Global Economic Interdependence: The Effect Of Protectionism

The foundation of globalization is being tested by our current economic and political environment. Economic relationships that had been based upon mutual economic dependency are starting to unravel, the ability for new credit lines for companies and countries alike has been diminished and countries that depend upon a large number of exports are now suffering double digit percentage losses in incoming capital. These factors and many more like it have put the global interdependence on cross border commerce to the test.
The interdependence of countries like the United States and the People’s Republic of China is one such relationship that will be strained in years to come as demand for overseas products in the U.S. drops due to the lack of discretionary spending of the American consumer. The result will be even more massive losses in jobs throughout China with a larger impact in China’s Tianjin and Guangzhou regions. These cuts will in turn slash into China’s GDP, which will then create greater shrinking of its credit market thus making it harder for the American government to use Chinese credit to institute future stimulus packages. It is a vicious cycle that can reverberate across the globe with consequences larger than can be imagined. From the symbiotic relationship between China and America to the seemingly disastrous symbiotic relationship between Western European Banks and Eastern European economies, it can be inferred that globalization may be in its death throes. I believe however that our best friend in this crisis will be that of global economic interdependence. The theory that economic protectionism will rear its ugly head and force countries to focus internally will only force credit markets to seize up more so than they are at this current moment in time.
Those most affected by the current economic crisis are people in developing and export heavy countries, such as South Korea, Taiwan, Poland and the Ukraine. Other countries that rely upon foreign aid to keep them stable will see their funding dry up, causing civil unrest and in some cases mob inspired coups. To this day we have already seen food riots and civil unrest from Haiti to Greece and these events are only the beginning unless the world’s financial markets are collectively stimulated. One such region that will find itself with fewer donors to its government is Palestine. If a truly global economic meltdown occurs, The Palestinian Territories will become more unstable due to rising food prices and economically weakened security forces. This will result in further destabilization in the Gaza strip and force political moderates such as the Fatah Party to lose favor, increasing support for fundamentalist groups and movements such as Hamas and Hezbollah. The domino effect of this could cause the new conservative Israeli government to ramp up operations in the Gaza Strip, the West Bank and the Golan Heights. When one looks at the ramifications of this particular domino effect they should see a potential for early conflict with Iran due to their supply of weapons, training and support for the previously mentioned terror organizations. While Palestine is a good example of the lack of foreign aid due to the worldwide economic downturn the reality is that it is only one example. The same case can be made across Central and Southern America, the Caribbean, Eastern and South Eastern Europe, most of Africa and Central Asia. The implications of a lack of global economic interdependence are on a scale never seen before, the result of which could plunge even the most sophisticated Western democracy into a degree of chaos.
While we may have to focus on these difficult realities and suffer an immense test of faith in global interdependent capitalism, we must stay the course in developing our economic and political relationships with our current economic partners. Not only will the developing world and export heavy countries be tested, but entire regions may become powder kegs for civil unrest, especially those that are already embroiled in conflict.


Sorry Lou Dobbs, I don't quite agree with you.