Globalisation is the ease of movement of people and goods across borders. The COVID-19 pandemic has immensely affected trade and Globalisation as new barriers have spawned at a breathtaking speed. Countries have closed their borders, issued travel bans, Supply chains have been paralyzed, and exports have been restricted; This has made Globalisation indeed fall victim to the Coronavirus.
Globalisation in Decline
Globalisation was already in decline before the COVID-19 pandemic as it reached its peak before the 2008-2009 global financial crisis and has never recovered since then. The pandemic will undoubtedly highlight the risks associated with overdependence on global supply chains and put stress on the notion of international interdependence. It is likely after the coronavirus pandemic; there will be an acceleration of changes that have long been in motion a new and more limited form of Globalisation as countries will strive towards self-independence.
The Coronavirus Effects on Globalisation
During this pandemic, the risks of dependency have entered public consciousness even though the worldwide interconnectedness of goods, services, people, data, capital, and ideas has produced immense benefits. The first visible sign in the U.S came when virus shuttered factories in China prompting delays in Apple’s delivery of Iphones as other firms reported interruptions. When the pandemic finally landed in the United States and the rest of the world, People realized that 72 percent of companies producing pharmaceutical ingredients for world consumption is indeed located abroad in the European Union, India, and China amounting to 97 percent antibiotics. Countries considered liberal such as France and Germany, not only barred the export of face masks but also closed their borders to travelers even to friendly nations. The shock remains even after the bans have been lifted, which dramatically affects the current trade and globalisation situation. Countries are suddenly fighting for themselves; it prompts them to rethink the idea of international interdependence. The pandemic has demonstrated the fragile supply chains that have prompted national responses instead of the usual cooperative international ones. Thus, it reinstated nationalist arguments for limited migration and reshoring manufacturing.
The changing face of Globalisation
The current situation of trade and Globalisation will not be the end. The world is likely to experience a different, more limited version of global integration and way of doing businesses opposite to what we have known in the past 20 decades. The public debate is about a world that is flat with frictionless capital flows and free trade. We are used to political debates about border walls, decoupling from China, Brexit, Populist nationalism, trade warfare, and the assertion of national sovereignty against U.S and Chinese corporations. Before the pandemic, global trade of goods and services was on the rise, but relative to the total output of an economy, the trade share is lower today than before the 2008 financial crisis. The pandemic will inevitably change the economic and financial order forever.
Key: The above image is an illustration for foreign policy and the impact on Globalisation and current trade situation.
There is a need for a better balance between Free trade, Globalisation, and self-reliance.
The Coronavirus has reminded us that the fundamental political and economic unit is still a nation-state as opposed to economists’ arguments that we could always turn to other countries if things happen badly in our own country. Now countries are shutting their borders and holding tightly to face masks and medical equipment. The 2008 financial crisis could have taught as a lesson, and it is indeed true we never learned as it went over our heads.
Coronavirus is killing Globalisation and world trade even though the pandemic is a gift to nativist nationalists and protectionists. It is likely to have a long-term impact on the free movement of goods and services.
Key: Coronavirus impacting current Globalisation and free trade.
The current trade and globalisation situation sits alongside the Fukushima earthquake and nuclear accident that both demonstrated a fragile supply chain. Economists are optimistic after the end of the pandemic, a transformative and more robust supply chain will be in place
Let us know If you have any questions or suggestions about current globalisation situation. Share your thoughts in the comments section!
Do you know anyone who would like to read the information in this post? Share it with them on Facebook, twitter and LinkedIn.
Please remember that sharing is caring!
What is your reaction?
