Globalisation vs Protectionism

What do protectionism and an angry teenager have in common? – They are both unaccommodating, volatile and put their own interests before others’. Now suppose this angry teenager did metamorphosis into a mature adult, it is highly likely that his ideologies would lean towards globalization – the ability to communicate and integrate with those outside your comfort zone so as to be open to new ideas and innovations. Unfortunately, the world we live in today has gone from being that teenager to sprouting the wings of globalization and then gone back to being that sulky kid.
Simply put, globalization is the interconnectedness between the different countries. It is a powerful force that enhances international trade, ideas and culture. Protectionism on the other hand, imposes an imaginary yet powerful shield around a country, thereby preventing the entry of foreign goods and services into the country. Such a policy not only affects the economies of countries that primarily trade with the protectionist but also harms the protectionist. Citizens belonging to a protectionist nation generally witness a fall in supply as the goods that were once so easily available through import, now have to be manufactured from scratch. This leads to an increased demand and a consequent inflation in the economy.
Let’s get into the nitty-gritties of the aforementioned phenomenon with the help of a globally condemned policy that is said to have sown the seeds of protectionism in the present era. The incumbent President of the United States, during the 2016 presidential campaign, promised to put the interests of Americans before the interests of the rest of the world. He has certainly lived up to his promise, except that the very same citizens, whose interests were to be protected, actually lost more than they gained. This can be seen from the first set of import tariffs on solar panels that was imposed in January 2018 by the Republican. While the trade embargo aimed to boost the productivity of the manufacturing sector of the United States, it resulted in quite the opposite effect; A $28 billion industry that relied on 80% of its supply of solar equipment from foreign sources, took a direct hit as costs skyrocketed. However, the cherry on the cake was provided by the most recent tariffs on $200 billion worth of Chinese goods, since, it not only discouraged the inflow of certain goods into the country but also triggered the start of a “trade war”. This “trade war” was officially inaugurated when China, in response to the trade restrictions, retaliated by announcing tariffs on $60 billion worth of US goods. And so begins a game of tit for tat. Nevertheless, cakes and cherries apart, no one wins against protectionism; not even the policy makers.
So to begin with, why would a nation choose protectionism over globalization? Let’s compare and contrast. In the short term, protectionism leads to inflation since it leaves consumers with very little to choose from. However, protectionism could be a desirous long term growth driver owing to its ability to gradually improve the GDP of the protectionist nation; growth that arises due to increased manufacturing activities in the country. Globalization on the other hand, prevails over protectionism in both the short as well as the long term since it not only gives consumers plenty more to choose from but also acts as a trigger for healthy competition between domestic firms and foreign firms. Such competition in turn causes the hosts to improve themselves so as to not get diluted by “that large MNC” that poses an impending threat to its market share.
We live in a highly interconnected world in which ideas, trends and cultures traverse thousands of miles with the click on a button. It has been proved by numerous cosmologists that the universe is constantly expanding and that once it has ceased expanding, it will contract back to form a nutshell over the next billions of years. However, it would be a shame if we followed the same path.

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