accessible to SMEs, and helping larger companies build more diversified supply chains that are more resilient to the inevitable shocks of a rapidly changing world," Winters asserted in the report.
As global trade continues to power prosperity, more than 80 per cent of business leaders stated that it allows for more resilient supply chains and sustainable development. However, fewer (62 per cent) believe it has been good for all economies. About 83 per cent said that globalisation has helped build more resilient supply chains.
Meanwhile, Kalyan Basu, Managing Director (MD) and Chief Executive Director (CEO), Vayana TradeXchange in an interview with BW Businessworld said, "The future of global trade remains uncertain and the supply chains will keep evolving to overcome the challenges and threats they face."
However, he said that India, with its advantageous position in the global economic landscape, continued the focus of the government on a stable policy regime, making India well-placed to potentially capitalise on the positive trends witnessed in recent times.
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