North ignores ‘perfect storm’ in Global South

February 16, 2024

KUALA LUMPUR – Globalization’s protracted decline

The age of globalization had mixed consequences, unevenly incorporating national markets for labor, goods and even some services.

It ended gradually with the trend far more pronounced following the protracted worldwide stagnation since the 2008 global financial crisis.

Sometimes still referred to as the Great Recession, Western central banks resorted to unconventional monetary policies, mainly “quantitative easing,” to keep their economies afloat.

But easier credit enabled more financialization and indebtedness than recovery, let alone sustainable development.

But the end of the era of globalization did not mean a simple return to the status quo ante. Most economies had been transformed irreversibly by economic liberalization, both nationally and internationally, with dire lasting consequences.

Market pressures for fiscal austerity were strengthened by conditionalities and advice from international financial institutions.

This inevitably led to deep cuts in government spending, leaving little for public investments which might contribute to the recovery of the real economy.

Interest rate hikes accelerate stagnation

The 2008 Wolfowitz doctrine, from late in the Bush Jr presidency, was revised by the Obama administration to launch the second Cold War.

The Covid-19 pandemic and the last two years of wars and sanctions have worsened supply-side disruptions, exacerbating “cost-push” inflation.

Some prices spiked due to opportunistic market manipulation by investors and speculators as well as deliberate disruptive interventions for political advantage.

The rule of law — even once sacred property rights — has been sacrificed for political expediency,