Long-Term Implications of Future Shifts on Global Economic Security - Research Paper Example

 Long-Term Implications of Future Shifts on Global Economic Security Introduction In terms of size, speed, and directional flow, the global shift in relative wealth and economic power now under way—roughly from West to East—is without precedent in modern history. This shift derives from two key sources. First, sustained increases in oil and commodity prices have generated windfall profits for the Gulf States and Russia. Second, relatively low labor costs combined with certain government policies have shifted the locus of manufacturing and some service industries to Asia (U.S. National Intelligence Council, p.7) Globalization has brought revolutionary changes in the global political, economical, social and cultural relationships. The slogan of collective growth put forward by globalization has influenced the entire segments of human life. Before globalization appears on the horizon, West was regarded as the political and economical power house as far as the global politics and economic activities were concerned. Even though majority of the global population were in East or Asia, the economic capabilities of the Eastern countries were far behind the Western countries. America and Europe were the major political and economical powers before the implementation of globalization. However, globalization has changed the above scenario and currently the global economical and political powers slowly, but steadily shifting towards the East. It is an accepted fact that China and India, the most heavily populated countries in the world is going to become superpowers in the near future itself because of globalization. Russia and Brazil also developing rapidly compared to the Western countries. In short, the future politics and economic activities is most probably controlled by the Eastern countries and in all probabilities West is going to lose its dominance in global political and economical circles. This paper analyses the long-term implications of these future shifts on global economic security from West to East. Impact of globalisation on economic security Holst (2007) has argued that economic interpretations of globalization cantered around three forms of capital; financial, productive and commercial (Holst). Globalization has opened many opportunities to the Eastern countries like India, China, Brazil, Russia etc in the financial, productive and commercial sectors. It is possible for a Chinese or Indian company to invest in the American share market at present because of globalization. Same way it is possible for the Chinese or Indian products to enter the Western markets without many restrictions. Moreover, the exchange of manpower is possible between the Eastern and Western countries like China and America or India and Britain. Western countries are experiencing huge manpower shortage at present and in future also the above problem is going to be multiplied. In other words, it is going to be extremely difficult for the Western countries to avoid the manpower utilization from the East. Outsourcing is already so popular in Western countries like America and Britain even though the administration senses the dangers involved in it. Even though President Obama warned the Americans about the dangers of outsourcing, Obama himself knows that it is difficult for the American companies to complete their projects without seeking the assistance of the cheap labour market in India and China like countries. A task worth $5000 in America can be completed in India for around $ 3000. It is difficult for the American companies to survive in the heavily competitive global market if they fail to exploit the cheap labour markets of India and China. In short, the productivity of the countries like India and China is going to be increased a lot in future because of the opportunities they are going to receive from the West. The unemployed youths or the non-productive sectors in India and China are going to be benefitted more from the outsourcing jobs from the Western countries. The mobilization of non-productive sectors will help India and China like Eastern countries to increase their productivity further. At the same time, the wealth which was earlier accumulated in the West is slowly shifting to the East which is not a good sign for the Westerners. Since the Eastern countries are heavily populated compared to the Western countries, the above shift in wealth may correct the global economic imbalances. International trade has been increased a lot as a result of the globalization and liberalization policies. In fact America and UK like capitalist markets were conquered by the cheap Chinese products at present. It is impossible for Americans or the British to avoid these products because of their poor economic stabilities as a result of the recent global recession. Eastern countries were least affected by the recession compared to the Western countries. China like bulk production oriented countries are utilizing the opportunities created in the West judiciously to sell out their product. According to William I Robinson (2003), one of the distinctive features of globalization is the rise of transnational capital (Robinson p.12). In most of the Western capitalist countries like US and UK, big companies are almost in a saturated state. The space for expansion is limited in this region and hence big Western companies already started exploring opportunities in the East. For example, Starbucks, a coffee business tycoon in America, have coffee shops literally in every corner of America. It is impossible for them to grow further in American market. At the same time, they have lot of opportunities in countries like China, India, Brazil, Russia etc. They already opened many shops in these countries and these countries going to be benefitted from the above foreign capital. According to Hersh & Schmidt (2000), socialist countries perceived globalization as the continuation of capitalism (Hersh & Schmidt p.3). But for the time being China like socialist countries seems to be the number one exploiter of globalization. Earlier China calculated that globalization was intended for the exploitation of the wealth of the developing countries by the capitalist countries. Now, they have realized that their calculation was wrong and they started opening their markets more widely to the foreign direct investments. They have realized that it is impossible for a country to develop properly through the exploitation of the internal resources alone. “ According to the growth projections, the eight largest economies in 2025 will be, in descending order: the US, China, India, Japan, Germany, the UK, and France, and Russia” (U.S. National Intelligence Council, p.7) The above projections or statistics and the earlier discussion clearly show that the emerging countries like India and China may surpass even America in the near future itself. In other words, economic stability of China and India could be more than America or Britain within 50 years time. The current and future shifts of wealth from West to East can be considered as a positive one when we consider the huge population of countries like India and China. At the same time, a major reason to worry is the fact that the future of heavily populated Eastern countries like Myanmar/Burma, North Korea, Pakistan, Afghanistan etc are not so good as far as the economic security is concerned. Role of weak and failed states Myanmar/Burma, North Korea, Pakistan, Afghanistan etc are some Asian countries which struggled to mobilize their internal resources because of various reasons. These countries have severe internal problems which retard their efforts to attain economic growth. Pakistan and Afghanistan are the major contributors to global terrorism and they are facing the consequences of that now. Burma and North Korea don’t have any belief in freedom, liberty and human rights and hence the people in these countries are forced to lead a pathetic life. Moreover, Western countries have lot of concerns in investing in these countries because of the poor political and economical climates in these countries. Nobody expects the internal problems of these countries may be solved in the near future. In other words, these countries may continue to struggle even though their neighbors develop a lot. Energy security “Petroleum products derived from conventional crude oil constitute more than 50 percent of end-use energy deliveries in the United States and more than 95 percent of all energy used in the U.S. transportation sector. Almost 60 percent of liquid fuels are imported”(Unconventional Fossil-Based Fuels Economic and Environmental Trade-Offs). Russia and Middle East have immense oil resources and the demand for oil products is going to be increased in all probabilities considering the heavy industrialization and automobile uses in future. Oil is a non-renewable energy source which is used extensively in the energy sector. So far science and technology failed to develop cheaper technologies to exploit the renewable energy sources like solar power, wind power, tidal power etc. Nuclear power is an option; however the increased complexities involved in the technology and disposal of nuclear waste made it unpopular. In short, oil resources are still the favourite energy source in the world and hence Russia and Middle East is going to get better returns for their oil products in future. At the same time, oil resources are not much environment friendly and the purification of petroleum and other biomass fuels is causing severe damages to the environment. Moreover, greenhouse gas emission from oil driven vehicles is another factor major factor of concern. America and other western countries are trying to develop electric or hybrid or environment friendly cars. Even amidst all these challenges, in my opinion, the world is going to continue its oil use until the oil resources will be exhausted. In other words, Russia and Middle Eastern countries are going to get a substantial income from their oil resources. Financial system As discussed earlier, global financial system is changing as a response to the growth of petrodollars (The money received by oil exporters from selling oil and their deposit into Western banks) and Sovereign Wealth Funds. These shifts are likely to accelerate in the future if global financial imbalances continue. Petrodollars help the OPEC countries or the Middle Eastern countries in two ways. They are not only getting good revenue by selling petroleum products in Western countries at a higher margin, but also getting substantial returns on the same money deposited in the Western banks. Sovereign Wealth Funds are another option for the emerging countries to achieve more revenues from the Western countries. Sovereign Wealth Funds are global investment funds which make use of financial assets such as stocks, bonds, property, precious metals or other financial instruments. In short, emerging countries and their firms making lot of money from petrodollars and the Sovereign Wealth Funds invested in the Wall Street Firms. The above trend is going to continue at least for a couple of decades more. Technology and information security We have seen that new technologies have shaped our lives in many ways. The future is likely to bring many new technologies which will continue to change lives around the world. These technologies will also help to change the global economic security situation. China is able to make better quality products at a cheaper rate because of their superior technological advancements compared to the Western countries. In fact, many of the Western firms remain clueless in finding a solution for tackling the stiff competition offered by the Chinese products. In fact the Americans started to purchase cheaper Chinese products nowadays and America seems to the number one market for the Chinese products. Indian products are also offering stiff challenges to the American or Western products. Recently, India auto mobile manufacturer TATA group developed world’s cheapest car and it is expected that this car may become a hot product in the Western market considering the price and the mileage TATA’s NANO has. Moreover, TATA has recently acquired the British automobile firm Land Rover and Jaguar. In short, China and India are some of the countries which may put an end to the technological superiority of the Westerners. Information security is another major problem faced by the Western countries. In fact many people believe that China has already started an undeclared cyber war with America. There are many reports which show that the Chinese hackers were able to penetrate the firewalls created by the Westerners. On the other hand, China doesn’t allow any of the foreign media to operate freely in their soil. Even Google, Apple etc like big companies forced to make changes in their services or products before selling it China because of the tight security on information exchange from China. India has recently asked the Canadian mobile phone manufacturer, Blackberry to strengthen their security features to make it suitable for the Indian conditions. “As of now, a temporary solution has been offered to the Indian government that lets security agencies to lawfully intercept the encrypted BlackBerry services” (Makwana). In short, Asian countries or the Eastern countries seem to be in a better position as far as the technological advancements or information security is concerned. Resource, food and water security Even though, America attacked Iraq citing the theory of weapons of mass destruction (WMD) possessed by Saddam, many people believe that the actual reasons were entirely different. Severe drinking water shortages and scarcity of oil resources forced America to attack Iraq in the name of WMD. Iraq is blessed with immense fresh water and oil sources. Because of the injudicious exploitation of natural resources, the Western world is facing scarcity in some of the essential commodities whereas the Eastern world or the emerging world has all such elements in their pockets. At the same time, it is the duty of the emerging as well as the developed world to take all precautions to protect the environment. The developed world already contributed heavily to the environmental problems and the emerging world should not repeat the same mistake. “The world community must work collaboratively to slow, stop, and reverse greenhouse gas (GHG) emissions in a way that promotes sustainable economic growth, increases energy security, and helps nations deliver greater prosperity for their people” (Climate Change) Role of the BRICs The role and contributions of the BRICs (Brazil, Russia, India and China) is going to be crucial in the future world. The economic power and the political power of these countries is going to be increased a lot in the future. India already acquired a temporary place in the UN Security Council and they are demanding a permanent place there. Being the second heavily populated country in the world and also a prominent member in the global politics, India’s chances of becoming the permanent member of UN Security Council is bright. China and Russia are already permanent members of UN Security Council. India’s entry into this permanent club will definitely increase the bargaining power of the BRIC countries. At the same time India and China are not in good political relationships. India is a democratic country whereas China is a communist country. Moreover, China believes that the Indian state Arunachal Pradesh belongs to them. These two countries were already engaged in a war over the Arunachal Pradesh issue. The asylum given to the Tibetan leader Dalai Lama and the support extended to the freedom struggle of Tibetan people by India is indigestible to China. In reply, China is doing everything possible to strengthen the conflicts between arch rivals India and Pakistan. Recently India and Pakistan (Both are nuclear powers) came close to a military encounter over the Mumbai attack issue. Pakistan does not like the increasing roles of India in the global politics and they are doing everything possible to destabilize India. In short, the economic and political development of India and China depends on how cleverly they are going to settle their mutual issues and issues with other countries. Conclusions Considering the rapid pace of the economic progresses in the Eastern countries compared to the Western countries, it is believed that the political and economical power may shift from the West to East in a couple of decades from now. BRIC countries are utilizing the possibilities of globalization more than any other countries in the world. Even though the shift in economic power is taking place from West to East, the distribution of wealth in the East is not uniform. Countries like Pakistan, Burma, North Korea, Afghanistan etc are facing lot of internal problems and hence their economic developments are too slow. The economic imbalances in the Eastern region may strengthen the conflicts between the Eastern countries which may result in military encounters and that of course are a major factor of concern in the future. Works Cited 1. “Climate Change”. US Department of Sates. 03 November 2010. 2. Hersh, Jacques & Schmidt,Johannes Dragsbaek. 2000. “Globalization and Social Change”. Publisher: Routledg. 2000 3. Holst, John D. 2007. “The Politics and Economics of Globalization and Social Change in Radical Adult Education: A Critical Review of Recent Literature”. Journal for Critical Education Policy Studies Volume 5, Number 1 (May 2007) 4. Makwana, Samir. 2010. BlackBerry Services to Continue in India. 03 November 2010. 5. National Intelligence Council. 2008. Global Trends 2025: A Transformed World. 03 November 2010. 6. Robinson, William I. 2003. “Transnational Conflicts”. Publisher: Verso, Meard Street. London 7. “Unconventional Fossil-Based Fuels Economic and Environmental Trade-Offs”. Rand Corporation. 03 November 2010. Read More