AYABONGA CAWE: Some features of present-day global economy are familiar

While features of this phase of the global economy and its interdependencies are new (as in the case of the semiconductor wars and fifth-generation technologies), others are familiar if one considers the enduring geopolitical contests over securing supply of critical minerals and consumer markets.

Globalisation has not reached its nadir as many are suggesting, but because it is “as old as mankind”, as Samir Amin suggests, it is unfolding in a shifting and evolving terrain. The imperial preference systems of the early 20th century logically precede the contemporary preferences and blocs, albeit under different market and power arrangements.

After all, colonialism was a particular moment in the perennial pursuit of new markets and the expansion of the impulses and power-hunger of empires that predate capitalism. So too was the spread of Islam and Christianity, and the struggles associated with both, examples of earlier globalisation. All of these moments had features similar to our contemporary understanding of globalisation; a growing interdependence of national economies, cross-border trade in goods and services, and the mobility of capital, people and information.

I argue that the phase that is coming into being is elevating the role of industrial policy alongside geopolitical impulses of territorial advance and the acquisition of new markets. This occurs — in “time-honoured disguise”, to borrow from Marx — to aid territorial and economic expansion projects that protect national producers, reduce emissions and manage cross-border migration, advance geopolitics and existing forms of interstate coercion.

This is evident in what policy instruments and approaches to statecraft have emerged in the past few decades in response to the post-Cold War reconfiguration of economic and political power relationships.

In the US this included instruments like the African Growth & Opportunity Act and the use of competition policy, understood  more recently alongside the section 232 tariffs on the import of steel and aluminium for “national security” and other instruments such as the America Competes Act, the Inflation Reduction Act’s tax credits on new energy vehicles, or the use of export controls such as the foreign direct product rules. The latter category limits the export of US products feeding into Chinese production or enabling the Russian war effort in Ukraine.

In China, it has historically taken on many forms, including competition policy, export tax rebates and drawbacks and concessional state financing and territorial expansion of state-owned firms into “partner” nations in the developing world. In India it has included production incentives to incentivise investment in industries such as electronics and pharmaceuticals. In Indonesia, export bans on critical minerals such as nickel seek to encourage local beneficiation to shift the terms of trade. In Colombia, behavioural and windfall taxation on oil, gas and coal, alongside commitments to a trade policy regime focused on food sovereignty and the modernisation of agriculture through land reform for national security reasons.

That many of these actions have been found to violate WTO rules indicates that the current moment of globalisation is confronted with contradictions around the credibility of multilateral institutions as a platform for global consensus. Rather than being an enduring feature of the global economy, such consensus is open to constant renegotiation and contest.

Here at home industrial policy has correctly focused on the retention of capabilities in value-added tradable sectors such as the automotive, steel and chemicals sectors, through production and trade incentives, confronting market concentration, encouraging of competitiveness in industrial sectors key to meeting basic human and market needs (such as agro-processing textiles, furniture and building materials), and enabling entry and advance into new sectors like global business services, white goods or renewable energy.

In pursuit of a reduction in the non-oil import bill by a fifth, SA social partners, in balancing a pragmatic acceptance of the principles and constraints that govern the current global order, seemingly accept the cold reality that the policy armouries of developing and developed economies alike are being filled with increasing firepower to intervene in markets and across society.

All in an attempt to encourage the expansion of local production, improve firm-level productivity and secure — under trying conditions — employment-creating structural change.

• Cawe is chief commissioner at the International Trade Administration Commission. He writes in his personal capacity