Syllabus: Effect of policies and politics of developed and developing countries on India’s interests
Changing Global Trade Order
- Recent U.S. tariff threats reflect bilateral coercion replacing multilateral trade discipline.
- Globalisation is portrayed as a political system shaping markets, governance, and international engagement.
- Liberal values of democracy and cooperation increasingly lose relevance in trade negotiations.
- Trade is reverting to mercantilist thinking, treating surpluses as power and deficits as vulnerability.
Historical Evolution of Globalisation
- Early global economy was force-driven, relying on domestic exploitation and overseas resource extraction.
- Mid-20th century institutions created a normative multilateral framework for managing international affairs.
- Sovereignty expanded faster than democracy across newly independent post-colonial states.
- System legitimacy depended on restraint in unilateral power, framed as humanitarian or democratic pursuit.
Political Assumptions of the Liberal Order
- Framework relied on open markets, capital mobility, and cross-border enforcement of contracts.
- Shared resource management and negotiation mechanisms supported temporary global economic stability.
- Many countries experienced growth and poverty reduction under this institutional arrangement.
Structural Consequences and Populist Turn
- Returns to capital exceeded wage growth, intensifying inequality across integrated global supply chains.
- Manufacturing declined in some regions while surging in others, reshaping labour migration patterns.
- These imbalances triggered populist politics and inward-looking national economic strategies.
China’s Systemic Disruption
- China integrated globally while retaining firm state control over capital, labour, and information.
- Model relied on excess capacity and sustained external demand to maintain trade surpluses.
- This constrained industrial ambitions of poorer economies, including India.
- China emerged as an alternative development and governance model for global actors.
Decline of Multilateral Support
- International aid increasingly conditional on donor country national interests.
- Multilateral institutions struggle to enable joint negotiation on climate and illicit financial flows.
- Developing countries face weakening collective bargaining capacity in global forums.
India’s Position and Strategic Choices
- India is described as too large to ignore yet too poor to shape global outcomes.
- Demographic advantage remains underutilised for productive economic capacity creation.
- Social structure shows sharpened stratification between a narrow elite and vulnerable majority.
Domains of Selective Leadership
- Potential strengths include digital public infrastructure, renewable energy, and services sector leadership.
- Democratic decentralisation identified as another possible area of comparative advantage.
- Economic growth lacks credible expansion through sustained public investment in health and education.
Governance Imperatives for Relevance
- Low state capacity risks long-term marginalisation in a mercantilist global environment.
- Strong institutions and broader social cohesion are necessary for inclusive growth.
- National ambition requires institutional foundations beyond symbolic political rhetoric.