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In fact, long before the coronavirus outbreak, globalization had experienced a recession, the peak of which occurred before 2008. The global financial crisis. Later, she did not return to the previous level.
The pandemic will certainly highlight the various risks associated with over-reliance on the global supply chain, encourage the renationalisation of production, and emphasize the importance of international independence. The expected result is the acceleration of change that had begun a long time ago and was moving towards a new, different and more limited globalization.
The exchange of goods, services, capital, people, data and ideas on a global scale has certainly had benefits. But during this pandemic, the public was aware of the risks of this membership. For Americans, the first major sign was an interruption in the supply of Apple’s iPhone from China, where it closed factories due to the virus. Subsequently, other producers also reported the cessation of production.
When the pandemic hit the US In the USA, Americans realized that 72 percent of pharmaceutical ingredient companies are located abroad, primarily in the European Union (EU), India, and China. It is from abroad that up to 97% come to the United States. Antibiotics Liberal states, open to globalization, such as France and Germany, not only closed borders to travelers, but also banned the export of protective masks, even to friendly countries (this ban was later lifted, but persisted astonishingly) . When each state suddenly begins to think only of itself, it would be worthwhile for the little ones to reflect on the idea of international independence.
This will have to be considered. From the outset, the pandemic highlighted the fragility of supply chains, fostered national decision-making rather than international cooperation, and strengthened nationalist arguments within producer countries and in favor of more limited migration.
This will not be the end of globalization. Rather, the world will see a different and more limited version of global integration than in the past three decades. Its contours are barely palpable, but nonetheless visible.
Accelerated trends are not in the news for a long time now. There has long been a debate about a flat world, about frictionless capital flows, about free trade. But more recently, politicians have debated state boundaries, China’s secession, trade wars, Brexit, populist nationalism, and defending national sovereignty by resisting all-encompassing American and Chinese tech corporations.
Key indicators show that change is taking place. Before the pandemic, world trade in various goods continued to grow, but in terms of the size of the global economy, the share of trade is now less than it was before the financial crisis. Financial flows between countries peaked in 2007, and progress in further liberalization of world trade stagnated much earlier. More than ten years ago, the level of foreign direct investment worldwide had not reached previous peaks. The governments of EE. USA And other countries are tightening export controls on key technologies, and Internet access is increasingly fragmented on national lines.
Globalization is complex, not all indicators point in the same direction. Trade in goods decreased, but trade in services intensified. Data flows between countries have intensified, although China and Iran are working to slow them down. Before the coronavirus pandemic, the level of international travel and study had peaked, and migration was so frequent that many called it a crisis. In general, the slowdown in globalization after the peak has been gradual, but it is real.
This can be seen in the preferences of many countries in the world. Today, even the most globally oriented politicians do not shout about the advantages of open borders, trade and cash flows, about international obligations. Many of the recent elections have won, highlighting what they have called globalism, the damage and promising to protect against the effects of broader openness. For defenders of globalization, protection is a change of qualifications, transfer of payments and greater security, for nationalists: strict borders, tariffs, immigration restrictions. Where the promises of globalization have dominated political discourse in the past, threats have emerged front and center.
It is not difficult to see why. Globalization is often blamed for financial crises, especially in 2008. The global financial crisis, but also due to the 1997 crisis in Asia, other crises in Russia, Turkey, Ecuador, Cyprus and elsewhere. According to many, globalization has increased crime, global competition, and inequality between and within nations. International trade networks consume more energy and emit more greenhouse gases. It is not new that diseases are spreading rapidly across the continents. Since 2003 The world has been exposed to the SARS virus, the swine flu, MERS, Ebola and Zika.
Perhaps the biggest argument against globalization is that it supports the interests of the world elite at the expense of most populations. Globally, this is far from true: international economic relations have led to a sharp increase in GDP, a reduction in poverty, better living standards, health and much more accessible information. It is true that many of these advantages have been considered fragmented and taken for granted, and their disadvantages, such as the loss of manufacturing jobs, are considered quite concentrated. And those who have suffered as a result of globalization now have a political voice: populist parties promise sovereignty, nationalism, decisions at the national level, as well as the weakening of supposedly unreliable international institutions led by the elite.
To idealists, a global pandemic seems like a global threat that could usher in a new era of international cooperation. In reality, national governments make decisions individually, almost without consensus. The G20 called an extraordinary meeting of world leaders (teleconference, of course), followed by abstract promises but without concrete commitments.
The Chinese government increased the production of protective masks, instead of selling them, the governments of the main European countries temporarily banned their export, the USA. USA They tried to attract the German company that develops the vaccine. The coronavirus crisis is global, but so far there have been reactions nationwide.
For many, COVID-19 does not seem to be the reason for the nations of the world to concentrate, but the clearest example of an already failed globalization system. “The United States is one in the face of threats to global health,” Peter Navarro, economic adviser to the President of the United States, Donald Trump, told the Financial Times.
“This is why it is so important that the Trump administration recovers production capacity, supply chains for essential drugs, and reduces the United States’ dependence on foreign countries,” he said.
When such sentiment prevails, it is easy to imagine that world governments are reviewing international travel, migration, supply chain risks, export controls, information sharing, etc. – in short, the essential components of globalization. The new slogan will not be to reduce costs, but to reduce risks.
Many of the drivers of globalization are data, capital and goods flows, economies of scale, etc. It will not disappear, but as global moods, government policies, and governance principles change, globalization will change. A coronavirus pandemic will mark not the end of an era but its transformation.
First, states may become less dependent on each other for fear of failure, as well as less dependent on China. Weaker supply chains are not to blame for globalization, but for companies becoming dependent on a single source of supply. It is easy to imagine how companies, on their own initiative and at the behest of governments, expand their supply sources, moving to national or regional production. Automation and other production technologies that save people would facilitate this process, and the ongoing trade war with China would speed it up.
Second, economic integration will continue to take place, only moving from the global level to the regional and bilateral levels. Since 1993, the Uruguay Round of multilateral trade negotiations has not advanced much. Instead, the EU has concluded separate trade agreements with South Korea and Japan, African countries are talking about a continental trade zone, and an agreement similar to the Pacific Free Trade Agreement has entered into force after Washington’s withdrawal. Even the China Belt and Road initiative is building regional and bilateral ties rather than global ones.
Third, the political debate in the US is likely to continue. USA And in many Western countries about the losers of globalization and how to protect workers from economic loss. The problem is that the chosen instrument, protectionism, only exacerbates the problems. Until now, the question of how to protect workers without abandoning the benefits of a globalized economy and higher living standards has not been answered.
Perhaps the coronavirus pandemic marks the end of the post-Cold War era. Admiration for greater international integration has waned. On the other hand, it would be foolish to replace globalization with isolationism and protectionism, which have previously impoverished many nations. The next phase of globalization, and the precise outlines of more selective border crossing agreements and post-pandemic models of independence, will be a major issue likely to revolve around important political debates in the years to come.
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