The world in 2020

It is virtually impossible to reverse the trends unleashed by globalisation

Shahid Javed Burki January 06, 2020
The writer is a former caretaker finance minister and has served as vice-president of the World Bank

It was inevitable that the end of one decade and the beginning of another would produce a great deal of commentary on the state of the world: its past, present and future. There is no particular reason to treat a decade differently than any 10-year period. What makes it different is that it affords an opportunity to reflect on the state affairs in the country of residence or the world at large by analysts of different persuasion. Let us begin with the world. There is near-consensus among most analysts that the state of the world was precarious at the time the new decade began. However, there were differences in the way the future was looked at by the several commentators who offered their views. I will first review what experts see as the 21st century’s second decade drew to a close and the third began, and then discuss how the future looks to me at this time.

Any full examination of the state of affairs must cover a lot of ground. It should look at the composite picture or separately at different aspects. These could and should include the state of politics, economics, society, and international relations. The last means looking at the way a particular place or a country deals with the outside world, focusing on the places that matter for it. For Pakistan, development of its relations with its immediate neighbours — Afghanistan, China, India and Iran — would be consequential. Also of importance would be the country’s dealings with the Middle East, in particular with the Kingdom of Saudi Arabia. What happens in the United States as that country heads towards another presidential election will impact Pakistan both directly and indirectly. Up until recently, the United States was the major source of external finance for Pakistan. Pakistan had high rates of economic growth when large capital flows became available from America. Upon taking office in January 2017, President Donald Trump dramatically reduced the amount his government was providing. That may not change even if he loses the November 2020 election. However, Pakistan, like most countries and regions around the world would be influenced by the direction the United States takes.

In looking outside its borders, Pakistan must not forget that some 10 million of its citizens or those who are of Pakistani-origin but live abroad, also influence the way the country to which they once belonged, functions. The most important impact is the remittances they send the families they left behind. Remittances helped millions of households climb out of poverty and enter the lower middle class. They also became politically more active; their economic and political rise was instrumental in the electoral success of Imran Khan.

Most of this flow comes from the oil exporting countries in the Middle East. Millions of Pakistanis have gone over the years to these places, filling the wide worker-gaps as they began to develop as the incomes from the sale of oil began to be invested in building what were once relatively backward economies. Most of these countries limited the time the imported workers could spend in their place of work. There was fear that long stays would lead to the migrants to demand citizenship rights. As a recent book by three sociologists put it, the countries built “nations with non-nationals.” That was the title of their book.

With that as the background, I will turn to a discussion of the way the world looks, as 2019 gives way to 2020. “Apocalypse is not yet upon our world as the 2010s draw to an end, but there are portents of disorder,” wrote Michiko Kakutani in an essay contributed to a special issue of The New York Times’ Sunday Review of December 29. She once was the book editor at the newspaper. She titled her essay, “The End of Normal”. She continued: “The hopes that nourished during the opening years of the decade — hopes that America was on a progressive path toward growing equality and freedom, hopes that technology held answers to some of our pressing problems — have given way, with what feels like head-swiveling speed, to a dark and divisive era. Fear and distrust are ascendant now. At home, hate crime violence reached a 16-year high in 2018, the FBI reported. Abroad there were big geopolitical shifts. There was the rise of nationalist movements and a backlash against globalization on both sides of the Atlantic. The liberal post-World War II order — based on economic integration and international institutions — began to unravel, and since 2017, the United States has not only abdicated its role as a stabilizing leader on the global stage, but is also sowing unpredictability and chaos abroad.”

This is by and large a correct diagnosis of the state of the world at the close of 2019 but leaves open the question as to how this was caused. Should the blame be put at the door of President Donald Trump who moved in the White House in January 2017 after an election, the legitimacy of which remains in doubt? Was the unexpected triumph of Trump the result of massive interference by the Russian state or was it the consequence of the President’s correct reading of the fear that had taken hold among a large segment of the population about their economic future? If the latter reading was correct, was it the result of the relentless working of the forces unleashed by the process of globalisation? Or were the turn of events in the late 2010s caused by what economists call “cycles” to which all economies are subject?

It is important to find the right set of answers to these questions. That would help in reading how the future is likely to unfold in the 2020s.

Globalisation and its consequences was by far the most important reason for the turmoil in the Western part of the world. While these countries have strong institutions of governance, they did not have the institutional infrastructure to deal with the pressures a progressively closely-knit world brought. Three of these were important. Restructuring of the global production system meant factory-closures and loss of jobs. New technologies meant low wage growth among manual workers. Easing of controls on the movement of people brought people of colour, speaking different languages and following different faiths to the countries that were essentially white and Christian.

It is virtually impossible to reverse the trends unleashed by globalisation. The “Brexit” move is an attempt to accomplish this but it would seriously damage the British economy and possibly compromise its political structure. However, the perceived adverse consequences of globalisation can be accommodated with better informed public policy.

Published in The Express Tribune, January 6th, 2020.

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