THE WORLD IS CHANGING. It is highly unstable with geopolitical tensions that would last long term.At least 30 to 40 years. And we have to work with a different perspective now.
I said in my PhD thesis in the early 2000s that the more the globalisation, the more that we have economic globalisations, the more we will have tensions over identity in each country.At that time, we thought that if we have more globalisation, we will have more democracies and more standardisations in terms of cultures. We were wrong.
Because globalisation has a big impact on every country’s economy, leading both opportunities and pressures. And depending on your own status, you will either have stability or not. This is important to keep in mind.
So today, global trade is shifting from hyper-globalisation to a more strategic and fragmented model. That’s what I observe. Rising protectionism, geopolitical tension and supply chain vulnerabilities have led to the first impact―re-shoring, bringing production back home.
And the second point is friend-shoring―relocating supply chain to trusted partner countries. This is where India-Europe comes in. We know that India and Europe were negotiating a free trade agreement. That can have a big impact. It also gives an opportunity for India and Europe to work together and to strengthen collaborations for common interests.
Europe has always seized opportunities. And when you look at this geopolitical situation, the opportunity of Europe is to strengthen itself. It means to have what we call strategic autonomy ,or in other words, our own economic sovereignty, in terms of what is important in manufacturing and industry for Europe.
The good thing is that now you have this awakening of Europe and a consensus to work together and to get this autonomy. I think that this is a good opportunity for Europe.
Another point is defence. Europe has to strengthen its defence strategies, and it is working on it.
Where does this leave the smaller countries of the world? I think There are maybe two directions. The first is for each country to look at what the essential industries they would want to focus on, develop and prioritise. And also, what are the strategic industries you need to keep within your own country. And the point is, have different partners, not just one. And if you lack certain capabilities, you need to collaborate with the most reliable and trusted partners. Ultimately, no country can afford to depend on a single ally―it must build a network of diverse partnerships.
If you are not strong enough, you have to gather yourself into alliances, regional or cross-continental―economic alliance, defence blocs and so on. We are witnessing a redefinition of global collaboration. It is constantly evolving, and this marks a new direction.
Since it is not for the short term, it is essential that nations build greater self-reliance. It is not just trade and defence; education is very important, so is anything from , artificial intelligence, cybersecurity, space are equally important. We need to embrace this new model of collaboration which will be a win-win for both India and Europe. That is the spirit of the free trade we hope to finalise by the end of this year.
―As told to K. Sunil Thomas.
The author is the dean of ESCP, the world’s oldest business school, in Paris.