When the question of a borderless economy arises, we often find ourselves in a dilemma. Usually, we visualise utopia, an open economy which is free of any trade biases. To experience a world without borders has been the dream of many and there is a good reason for it. Free trade means free movement of resources, be it capital, manpower, technology, or technique.
Having said that, it makes us think over the pragmatism of it all. An open economy is a welcoming opportunity for bigger, affluent companies to expand their business in international territories, but meanwhile, they swallow local indigenous markets.
Most importantly, this could lead to the concentration of power in the hands of a few. This can be very dangerous for developing economies. The big boys would virtually aim to McDonaldise the market.
With a discerning past, it won’t be wrong to imagine a massively corrupt world soon, slowing down the economy and favouring only the rich. Such a world would have drawbacks like unemployment, crime, and social disorder History tells us that large developed economies overpowered the third world countries and exploited them for decades, to reap undue benefits till the time they revolted. India and its neighbours are a living example of the same.
As a rational citizen, instinct would guide one to migrate to richer parts of the world with more employment opportunities, to developed and strong economies which have greater resources. Thus, increasing the talented population in those very areas. This means underdeveloped and developing economies would drift further from growth. On a parallel note, this would also gradually cause a huge chunk of brain drain in some major parts of the world.
Since the outcome would most likely lead to more number of jobs being taken over by the more competitive immigrants, this would leave the local aspirants with fewer options. This scenario can vividly be seen in the largest economy of the world, USA. The country has been threatened by the massive influx of highly competitive and skilled immigrants from across the world, and it has retaliated by making the H-1 B Visas (working Visas) extremely difficult to obtain.
But, a closed economy cannot be considered a recommendable solution either.
And, it is also true that the protection of domestic companies is the topmost priority for almost all countries since it helps the native companies in establishing themselves through expansion. On the other hand, it can come across as an injustice towards the citizens since they are being deprived of access to newer products and wider choices.
Moreover, restrictions on imports may improve welfare in the short run by encouraging domestic production and employment in protected industries. However, the rest of the world will retaliate in the long run and then, the export industries will be hurt. Thus, such beggar-thy-neighbour policies often lead to a negative effect on national and international economy in the long run.
Therefore, we can’t have a rigid one-way system. It is always safer to say that a balanced economy is the most suitable model for a progressive world