Deglobalisation: Causes, Impacts & Way Ahead

Table of contents

Recently, Trump’s policies have intensified deglobalisation, focusing on trade protectionism, stricter immigration controls, and withdrawal from global agreements. His “America First” approach disrupted global supply chains, weakened multilateral institutions like the WTO, and shifted the world towards a more fragmented and nationalist economic order.

About De-Globalisation

According to the World Economic Forum (WEF), deglobalisation refers to the retreat from global economic integration, marked by the rise of trade barriers, the reshoring of supply chains, and a decline in cross-border investments and mobility.
Deglobalisation shifts economies toward greater self-sufficiency by prioritising domestic industries, strengthening local supply chains, and reducing dependence on global markets.

Trump’s “America First” Agenda: A Blow to Globalisation

Trade Protectionism: Imposed high tariffs on key trading partners like Canada, Mexico, and China to protect U.S. industries and correct trade imbalances, but this strained international trade relations and disrupted global supply chains.
Withdrawal from Global Agreements: The U.S. exited major multilateral agreements like the Paris Climate Accord and WHO, signalling a retreat from global cooperation and a shift towards economic nationalism.
Sanctions on International Bodies: The administration imposed sanctions on the International Criminal Court (ICC), reflecting skepticism toward global institutions that challenged U.S. sovereignty.
Redefining Trade Policies: Shifted focus from multilateral to bilateral trade agreements, renegotiating deals and imposing new tariffs, contributing to what analysts call a “reset” of globalisation”.

Causes of Deglobalisation

Geopolitical Tensions: Conflicts like the Russia-Ukraine war and the Israel-Gaza crisis have disrupted global trade, led to economic sanctions, and increased regional instability.
Weakening Global Governance: Institutions like the WTO, IMF, and WHO have struggled to manage trade disputes, financial crises, and pandemic responses, leading nations to pursue independent policies.
Rise of Protectionism: Countries are imposing trade barriers, tariffs, and localisation policies, as seen in the UK’s post-Brexit trade policies, the U.S. Inflation Reduction Act, and India’s PLI schemes to boost domestic industries.
Faltering Regional Cooperation: Events like BREXIT, U.S. withdrawal from TPP, and EU internal divisions have weakened multilateral trade agreements and economic blocs.
Supply Chain Disruptions: The COVID-19 pandemic, Suez Canal crisis, and Red Sea attacks (2024) exposed vulnerabilities, pushing nations to reshore and friend-shore critical industries.
Job Losses in Developed Nations: Offshoring to countries like India and China has caused unemployment concerns in the UK, U.S., and Europe, fuelling nationalist economic policies.
Rising Economic Inequality: According to Oxfam (2024), the top 1% owns 50% of global wealth, intensifying the backlash against globalisation and corporate dominance.
Political Polarisation and Nationalism: The rise of right-wing governments in Europe & America, policies like ‘America First’, & economic sanctions on Russia & Iran have reinforced economic fragmentation.

Impacts of Deglobalisation

Globalised World	Deglobalised World
Economic interdependence fosters peace and stability, reducing the chances of war.	Increased conflicts due to weakened economic ties & rising nationalism. Eg., Indo-China tensions.
Optimised supply chains, free movement of labour, and stable trade flows drive global growth.	Lower growth rates, higher inflation, & economic volatility due to trade barriers & supply disruptions.
Foreign investments, trade, and outsourcing fuel economic growth and poverty reduction.	Reduced investments and trade hit service-based economies like India, the Philippines, and Malaysia, affecting job creation and GDP.
Cross-border collaboration accelerates technological advancements and research.	Limited knowledge exchange slows down innovation, impacting industries like AI & green energy.
Global cooperation strengthens international institutions (UN, WTO, IMF) and trade blocs (EU, ASEAN).	Nations prioritise self-interest, weakening diplomatic ties and multilateral organisations, increasing risk of conflicts.
Open markets ensure free movement of workers, balancing global labour demands	Reshoring and trade restrictions disrupt jobs. Eg., Gulf nations faced labour shortages during border closures in the pandemic.
Developing nations receive global aid through institutions like IMF, World Bank, and UNDP.	Declining foreign aid leaves vulnerable nations exposed to crises like wars, famines, and disasters.
Collective action through agreements like the Paris Climate Accord ensures sustainable solutions.	Fragmented global responses weaken efforts to combat climate change, food, & terrorism.

Way Forward: G.L.O.B.A.L. Approach

G – Green & Inclusive Growth: Promote sustainability and equity through green investments, circular economy, and climate action (COP28, LiFE Movement).
L – Localisation with Global Integration: Strengthen domestic industries while engaging in selective global trade (Atmanirbhar Bharat, RCEP).
O– Open & Ethical Trade: Ensure fair trade, transparent supply chains, and responsible global commerce (WTO Trade Facilitation, DPI expansion).
B – Bridging Cultures & People-to-People Ties: Foster cultural diplomacy, education exchanges, and knowledge sharing (International Yoga Day, G20 Global South Summit).
A – Adaptive & Collaborative Diplomacy: Enhance multilateral cooperation, conflict resolution, and global governance reforms (Vasudhaiva Kutumbakam, UN peacekeeping).
L – Leveraging Technology for Global Good: Expand AI, digital infrastructure, and innovation-driven solutions for global challenges (UPI internationalisation, G7 AI Safety Summit).

As Kofi Annan said, “Arguing against globalisation is like arguing against the laws of gravity.” While deglobalisation may offer short-term national gains, a balanced approach — integrating self-reliance with strategic global cooperation — is essential for sustainable progress, peace, and shared prosperity.

Reference: The Economic Times | DD News

UPSC Mains PYQs – Theme – Globalisation

Globalisation has increased urban migration by skilled, young, unmarried women from various classes. How has this trend impacted upon their personal freedom and relationship with family? (2024)
Elucidate the relationship between globalisation and new technology in a world of scarce resources, with special reference to India. (2022)
What is Cryptocurrency? How does it affect global society? Has it been affecting Indian society also? (2021)
Is diversity and pluralism in India under threat due to globalisation? Justify your answer. (2020)
Customs and traditions suppress reason leading to obscurantism. Do you agree? (2020)

PMF IAS Pathfinder for Mains – Question 74

Q.”Deglobalisation is a reaction to the excesses of globalisation, yet it comes with its own set of challenges.” Critically analyse the key drivers of deglobalisation and its implications for global economic stability, with special reference to India. (250 Words) (15 Marks)

Approach

Introduction: In the introduction, briefly define deglobalisation & its implications for economic stability.
Body: Discuss the key drivers of deglobalisation, implications for global economic stability and briefly impacts on India.
Conclusion: Write a conclusion highlighting a balanced and sustainable approach.