By Vishal Kale
A cursory glance at many a nation will reveal increasing resistance towards immigrants. In fact, this argument can be quite successfully stated for economics and trade in general, with rising barriers in quite a few places. Thus, any analysis of protectionist tendenciesbe it human capital or economic factorshave to be analysed keeping this in the backdrop. Rising prosperity of immigrant classesfuelled by easy information flow from around the world, in addition to other factorscreates a situation where we can expect much more of this, before things stabilize.Sundar Pichai (an Indian American currently the CEO of Google) has expressed concerns over the restrictions placed on immigrants | Photo Courtesy: Prospect Magazine
The sectoral privileges
The world is developing on two frontsbetter infrastructure and human development. There have been major structural changes in economic trends as compared to two decades earlier. This has created sizeable markets around the globe, as well as the ability to host manufacturing or service facilities to cater to them.
[su_pullquote align=”right”]They thrive due to the market size and location, cost of production arising out of lower wages, infrastructural costs, as well as economies of scale[/su_pullquote]
Some sectors demonstrably benefit from shifting their manufacturing or services to offshore sites. They thrive due to the market size and location, cost of production arising out of lower wages, infrastructural costs, as well as economies of scale. It is vital that some markets have invested in creating specific infrastructure around identified areassteel and handsets are a case in point for China, and IT Services for India. This has given them a comparative advantage over other locations, including the home nations, for companies in these trades.
The aftermath of an economic collapse
This has been complicated by the biggest shock the global economy got, starting 2007. The globe has still to emerge from its rippling after-shocks. This was by all accounts the single biggest depression to hit the globe in economic terms since 192933. The ensuing mayhem was bound to have ripple effects on culture, and society as well. Large numbers of people lost jobs everywhere, but more so in the West, especially in the USA. This is of course a simplified statement, for the purpose of driving home a point.
[su_pullquote]Sitcoms and comedy shows of the US depict how it has captured the imagination of at least a segment of the population[/su_pullquote]
Thus, we can see that it was a complex series of events that has lead to anti-immigrant pressures and rising protectionist tendencies. This is bound to continue even after relative economic stability has been attained. The growth of the developing economies relative to the developed world is a reality, and is here to stay. Sitcoms and comedy shows of the US depict how it has captured the imagination of at least a segment of the population. They are seeing, from their points of viewimmigrants thriving in their cities, with jobs. They are seeing the home nations of these immigrants also growingfuelling a potential backlash. The response might not have been so stridenthad it not been for the Economic Crash.
The light at the end of a hiccup
Critically, unless that Crash is analysed, and understood, we are at a risk of repeating the same. Unless the West understands the nature of global capital flowsit’s worldwide socio-economic impact; and linkages with societal trends and movementswe cannot arrest this protectionist trend.
In light of the above, it is clear that this is a present trend with powerful emotive as well as economic causes behind it. What this tells us is, tackling this will not be easy. The ramifications of this will be both good and bad. Some of the Indian industries are dependent on the billing from US shores. For them, the outlook turns bearish. There might be some hindrance in the cross-border movement of talentwhich may or may not impact projects.
There is another aspect to thisif this forces the said industries to innovate and grow up the value chain, there might be a silver lining in all this as well. This may even be leading to enhancing core competencies. Not only that, it might also reduce the Brain Drain, enabling more talent to remain. Given the growth story of India, there is an even chance that they may prosper. In the background, the Startup Ecosystem gathers momentum in India, combined with the start of calls for a level playing field, as echoed in a recent article on LinkedIn by Ms Vani Kola. Thus, it might just prove good for us; and not so for the USA. It has an even chance of creating competencies where it isnt as strong, tilting the scales in favour of developing nations.
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