Journal of Asia-Pacific Business

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Deglobalization: Economic and Political Challenges

Riad Ajami

To cite this article: Riad Ajami (2022) Deglobalization: Economic and Political Challenges,
Journal of Asia-Pacific Business, 23:4, 273-276, DOI: 10.1080/10599231.2022.2145623
To link to this article: https://doi.org/10.1080/10599231.2022.2145623

Published online: 02 Dec 2022.

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JOURNAL OF ASIA-PACIFIC BUSINESS
2022, VOL. 23, NO. 4, 273–276
https://doi.org/10.1080/10599231.2022.2145623

EDITORIAL

Deglobalization: Economic and Political Challenges

During the last seventy years, a US-centric globalization following World War
II flourished. Free market structures and policies nurtured the growth and
advancements of global markets and improved the economic conditions of
a large segment of the global population. In a US-based global American
multinational system, US global 500 firms grew and flourished and helped
the economic recovery of Europe, as well as Japan and South Korea, and aided
other smaller Asian economies. The arrival of the Indian economy to the
global marketplace lifted the 1.3 billion inhabitants of the Indian lower and
middle classes. Furthermore, the Chinese economy with its equally large
population, experienced much faster economic growth than that of India.
China became the factory of the planet in our global village. Moreover, other
state-owned multi national firms from other emerging economies arrived to
the global economy and started to compete with US multinational enterprises.
The structural deployment of assets and capabilities of multinational corpora­
tions whether in multinational formats or transnational formats led to global
efficiencies and global economic growth and supported global links. The
geocentric mind set of US corporate leaders and decision makers, while
initially absent, became more evident to US global leaders and helped further
the development of economic structures in emerging markets.
The efficiency of the US multinational system led to economic growth not
only in the United States but also across Asia-Pacific economies. This helped
lead the arrival of the Chinese to global markets and the entry of China to the
World Trade Organization (WTO), helped to reduce Chinese poverty, and
fueled its GDP growth rate – a rate that ranged from 8 to 10% annually for over
3 decades.
COVID-19 exacted and demanded a lockdown, not only in China and
across the Asia-Pacific countries but in other countries and reduced GDP
growth rates worldwide. Following that, the economic benefits of globalization
were certainly put to question, and employees across the United States and
elsewhere pointed out that globalization helped the winners and impoverished
them (the workers). They also argued that the benefits of globalization accrued
mostly to the few at the top of the economic pyramid. Today we have serious
global economic challenges and a desire to disengage from the global economy
behind a mind set that the global economy did not benefit the majority of the
population in this global village that we are living in.
The evident advantages of a multinational corporate vision such as scale and
scope and technological growth and innovation, are now called into question.
© 2022 Taylor & Francis Group, LLC
274 EDITORIAL

Instead of looking at the efficiencies of a multinational system, most stake­

holders are arguing that the system needs to be effective not just efficient and
should address the needs of all including the populace in emerging economies.
In addition, concern regarding national sovereignty is echoed now by all
across the globe, as well as in the US economy.

Inflation, oil price increases, and a possible recession

The US increase in interest rates, among the highest within the last two
decades, could negatively impact US economic growth, as well as the economic
growth of others in emerging markets, as well as the Asian countries. While
the outcome of this high interest rate is not totally clear to US and other
Organization of Economic Cooperation and Development (OECD) policy
makers, there is a total consensus that it may lead to a global recession and,
possibly, stagflation. The hike in the US interest rate is increasing the value of
the US dollar against other major currencies in OECD countries, Asia, and
elsewhere. This could reduce the export capabilities of the United States and
increase US imports and could make it more difficult for other countries.
Emerging countries are dependent on energy and food imports. Moreover, oil
is priced in US dollars, and this will increase the cost to the oil importers and
will exact a heavy price. The interest rate increase in the US will also hurt other
emerging countries and make their debt payments more difficult and make it
more costly to service this debt or to borrow any additional funds on world­
wide markets.
The Japanese economy, among other OECD countries, is feeling the impact
of the US dollar’s increase in value in the foreign exchange market. To counter
this, the Japanese Central Bank recently started buying yen on the worldwide
market and selling US dollars. The Japanese government is determined to keep
interest rates in Japan as low as possible in order to help improve economic
growth. The weaker Japanese currency makes oil and food imports more
expensive in Japan and reduces the purchasing power of the yen. This will
lead to discontent by the Japanese worker and make the Japanese currency
weaker.
Besides Japan, our neighbor to the north, Canada, is equally concerned
about the increasing value of the US currency. This makes the Canadian dollar
weaker and increases the price of imported goods to Canada. Canada, similar
to Japan, is not interested in raising interest rates. Oil prices are emerging to be
another central issue of concern for global oil importers and US oil consumers.
The three-months’ decline in US oil prices that we have seen at the pump is
coming to an end. Among other factors, the oil price increase relates to the
announcement by the cartel, OPEC+, that they plan to cut production by
2 million barrels daily in a global oil market, estimated at 100 mbd. Moreover,
the European ban on Russian oil that will take effect by December, will also
 JOURNAL OF ASIA-PACIFIC BUSINESS 275

impact oil supplies and push oil prices higher. The available tools to the US
government and policy makers to arrest the oil price increase are limited, and
this is likely to fuel further inflation and impact US Fed policies attempting to
reduce inflation. Oil product exports being considered by the US government
are being resisted by US companies and will likely create more friction
between the US government and our European allies.
In conclusion, a stagflation could become a reality and could lead to
a recession in the United States and in global markets. Managing the global
economy in these turbulent and changing times will demand that we bring
together US policy makers and corporate decision makers to try to fashion
a better return to a globalization that will work for all. In the future brave
world of globalization, workers and other stakeholders will have to work
together to bring that about.
This is the last issue in Volume 23, and the publisher has recently changed
the rules to accommodate larger works. This is great news for us and for our
colleagues on this scholarly expedition because we have frequently had to
decline manuscripts for length. We may still do so – please, do not send us
your dissertations – but, we have more latitude now, so we will be accepting
more manuscripts for review. We are hoping that your academic year has been
progressing well and that your research may be enhanced or instigated by one
of the following articles:
Our first article of the issue is, “Effect of Corporate Governance on Free
Cash Flows via Dividend Payout,” by Affaf Asghar Butt, Sadaf Murtaza, and
Aamer Shahzad of University of the Punjab, and Jamshaid Ahmad of Higher
Education Department Punjab. The authors explore the efficiency of corporate
governance mechanisms on free cash flow through dividend policies of firms
on the Pakistan Stock Exchange.
The second article, “Vietnam’s ascendancy in the electronics trade and the
role of inward FDI,” by Craig Parsons and Vu Hong Ha of Yokohama
University uses Revealed Comparative Advantage (RCA) to examine the
recent and rapid increase in Vietnam’s comparative trade advantage. The
third article is by Peeyush Bangur, Manoj Singh, and Ruchi Bangur of
Banasthali Vidyapith, and Pankaj Kumar Singh of ICFAI Business School.
The article, “Determination of Properties of the Benchmark Index through
Strangle Option Strategies,” uses Tan 0 to analyze the Nifty Index of India with
a view to improving the stock market’s performance.
Our fourth article is, “Shareholder perks and stock performance: Evidence
during the global financial crisis,” by Yuta Uchida and Jittima Tongurai of
Kobe University and Xiangyu Chen of Zhejiang Gongshang University. The
authors investigate the phenomenon of cumulative abnormal returns during
the financial crisis of 2008.
Finally, our fifth article is, “CSR and Tax Avoidance: Are They Related?
A Perspective of Neo-Institutional Theory in Emerging Economy Malaysia,”
276 EDITORIAL

by Noorsakinah Abdul Wahab of Universiti Kebangsaan Malaysia and Mohd

Zulkhairi Mustapha and Nurliana Md Rahin of Universiti Malaya. This
decade-long study explores the complex relationship between CSR and tax
avoidance.
As always, we extend our deepest appreciation to our submitters, reviewers,
and readers for their sincere efforts on behalf of business scholasticism and our
humble journal. Thank you!

Riad Ajami
Wright State University
riad.ajami@wright.edu