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Event Type: News & Events
Event Location: IIDS Campus

Talk program with H.E. Marten van den Berg, Ambassador of Netherlands to India, Nepal and Bhutan

Institute for Integrated Development Studies (IIDS) and the Consulate of the Kingdom of the Netherlands in Kathmandu jointly hosted a talk program with H.E. Marten van den Berg, Ambassador of Netherlands to India, Nepal and Bhutan on 13 December, 2022 at the IIDS campus. The topic of the talk program was ‘Globalization, Geopolitics and Developing Countries: Challenges and Way Forward’. The program featured opening remarks from Dr. Biswash Gauchan, Executive Director of IIDS and Mr. Deepak Sapkota, the Honorary Consul of the Netherlands to Nepal.  Amb. Durga Prasad Bhattarai, distinguished fellow of IIDS, gave his concluding remarks at the end of the program.  

Dr. Gauchan gave a brief overview of the topic of discussion, revolving around international trade, along with the challenges faced by Nepal as a developing country, in the context of global trade. “When Nepal joined the WTO in 2004, its trade deficit was 15% and has now hiked to a staggering 36% compared to 10% of its peers. Trade deficit in itself is not bad if managed properly.” He further added that the economic rise of China and India does not seem to have any positive spillover effect on Nepal. Instead, it will pose geopolitical challenges in the future with the Ukraine-Russia war in the backdrop.  

Impacts and Patterns of Globalization 

Amb. Marten commenced his session by mentioning the steep rise of globalization since 1986, with a conspicuous rise in the global average growth trade intensity of 3.4% between the time period of 1986 to 2007. The increase in trade from the year 1986 can be attributed to factors such as technological advancement, substantial decline in shipping costs and bilateral trade negotiations. Global trade was further boosted when China entered the global market as a member of the World Trade Organization (WTO) in 2001. However, after the global financial crisis of 2008 the period of “slowbalization” or deglobalization commenced with a steady decline in the average growth trade intensity.  

Impacts of globalization can be seen in all sectors and regions of the world whether they be negative or positive. On the positive side, globalization has helped boost the global economic growth, lifted millions out of poverty, advanced technological innovation and fostered foreign direct investment. On the other hand, inequitable distribution of capital and resources, income disparities and obstacles such as supply chain disruption caused by Covid-19 pandemic have risen. In addition to the above-mentioned impacts and consequences of globalization, Amb. Marten shed light on the unintended consequences of globalization specifically relating to trade deficit, trade wars and how globalization brought forth the burning issue of nationalism.  

There are two misconceptions regarding trade deficit, that it is by definition economically unhealthy for the country and it leads to job losses. Amb. Marten was in tandem with the remarks made by Dr. Gauchan regarding the misconception of trade deficit. Amb. Marten stated that the ills of trade deficit depend on the context and trade deficit itself is not necessarily bad. But this misconception has been misused by countries to implement protectionist measures against cheap imports. Furthermore, this misconception has served as a populistic and nationalistic plank for politicians to make political gains in their country, which have affected the international labor market.  

He also explained the indispensable role of China for globalization. Amb. Marten mentioned the relevance of China in the global market and as the major trading partners for most of the countries around the world. China’s economic heft is such that if China is not included in the global supply chains, then there would only exist multiple regional supply chains around the world, not a global one. However, China is currently witnessing a slowdown in its economic growth pattern and a combination of factors has engendered China’s economic slowdown. Firstly, the strict zero-covid policy in the form of lockdowns adversely impacted their economy. Secondly, the disruption in the global supply chain has forced countries to look beyond China. Thirdly, China is steadily experiencing the untoward consequences of their negative population growth.  

Prospects for Nepal 

After the financial crisis in 2008, there has been a decline or slowbalization in the trade of goods, however, as services become more tradeable and with technology advancing at a rapid pace, a surge in service trade has been observed in recent years. This trend in the globalization and global trade of services is especially beneficial to geographically difficult, landlocked countries like Nepal. “The future of Globalization is not in manufacturing but in services. And, it will be good for countries like Nepal”, Amb. Marten stated.  

Amb. Marten proposed that the policymakers of Nepal can replicate economic clusters or centers of excellence established in the Netherlands, partnering with the private sector as well as international partners. Along with these institutions, Amb. Marten suggested stakeholders to strengthen universities and create competitive jobs for Nepal’s economic development. Amb. Marten also highlighted the similarities between Netherlands and Nepal as being smaller countries when compared to their neighbors. Global institutions have a crucial role for both Netherlands and Nepal, as they do not have the capacity to influence global politics. Thus, it becomes necessary for smaller countries to strengthen the rule of law and support global institutions.  

In the closing remarks of Amb. Bhattarai acknowledged the talk programs’ enriching discussion and considered Netherlands as a next-door neighbor of Nepal. He highlighted the close relations between Nepal and Netherlands and echoed the fondness of both countries’ people and culture for each other. He believes that “policy instability” is doing greater damage than “political instability” in Nepal. There is a need to strengthen institutions, save domestic and foreign policies plus focus on the rules based international order. 

The event summary was prepared by Ms. Tanushri Gauchan, Volunteer and Mr. Samar Rana, Senior Research Assistant 

 

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