I know that you are all curious to hear my comments on current developments yet I would like to talk about the things we experienced throughout 2018 as another year comes to an end; because 2018 is a “lost year” to me. We should focus on top big events and stories of this year while there’s still a chance.
Last week, I got an email from a Serbian academic. He is the author of a newly published book on globalisation and he asked me to write a review for his book as the book involves passages about Turkey. I told him that I would write a review for him after I look through the book.
The name of the book is “Two Faces of Globalisation”. As the name implies, in the book the author talks about the pros and cons of globalisation, including banking and foreign trade issues which are closely associated with Turkey. Also, I can easily say that the book involves a comprehensive and timely analysis of the notion of globalisation. I dare say that protectionist measures implemented especially by Turkey since 2014 to counteract adverse effects of imports, US President Trump’s tax reform to encourage US companies to bring their cash home as well as protectionist practices in the rest of the world makes us all wonder: “Is globalisation coming to an end?”
While the book allows us to observe that China, with a prescient vision of future economy, is already trying to change its image long-time associated with “low-cost manufacturing”, the author is showing us that the Chinese are not only ones that realized the failures and flaws of the current system. Accordingly, I consider “Two Faces of Globalisation” a valuable work worthy of high regard.
In the book, there is a passage where Turkish Professor Dani Rodrik argues that world countries are stuck on horns of a “democracy-nationality-global economic integration” trilemma. He means that rapidly globalised countries are slowly losing their cultural identity and national values, which is unacceptable to governments. According to Rodrik, it is not possible to implement democratic & national values and global economic integration simultaneously, at least under current circumstances. He might be right.
“Does globalisation prevent governments from creating national policies?”
Considering that Rodrik is an economist himself, I thought he might be inspired by the concept of “impossible trinity”, according to which, it is not possible for a government to pursue free capital movement, fixed foreign exchange rate and independent monetary policies simultaneously.
We actually live in an era where international capital flows keep on increasing with expanding globalisation and governments came to a point where they do not allow central banks to implement any national monetary policy. When we raise interest rates to control inflation, we also see a rise in international capital inflows as well as in money supply, but whenever we decide to decrease interest rates to enliven economic activities, we then have to face undesired results, especially capital outflows. The fact that capital inflows into emerging markets have further accelerated with the rise of globalisation has led to uncontrolled economic growth through borrowing. Central Banks’ hands remain tied since almost the beginning of the 21st century.
No consensus exists among scholars about the historical origins of globalisation. But, it could be dated back to the 12th century. Globalisation brought various Social, Technological, Economic, Ecological and Political outcomes throughout every era of its history. These outcomes help us have a better understanding of the reason why and how some events or developments in the history have arisen in the first place.
In short, globalisation is irreversible, despite all efforts to reduce its negative impacts. The set of rules and standards implemented in almost all sectors, including Banking, Finance and Foreign Trade are pure indicators of the fact that it is indeed irreversible. Capital and Monetary Markets, even Football and Film Industry are managed with common global practices today. Although these practices are claimed to be “global”, we cannot deny the fact that the rules are set and regularly changed by the dominant powers in the world.