Globalization - A threat | Let's discuss Globalization

“The first step of solving a problem is to recognize that there is one”.

Globalization has been a significant force that provides vital contributions to global progress and prosperity. During the past decades, globalization has: raised productivity and employment, helped lift millions out of poverty, revolutionized communications, fostered competition, boosted global economic growth, and interdependencies through trade and FDI flows. The benefits of globalization have been measurable, numerous, and precious.

There are only two reasons that push the whole world to globalization, which ultimately lead to profits.

The impact of globalization on the exchange rate is easily visible over time. Between 1860 and 1924, the gold-backed currencies were among the major political controversies that led to monetary unification in many European countries.

<<<Also Read: Self-Reliance vs Globalization: The Aatm Nirbhar Bharat Mathematics>>>

Let us take an example on the Indian value of Indian rupees depends upon the dollar reserve we have. we incurred a trade deficit of 6.7 billion last month. Indian trading has never seen a day of trade surplus. That means we are bleeding dollars day after day. Whatever stability we have in our exchange rate is due to FDI and FPI.

Since the LPG reform value of Indian currency had been declining and reaching a new low, IMF and World Bank both put a condition before lending money to devalue the currency. According to them, this devaluation promotes trade. However, if we get to the big picture, we have been reeled into a vicious cycle of trade deficit because no matter how much we trade, we will receive at least 70 times less than what we are entitled to because of the unfair exchange rate.

We are losing our FOREX reserve by trading. Moreover, relying on FDI to bolster our currency. Putting the key of prosperity into someone else’s pocket is not a smart move. We either have to make trade laws to fill the deficit or stop trading to stop our bleeding FOREX.

Let us take an example of China; they are trading in surplus, and their currency is growing healthy day by day. Sometimes the Chinese government devalues the own currency to fight trade prices. They have the wherewithal to do that, and they reach that position by staying in a trade surplus for several years.

We can not only blame globalization for the devaluation of the currency. We have not established a firm trading law to protect us from such a situation.

At last, we can observe that law-making is a political issue. Lawmakers tend to consider the interests of Powerful Groups. They Affect the Elections. We can see one country is using globalization to profit only the virtue of trade surplus; we have to learn the lesson from them and stop depending on FDI to sustain our currency’s value. We can be the driver of our fate if we control the value of our currency.