Global Crossroads: New Powers & Globalization

The post-Cold War era has been defined by unprecedented economic dynamism, largely driven by the rise of Asian economies and the deepening of globalization. While this has generated immense wealth and opportunities, it has also created complex challenges related to inequality, geopolitical competition, and the need for sustainable development.

For India, navigating this evolving global landscape requires strengthening its domestic economic fundamentals, enhancing competitiveness, investing in human capital and R&D, and actively engaging in shaping global governance norms. The "Way Forward" involves adapting to new geo-economic realities, fostering resilient supply chains (e.g., through initiatives like "Make in India" and "Atmanirbhar Bharat"), promoting inclusive growth, and leveraging its demographic dividend. The significance lies in understanding these global shifts to formulate effective national policies and assert India's role as a responsible and influential global player.

• Japan's Miracle: Post-WWII; US aid (Dodge Line, Korean War); MITI guiding "developmental state"; Keiretsu; export-oriented growth; high savings.
• China's Rise:
  • Mao Era: Great Leap Forward (disaster), Cultural Revolution (disruption).
  • Deng Xiaoping (post-1978): "Socialism with Chinese Characteristics"; Four Modernizations; SEZs (Shenzhen); Household Responsibility System.
  • WTO Entry: December 2001.
  • BRI (2013): infrastructure; Digital Silk Road: tech component.
• Asian Tigers: South Korea, Singapore, Taiwan, Hong Kong. Export-Oriented Industrialization (EOI); strong state intervention; education focus. South Korea: Chaebols. Asian Financial Crisis (1997): Hot money, pegged rates, weak regulation; led to reforms.
• India's Liberalization:
  • Post-Independence: Mixed economy, ISI, Planning Commission, License Raj.
  • 1991 Reforms: BoP crisis; LPG (Liberalization, Privatization, Globalization); Manmohan Singh (FM).
  • Global Forums: G20 (India's Presidency 2023), BRICS (Expanded 2024), Quad (India, US, Japan, Australia).
• Globalization: Increased interconnectedness.
  • Drivers: Tech (Internet, ICT), economic liberalization (WTO, FTAs).
  • Debates: Homogenization vs. Hybridization (Glocalization); Anti-globalization movements (inequality, sovereignty).
  • Impact on Developing Countries: Opportunities (markets, tech), Challenges (vulnerability, inequality).

Major Debates/Discussions:

• State vs. Market in Development: "Developmental state" successes (Japan, Tigers) vs. laissez-faire. China's unique blend. India's shift post-1991.
• Globalization: Benefits vs. Costs: Growth, poverty reduction vs. inequality (Oxfam), cultural erosion, environmental concerns.
• China's Rise: Opportunity or Threat?: Growth engine, market vs. geopolitical assertiveness, debt sustainability, IP concerns.
• Cultural Impact of Globalization: Homogenization vs. Hybridization (Glocalization).

Historical/Long-term Trends:

• Shift from ISI to EOI (India, East Asia).
• Decline of Command Economies (USSR collapse, China's reforms).
• Rise of Asia: Economic center of gravity shifting.
• Globalization's Evolution: From shallow to deep integration; recent "slowbalisation" trends.

Contemporary Relevance/Impact:

• Geopolitics of BRI and DSR (CPEC for India).
• India's "Atmanirbhar Bharat": Self-reliance with global integration (PLI schemes).
• Digital Economy and Data Governance (India's DPDP Act, 2023).
• Climate Change and Green Transition: Global cooperation, green finance.
• Global Value Chains (GVCs) Reconfiguration: Resilience, diversification ("China Plus One").

Real-world/Data-backed Recent Examples:

• India's G20 Presidency (2023): New Delhi Declaration, AU admission.
• Oxfam Report "Inequality Inc." (Jan 2024): Stark wealth concentration.
• Semiconductor Supply Chains: Global shortages, US/EU/India CHIPS Act, India Semiconductor Mission.
• IMEC (India-Middle East-Europe Economic Corridor): Alternative to BRI.
• UPI Goes Global: Adoption by Singapore, France, UAE, Sri Lanka, Mauritius.

• India's G20 Presidency (Dec 2022 - Nov 2023): New Delhi Summit (Sep 2023), New Delhi Leaders' Declaration, African Union admitted as permanent member, Global Biofuel Alliance, IMEC.
• BRICS Expansion (August 2023 Summit): Invitation to Egypt, Ethiopia, Iran, Saudi Arabia, UAE (joined Jan 1, 2024).
• Italy's Exit from BRI (December 2023): Notified China of withdrawal citing lack of economic benefits.
• India's Digital Public Infrastructure (DPI) Push: Actively promoted DPI model (Aadhaar, UPI, DigiLocker) at G20, with several countries showing interest in UPI adoption.
• Critical Minerals and Resilient Supply Chains: Increased global focus, India's efforts (auction of blocks Nov 2023, joining MSP). Quad focusing on this.
• WTO Ministerial Conference 13 (MC13, Feb 2024, Abu Dhabi): Discussions on fisheries subsidies, agriculture, dispute settlement reform, e-commerce. India advocated for public stockholding.
• Red Sea Disruptions (Late 2023 - Ongoing 2024): Houthi attacks disrupting global supply chains, increasing shipping costs.

Prelims MCQs:

1. Consider the following statements: (UPSC CSE 2019)
   1. 1. Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries.
   2. 2. In terms of PPP dollars, India is the sixth-largest economy in the world.
   Which of the statements given above is/are correct?
   (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2
   Answer: (a)
   Hint/Explanation: Statement 1 is the definition of PPP. Statement 2 was incorrect at the time; India was generally ranked 3rd by PPP by most major institutions like IMF/World Bank. (Ranks can change, check latest data).
2. The term ‘Domestic Content Requirements’ is sometimes seen in the news with reference to: (UPSC CSE 2017)
   (a) Developing solar power production in our country
   (b) Granting licences to foreign T.V. channels in our country
   (c) Exporting our food products to other countries
   (d) Permitting foreign educational institutions to set up their campuses in our country
   Answer: (a)
   Hint/Explanation: This term was frequently in news regarding India's National Solar Mission and WTO disputes related to local sourcing requirements for solar cells and modules.
3. A "closed economy" is an economy in which: (UPSC CSE 2011)
   (a) the money supply is fully controlled
   (b) deficit financing takes place
   (c) only exports take place
   (d) neither exports nor imports take place
   Answer: (d)
   Hint/Explanation: A closed economy is self-sufficient and does not engage in international trade. This is the opposite of an economy integrated via globalization.

Mains Questions:

1. "The long sustained image of India as a leader of the oppressed and marginalised nations has disappeared on account of its new found role in the emerging global order." Elaborate. (UPSC CSE 2019)
   Direction: Discuss India's foreign policy shift from Non-Alignment and G-77 champion to a more pragmatic, interest-driven engagement with major powers and its implications for its traditional image. Value Points: NAM's relevance, focus on economic growth, strategic partnerships (US, Quad), balancing global aspirations with South-South cooperation (BRICS, G20 advocacy for Global South), continuity of developmental aid.
2. The new economic policy (1991) of India had been necessitated by the external factors. Elucidate the external factors. (UPSC History Optional, 2013 - relevant for GS understanding)
   Direction: Focus on the international circumstances that compelled India to undertake the 1991 reforms. Value Points: Gulf War (1990-91) impact on oil prices and remittances, collapse of Soviet Union, rising current account deficit, low forex reserves, pressure from IMF/World Bank, global trend towards liberalization.
3. Critically examine the effects of globalization on the aged population in India. (UPSC CSE 2016)
   Direction: Analyze both positive and negative impacts of globalization specifically on the elderly in India. Value Points: Positive: Better healthcare, improved communication with migrant children, financial products. Negative: Erosion of joint family support, loneliness, vulnerability to market fluctuations, digital divide, increased cost of specialized healthcare.

Prelims:

• Questions test core economic concepts related to globalization (PPP, types of economies, DCR).
• Increasing focus on international economic bodies (WTO, G20, BRICS) and their recent initiatives/memberships.
• Indirect questions testing impact of globalization (e.g., on agriculture, specific sectors).
• Factual questions about major economic events/reforms of India and other major economies if globally relevant.
• Application of economic concepts to current affairs.

Mains:

• Highly analytical and contemporary. Link static concepts with current geopolitical/economic realities.
• Focus on India's role in the new global order, its foreign policy shifts, and globalization's impact on Indian society.
• Critical examination of pros and cons of globalization and specific policies (BRI, India's reforms).
• Integration of economic aspects with political, social, strategic dimensions.
• Emphasis on India's engagement with global/regional groupings (G20, BRICS, Quad, SCO) and strategic initiatives (IMEC).
• Debates around "deglobalization" or "slowbalization" and resilient supply chains gaining traction.

1. Which of the following best describes the "Developmental State" model, as seen in the economic rise of Japan and some Asian Tigers?
   (a) A state that completely abstains from market intervention, allowing free play of economic forces.
   (b) A state that primarily focuses on social welfare programs and redistribution of wealth.
   (c) A state that actively intervenes in the economy to guide industrial development, promote strategic sectors, and enhance national competitiveness.
   (d) A state that nationalizes all major industries and implements central planning for all economic activities.
   Answer: (c)
   Explanation: The developmental state model (e.g., Japan's MITI, South Korea's Economic Planning Board) involves strategic state intervention to foster economic development, particularly in export-oriented industries, without necessarily resorting to full nationalization or complete central planning.
2. Consider the following statements regarding China's Belt and Road Initiative (BRI):
   1. 1. It primarily focuses on digital infrastructure projects like 5G networks and data centers.
   2. 2. It has faced criticism regarding debt sustainability for some participating nations.
   3. 3. India is a founding member and active participant in the BRI.
   Which of the statements given above is/are correct?
   (a) 1 and 2 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3
   Answer: (b)
   Explanation: Statement 1 is incorrect; while the Digital Silk Road is part of BRI, BRI's primary focus initially was on physical infrastructure (ports, railways, roads). Statement 2 is correct, as "debt-trap diplomacy" is a common criticism. Statement 3 is incorrect; India has not joined BRI and has raised concerns, particularly regarding the China-Pakistan Economic Corridor (CPEC).

1. The post-Cold War era has witnessed both the acceleration of globalization and the rise of new economic powers challenging the established order. Analyze the interplay between these two phenomena and discuss the implications for India's foreign and economic policy.
   Key Points/Structure: Introduction (define terms). Interplay (how globalization facilitated new powers, how new powers shaped globalization, tensions). Implications for India's Foreign Policy (multi-alignment, navigating rivalries, global governance). Implications for India's Economic Policy (Atmanirbhar Bharat, supply chains, R&D, inequality). Conclusion.
2. While globalization has brought significant economic benefits, concerns about its adverse impacts, particularly on developing countries and global inequality, persist. Critically evaluate this statement, providing examples from India and other emerging economies. What measures can be taken to make globalization more inclusive and sustainable?
   Key Points/Structure: Introduction (dual nature). Benefits (growth, poverty reduction, tech transfer). Adverse Impacts (inequality, vulnerability, domestic industry erosion, environment, labor exploitation). Measures for Inclusive/Sustainable Globalization (national level: social safety nets, education; international level: IMF/WB reform, fair trade, climate coop). Conclusion.