World is moving towards De-Globalization

Some of the readers might be surprised by reading the header of this article where I have mentioned the word De-globalization, in 2017 when everyone is talking unipolar world and global economy and the challenge from China I am talking about De-globalization. Sometimes it is very important for us to understand things in advance and act accordingly, timely action on the new scenario will make things easy.

I place a statement “World economy is moving towards de-globalization” you may not believe me because you are still thinking about world a global village or a unified marketplace. After reading this article your thinking will change, and I live critics but first read.

On 8/31/2016, Trump gave a speech about his 10-Point Immigration Plan, which was detailed on the Wall Street Journal on 9/1/2016 here and on PBS here. In this position, he talks about wanting to boost wages of H-1B workers and imposing a labor market test for employers before they can petition for a foreign worker

Keep the H-1B program but raise the bar: Depending on the scope of the changes, those changes to the program can possibly be implemented through internal memos within the federal agency (President tells DHS how to do their jobs). For example, a requirement that employers meet 125% of prevailing wage for each petition could potentially be quickly executable. There is already a prevailing wage requirement, so asking employers to meet a certain amount of the wage is not necessary a new requirement. However, a more burdensome requirement such as requiring employers to first conduct a labor market test prior to filing a petition with USCIS might require public notice and comment before a final rule can be enacted according to the law. This is because there is no requirement currently that imposes a labor test by employers. The timeline for rollout of changes would vary depending on the method for implementation.

Get rid of the H-1B program entirely: The reason why the H-1B program exists is based on the Immigration and Nationality Act (INA), a statute passed by Congress. To get rid of the program entirely, Congress would need to amend the INA. The President could submit a bill and if the Senate and House passed by simple majority, the bill could be signed and enacted into law. Because there is a majority of Republicans in the Senate and the House for this upcoming term, this could theoretically happen. Though, it’s unlikely that one single bill designed to get rid of the H-1B program would exist by itself. It will likely be encumbered with a bunch of other programs for a more comprehensive-like immigration reform bill. If that happens, we’re talking at least a few months for somebody to draft something this complex

As per the analysis there will be a line drawn on minimum wages of fresh H-1B immigrant aspirants and renewals and that minimum criteria will be 10mn USD per annum. This can be higher also because criteria are not only crossing cut off line but visa ranking will be made on the list filtered on the basis of higher to lower wages. In this manner cut off line can go little higher side.

Now after implementation many Indians and other nationals working on the same visa permissions will have to move back to their countries.

Is this all I was talking about?

No this is just one aspect another big change in the backbone of globalization itself.

Donald Trump stepped up his attacks Sunday against U.S. companies that move production offshore and fire workers. In a posting on Twitter, he said there would be consequences like a 35% import tariff “for these companies wanting to sell their product, cars, A.C. units etc., back across the border. Please be forewarned prior to making a very expensive mistake!”Instead of moving a factory outside the U.S., he encouraged business leaders to explore relocating factories between states and negotiate for tax breaks, encouraging a strategy that some state officials fear will escalate an arms race of incentives. Mr. Trump helped fuel those concerns by engineering $7 million in tax breaks last week to save 800 jobs at a plant in Indiana owned by Carrier Corp., a unit of United Technologies Corp.

Looking at this we can easily understand that Amerika want its companies to manufacture in their own country, they are avoiding any kind of anti-dumping import duty as this will make them against the WTO policies so now the thrust will be in bringing back American companies who have shifted their production out of America but supplying products back to America.

American companies explored the opportunities in globalization and major time FDI moved out from America in the wake of the concept of globalization. Now with the changing scenario the same policy will be reversed for the benefit of their country. So in other words we can say when India is talking about “Make in India” America is saying “come back to America”.

Now with this kind of changing world whole world economic system will acknowledge a upcoming change in global economy. No doubt worst hit will be, china but India will also see a negative swing in job market and other micro and macro-economic situations.

There are many economists in India who can analyze this with different view point but my objective of writing this blog is that now it’s time to do all analysis and reach to concrete action plan before we start experiencing the outcome of changing world environment.

I look at this phenomenon as De-Globalization, as other countries will follow this and will try to retain their wealth in their country only.

My area of interest is to study the effect of all this on Indian economy.

How will it affect Indian economy?

First of all, many Indians who are working in IT and other companies below the line will be coming back and will fill up positions in India based IT companies. As It companies will face complexities in US there will be limitation IT jobs in India. Which will hit back our idea of increasing jobs. I am not talking about any kind of turmoil in IT industry, as US will not be able to cater their IT requirement by in-house IT production and a good level of dependency will be there. In future there are fair chances that many companies can put forward a question mark on these policies as this may affect the total profitability and even viability of business and US will have to roll back many policies.

As us is willing to get back their investors investing their money outside their country this followed by other countries can also decrease FDI investments in India.

Do we need to worry about this?

Yes, we should be worried about this and start thinking about changing our own policies to cope up with upcoming changes.

The only way to go forward will be to start thinking about increasing production by our own and reducing dependence on imports. In clear terms we need to maintain our balance of trade by increasing production.

India Trade	Last	Previous	Highest	Lowest	Unit
Balance of Trade	-10369.40	-13008.90	258.90	-20210.90	USD Million	[+]
Exports	23884.97	20009.58	30541.44	59.01	USD Million	[+]
Imports	34254.30	33018.50	45281.90	117.40	USD Million	[+]

We cannot avoid buying Mineral oil but everything else can be produced in India, others which cannot be produced in India should be strictly demotivated like Gold, precious metals, think we are wasting 59.6 billion USD in importing Gold Silver and gems. We are also importing electronics, machinery, organic chemicals, Plastic, fertilizers optical lenses etc Imported plastics and plastic articles had the fastest-growing increase in value among the top 10 import categories, up 41.8% for the 5-year period starting in 2011. In second place for improving import sales were optical, technical and medical equipment, up 17.6%. Then came Indian imports of animal or vegetable fats and oils recording the third-fastest gain at 13.6%

We need to understand that India has a market for these products and world is looking towards India for consuming their products, why not we produce our own requirement.

We are importing heavily from china, during festive season we import electrical lighting from china. We have a big market and we will have to look forward towards producing our own requirement by our own rather then depending upon imports.

This will have a positive impact on our job markets, many new entrepreneurs will develop and prosperity will prevail.

We should also start thinking on different methods of decreasing imports from china. We can also think of imposing higher taxes on Chinese goods which will make Indian products more affordable and Indian production viable.