Globalisation versus Regional groups

Globalisation refers to the process by which businesses (MNC companies) or other organizations develop international influence by building supply chains that transcend international boundaries to source cheap and abundant raw materials from different nations. These organisations are guided by motive of profiteering and are least bothered about the socio-economic development of the locals. In other words they show scant regard for the local/regional problems. Thus globalization enhances interconnectedness of different World nations via the concept of multinational corporations and encourages them to negotiate free trade agreements so as to reduce barriers to trade, thereby benefitting their home governments in terms of tax contributions, but leaving the local problems unaddressed.

The smaller nations whose resource endowments are exploited by these MNCs are at loss as they don’t have the bargaining power to demand a share in profits. In order to enhance the collective bargaining power of such nations, they come together to form regional organisations such as ASEAN, SAARC, BIMSTECH etc. Thus, tendencies of regionalization strengthen to address regional issues, as global order is more and more being dominated by powerful nations via institutions such as UNSC, IMF, WB.

These regional blocks develop their own set of rules and regulations which over time get entrenched as their creed and will act as a stumbling block in their future attempts of integration with the Global World order.

For ex. ASEAN nations are taking time to accept the new rules of the proposed TPP agreement thus delaying their integration with the other World nations.

Similarly, India along with other BRICS member nations in 2012 established the New Development Bank Headquatered at Shanghai to fulfill its geostrategic interests by way of lending to other emerging nations. BRICS nations have realised that as long as developed nations continue to dominate institutions like IMF and World Bank, they will continue to dictate the World order by framing rules and regulations suited to their own needs. Thus, if multipolarism is to be achieved then BRICS nations need to unite and set up an alternative to the existing system in the form of NDB. This initiative will strengthen regionalism and help address not only local problems but raise their bargaining power at global platforms. 

By: Abhinav