Since World War II
In the years since the second world war, and the era of decolonization, global trade has been seen as a global good. In a way, this was to ensure that both the old colonial powers that gave up territory, and the new empire of the United States, had unrestricted access to markets – especially those of newly independent countries. While countries like India and China followed a protectionist path to their future, newly independent nations in Africa, Southern America and even nations like Pakistan found that allowing relatively free global trade would keep their elites happy.
The big change for India and China came, when they liberalised their economies and liberated their corporations to compete in worldwide markets, while opening up their economies to foreign competition. China liberalised after the death of Mao, and India liberalised in 1991, after the government almost had to mortgage the family gold to get India out of the deep economic crisis it was in.
For both India and China, with their billion plus population – the major comparative advantage comes from deploying highly skilled, and relatively low-cost labour. China can manufacture computers better and faster and cheaper, not just because it has state of the art factories, but it has extremely competitive rates of wages.
Similarly, India is in a unique position to offer services – especially in IT and linked areas – at a fraction of the price. It is this that enabled China to become the factory for the world, and India the back office. It is this growth that rankles.
Ever since India and China have begun gaining dominance in global trade – to different extents – the murmurs of job losses in the west have been growing too. And this has also coincided with economic downturns world over.