In just a few months,
COVID-19 travelled from China to more than 200 other countries and
has now killed more than 200,000 people. Some claim the pandemic sounds the
death knell for globalization – but in fact, it reveals the disasters that can
arise when nations try to go it alone.
Covid-19 will not kill the process by which businesses or other organizations develop
international influence or start operating on an international scale. Rather, it will accelerate underlying
trends, compressing into 2020 a transformation in flows across national borders
that would have taken years to emerge. As individuals and companies move
online, national borders become less relevant. Virtual meetings are
substituting for travel and physical meetings, with their greater efficiency
leading to higher levels of engagement. This increased digital connectivity
facilitates the rapid flow of ideas, the most influential dimension of the process by which businesses or other organizations
develop international influence or start operating on an international scale (globalization). The scientific race to stop
Covid-19 and find a vaccine has encouraged unprecedented collaboration. Greater
global awareness is evident in the intense interest in the march of Covid-19
and spread of the Black Lives Matter protests to five continents. Not all flows
are good, and the spread of bad and fake ideas is also accelerating, from
meddling by foreign powers to anti-vaccine fears that undermine the fight
against the pandemic. Covid-19 will also accelerate and transform financial
flows. With more than 100 countries requesting emergency financing, those from
the IMF and other multilateral groups will far exceed any previous era of
cross-border capital flows. Holdings of overseas currencies are
also rising. The pandemic is also likely to precipitate a new
wave of cross border mergers and acquisitions, including higher rates
of investment in and from the growth markets of East Asia. Travel has been
curtailed by the pandemic, but personal travel will rebound sharply, as soon as
a vaccine or medicine allow, thanks to pent up demand in China, the world’s
largest source of international tourism. Business travel growth is likely to be
permanently lower, since the pandemic has revealed the advantages of remote
meetings. Trade was already declining for reasons that preceded and are
unrelated to the pandemic. Overseas supply chains were built on outsourcing
repetitive tasks to lower labour-cost countries. But artificial intelligence,
robotics and 3D printing are changing the model: automated processes require
machines and skilled labour, which are more abundant in richer countries.
Demand for individual customization and rapid delivery encourages manufacturers
to return home. For services, banks, insurers and law firms are putting their
back-office functions on servers or in the cloud, rather than relying on
far-flung, labour-intensive call or data processing centres. The politics of
protectionism and nationalism reinforce these trends. The transformation of
work is being accelerated by the pandemic. Machines do not get sick or spread
viruses. Now that office workers are logging in from home, it begs the question
as to why they need to be anywhere specific. Increasingly we will see the globalization
of professional services. Many essential services cannot be done in another
country. But banking, law and design can, often at a far lower cost. East Asia
has been the principal beneficiary of globalization and remains an enthusiastic
supporter. The region’s assiduous containment measures have allowed its economies
to rebound toward pre-pandemic levels of growth. Meanwhile, US protectionism
and its disastrous handling of the pandemic is accelerating its relative
decline. The UK is less significant than it has been in centuries, with similar
self-inflicted wounds hastening its slide. Covid-19 has accelerated the rise of
east Asia as the centre of gravity of globalization. but it would make matters
worse. The world, especially the countries devastated by Covid-19, need
cross-border flows of vaccines, clean technologies and investments and trade
that create decent jobs. Business as usual is not an option. We need to
redouble our efforts to create a healthier, greener, better regulated and more
inclusive globalization.
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