The quick spread of COVID-19 is a direct consequence of our globalization. Globalization is the development of closer economic, cultural, and political relations among all the countries of the world as a result of travel and communication becoming easy. For us, this means that countries’ economies and societies are reliant on several other countries to function effectively. Regrettably, Globalization started slowing down in the 2008 financial crisis which led to the biggest recession since the great depression and was further harmed by the recent US and China trade war. Due to COVID-19, in 2020 exports from the US fell by 12.5% from this time last year. The decline in exports results in less income into a country and hence a slowing in the economy and as the decline is worldwide, it may lead to an economic crisis.
COVID-19 shined a light on how a natural cause can affect supply chains along with the dangers of international dependence as the initial shortage of personal protective equipment (PPE) and ventilators launched talks on the need for greater self-reliance. The public seems to levitate towards locally produced goods and services as they were disturbed to find out that their health relies on equipment manufactured in eastern countries and in times of need cannot be delivered. Additionally, globalization has led to our occasional dependence on migrant workers for certain tasks such as in care homes or for crop harvesting. In the west, those who suffered from globalization protested and continue to do so with the hope that the government imposes reshoring measures to bring jobs back to the West.
When the virus first started to spread in Wuhan in February, America’s tariff rate on imports were at their highest since 1993 and both the United States and China have begun to divide their technology industries. Since 2008, harmful global trade interventions have risen to 1,610 in 2020. This steady increase in measures reflects governments partial wish to become less dependent on the rest of the world. However, our planet and its economies need globalization to prosper. Science has never been more globalised than now in the search for the vaccine and the manufacturing of medical supplies. Over 100 countries worldwide have requested financial assistance from the IMF and other financial institutions, hence showing the world’s need for globalization.
Supply chains became fragmented to use the international division of labour, as companies used cheap labour elsewhere to produce goods and services at a cheaper cost than at home. This has allowed billions of people in developing countries in East Asia or Africa to lift themselves out of poverty. Additionally, globalization has created a lot of wealth in the West, however, this inevitably meant that lower-skilled jobs were lost. Additionally, if factories are brought back it does not mean jobs are brought back. As almost always, they will be more automated as seen in the manufacturing of cars and clothes which were relocated to countries with cheap labour and are now being reshored due to the lower price of manufacturing through machinery and the advantage of shorter supply chains. Governments chose not to take the risk of relying on other countries during the pandemic as they have seen the risk. However, I do not believe this to be the right approach as a collaboration between countries has offered immense possibilities of growth in the world. For example, globalization has allowed for worldwide pharmaceutical companies to collaborate together to find a vaccine and has allowed for an enormous amount of medical supplies to be manufactured. There are imperfections in globalization that must be resolved and all countries should commit to their alliances and not pull back in a time of crisis. Countries should strengthen their alliances as opposed to withdrawing.
As of now, all countries are against a tariff war. French presidents backtrack on the tariffs going to be imposed on America’s tech giants Google, Facebook, and Microsoft and Germany’s refusal to align with the US or China in their recent conflict are examples. No county has taken significant actions to withdraw from their global alliances, interests, and strategies. Several countries such as Japan are currently offering stimulus packages for firms that reshore their factories along with the European Union which is talking about ‘strategic autonomy’ and is creating a fund to buy stakes in companies. America has ordered its main federal pension funds to stop buying Chinese shares and so far, this year countries representing 59% of world GDP have reduced foreign investment. Governments cant engage in conflicts at this time as money is scarce and are directing their efforts on strengthening their own economies to survive the pandemic.
Currently, governments are establishing policies to protect their citizens from COVID-19 and are only starting to think about what is to come next. I believe that if the liberal trade system is not repaired it may have more damaging economic repercussions in the long term than the damages caused by the pandemic. If countries seek to detach themselves it may create separation within the world, which consequently results in further conflicts which governments are not willing to get into. I believe that globalisation is too big to fail as it has gone too far and has become too integrated for a complete deglobalization. The multitude of states and companies that benefit from it worldwide will oppose themselves to its elimination. This year’s pandemic was the 3rd major drawback on globalization in the past 12 years and companies are discussing supply chain risk and are putting contingency plans in place. Companies see this as something vital to the business so we might see shorter supply chains or companies relocating in the near future. Globalization’s downsides must be resolved such as the inability to get resources during a crisis, or the claims of exploited labour in developing countries amongst others. However, a divided world will make it harder to recover from any crisis whether it is natural as the COVID-19 or a human-made tragedy as another conflict. The past has shown dynamism and resilience of globalization even with the catastrophes it creates and demonstrates little signs of stopping as its massive advantages outweigh its downsides.