03 Jan Hyper Globalization
Hyper-Globalization and The Effect of it on India
This article covers “Daily current affairs for UPSC” and the topic is ‘Hyper-Globalization’ Which is in news, it covers the “impact of it on Indian Society” In GS-1, and the following content has relevance for UPSC.
For prelims: About hyper-globalization
For mains: GS -1, about hyper-globalization and its impact
Why in news:
- In 2022, two wars are actively taking place, undermining hyper-globalization.
- The first conflict is Russia’s invasion of Ukraine, while the second conflict is an economic conflict between two superpowers (US and China).
- The global trading order suffers the most collateral damage from the two conflicts: instead of production based on comparative advantage and trade profits, it is now each nation for itself.
- It is the abrupt increase in the size, reach, and speed of globalization that started in the late 1990s and has persisted throughout the first decade of the twenty-first century.
- Political, cultural, and economic globalization are all three of their key facets are all covered.
- Characteristics of a hyper-globalized world: Wars are not common, and economies mostly adhere to the theories advanced by Adam Smith and David Ricardo in the late 18th and early 19th centuries.
- In his book “Wealth of Nations,” Adam Smith argued that we should purchase a good from a foreign nation if they can do it at a lower price than we can.
- According to Ricardo, nations are capable of producing even goods in which they do not have an “absolute advantage.” Comparative advantage was important.
- The concept of comparative advantage served as the driving force behind “hyper-globalization’s” second golden age.
- The “doux commerce” premise holds that men become less likely to engage in violence or illogical behavior as a result of trade.
- “Commerce is a remedy for the most harmful prejudices,” according to the French philosopher Montesquieu, and “peace is the natural outcome of the trade.”
Comparing globalization and hyper-globalization
- The International Monetary Fund describes globalization as the process by which international commerce and financial markets are uniting.
- Hyper-globalization is the term used to characterize the tremendous rise in global trade that has been observed for nearly 15 years, starting in the early 1990s. It caused a previously unheard-of movement of both capital and people.
- The primary distinction is how quickly the globalization process proceeds.
The Effects of It on Indian Society
- It encouraged manufacturing in India based on comparative advantage.
- For semiconductor companies producing less complex 28-65 nm range semiconductors that can be utilized in autos, household appliances, and mobile phones, India is offering incentives totaling 30-50% of the project cost.
- Five years ago, it might not have thought it was worthwhile to spend tax dollars on this.
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