Globalisation refers to the flow of goods, people and crucially, ideas across national borders. With cases on the rise and further impending lockdowns to mitigate what indeed is a second wave, what are its future prospects? The pandemic, as well as the measures taken to tackle it has led to the greatest decline in international flows. Current forecasts show a 44-80% drop in international airline passengers, 30-40% reduction in foreign direct investment and 13-31% decline in merchandise trade. These figures appear bleak but are mostly a harsh reversal of the recent gains made in globalisation. They don’t necessarily signal a complete breakdown of global market integration.
As the virus continues to spread across several nations, governments are increasingly driving economic and healthcare resources into their own countries, prioritising national issues over global ones. For the most part, the pandemic has seen countries act independently of one another as they close their borders and work towards differing policies that address their circumstances. What could this mean for the efforts to tackle large-scale global issues like poverty, climate change, cybercrime etc.? It may perhaps lead to unilateral responses for those matters.
Economists predict that this crisis will fundamentally overhaul global trade as businesses seek to reduce their reliance on Chinese manufacturing. This would be suggestive of a broader trend because global corporations are now seeking to secure themselves following the supply shock brought on by COVID-19. The Economist Intelligence Unit (EIU) published a report highlighting how globalisation will be set back with the shift towards regional supply chains. “By building quasi-independent regional supply chains in the Americas and Europe, a global company will provide a hedge against future shocks to their network,” the report said. Moreover, setting up or moving supply chains – especially within the automotive industry – is extremely complex; so any major changes will likely be permanent. Other sectors like agriculture, pharmaceuticals and energy have felt the weight of this health crisis. Problems with international logistics have placed immense pressure on supply chains.
Global economic performance has suffered a great hit, particularly from the travel restrictions that have slowed or altogether halted the free movement of capital, goods and labour. As restrictions are lifted, nations will seek to introduce stricter biosecurity policies and adopt rigorous testing and tracing, further dissuading tourists and organisations from international movement. Post-crisis, modern aspects of globalisation like digital connectivity will sustain the rapid growth they have seen during the pandemic. For instance, businesses have discovered the benefits of efficiency and saved travel costs of remote working. Of course, it is still difficult to predict the future flows of people, but for now, we can safely assume (at least short-term) that this will decline. On the other hand, extended periods of lockdowns and travel bans might actually resurrect this, maybe even more than ever before, so projections for this remain open-ended.
Some have argued that the crisis has controlled the environmental impact of globalised capitalism by reinstating the local economy over the demands of big corporations and markets. In terms of local businesses, there could be an influx of customers as people shift their preferences to the restaurants, cafés and stores in their towns and cities. Since international travel will likely remain regulated, it may create a boost for local economies as parks and open spaces become popular destinations to reconnect. We could also see a surge of local innovation once capital investment is available – with organisations working to offer solutions that address the new challenges unique to their nations. But no country can deny the importance and vast reach of a global network. Raw materials, international labour and supply chains cannot be restrained within closed borders without there being a considerable reduction in the quality of life. Globalisation is vital in the health and growth of a country. International business leaders play a crucial role in global cooperation regarding these factors. They should consider both the internal and external implications of their approach. Internally, this might include utilising the opportunities created by new technologies and externally, how these technologies impact a company’s position in relation to its stakeholders.
A vital (and arguably the most important) element of the future of globalisation is politics. The collaboration of world leaders is absolutely essential in tackling 21st century challenges. But so far, there has been what Ian Goldin, Professor of Globalisation and Development at the University of Oxford, calls “an increasing political fragmentation”. It raises the question of whether world leaders are capable of working together. The reformation of international institutions like WHO are needed to end future crises, least of all, the one we’re currently facing. Goldin goes on to say “no country, no matter how high a wall it builds, will be able to thrive in a world of tension and failure to manage our collective challenges”. In the past few weeks, we have seen scientists and medical professionals around the world work tirelessly as they research the best possible vaccines to save lives. The ubiquitous nature of this virus has emphasized just how interconnected we are and the necessity for global solutions.