Globalization to stay in Post-COVID 19 World but with a new Geopolitics

The economies throughout the world are adopting lockdown to fight the COVID 19 pandemic thus stopping the forces of globalization. But historically, the globalization process continued in one or the other way through social, cultural, political networks even when the disruptions to trade and investments were caused by yellow fever during the 1870s, bubonic plagues spread over in port cities at the end of the 19th century, and the World War I, Great Depression, World War II, 9/11 attacks, and economic crisis of 2008. The forces of globalization are most likely to push it forward but with a changed face and new geopolitics at the global level.


Guljit K. AroraGuljit K. Arora | Updated: 07-05-2020 21:29 IST | Created: 07-05-2020 21:29 IST
Globalization to stay in Post-COVID 19 World but with a new Geopolitics
The world may see supply chain disruptions and drop in investor confidence Image Credit: ANI

The world has entered in the most challenging times with the Covid-19 pandemic. Human tragedies continue to be unending in spite of the prolonged lockdowns with all types of commercial activities closed; social distancing and work from home being implemented throughout the world along with massive awareness campaigns and public advisories being issued on such a large scale that was never witnessed in the modern history. However, incidents of attack on a few warring against such a contagious disease by way of providing healthcare, essential services and managing law and order, are deplorable.

This pandemic has exposed the stark realities of public health systems all across the map. In spite of governments extending 'life-support' to the poor and issuing stimulus packages for the corporate sector; the financial and economic consequences are devastating. Effects of the disturbed supply chains and the consequent production losses will be tangible. Questions have been raised on the virtues of globalization for which once the USA and China were aggressive leaders. Many see this as a revolt against globalism and the beginning of new world order. The long lockdowns and closures of domestic and international businesses for long are likely to induce a change in the human psyche towards social living, working and use of technologies depending upon how long such a situation continues. This could be well assessed when this menace is suppressed and the normalcy is restored. However, the future will remain uncertain until the long term health effects and virus-spread trajectory is fully known and economic impacts are measured. Such a high degree of uncertainty about future life in uncharted territory is worrisome causing mankind to ponder about what would be the “next-normal”.  

Discovered in Wuhan, the largest and highly acclaimed economic centre and capital city of Hubei province of China in December 2019, the novel coronavirus (COVID 19) has spread in every country and territory of the world in a few months. The number of infected people and fatalities are increasing by the day throughout the world. As the virus is highly contagious and has long life outside the host body, the economies with high population density, poor sanitation practices, insufficient tertiary health facilities and lacking resources for effective healthcare communication particularly low accessibility to the internet are highly vulnerable to the pandemic.

Lessons of COVID 19

The Covid-19 outbreak, however, has brought many interim lessons which could be summarized as follows:

  1.  The pandemic does not discriminate among geographic boundaries or among nationalities, religions, communities, ethnicities, castes and creeds.  All nations are fighting the common enemy at different places in their own way. At this time, sharing the best practices will create positive spillover effects.
  2. Tackling such a virus requires strict community measures while recapitalising the holistic health systems and further supporting the low-income countries with the most needed supplies with liberalised trade barriers. 
  3. All the macroeconomic policy handles including monetary, fiscal, structural and developmental policies be based on expected effects and put together as a stimulus package simultaneously.
  4. The united human efforts made through international cooperation and shared humanity with appreciation to those who acted with humaneness and compassion, beyond the call of duty, while learning from Ebola, HIV, SARS, TB and Malaria must be shared and put together. They can be used to find out the vaccine and healthcare treatments, regulatory frameworks, multilateral systems, and further strengthening crisis management.
  5. The role of international organizations that see human well-being as the shared concern of the global community, and are acting unbiased beyond international boundaries, deserve to be well recognized and further strengthened in the post-epidemic period.
  6. The stimulus packages announced by different countries have to focus on the healthcare capacity building, pandemic resiliency, demand revival, financial stability and checking corporate insolvencies. Their effectiveness, however, will depend not much on size, but on how sincerely are they coordinated and implemented, what is their speed, composition and quality, and how precisely the formal sectors are targeted and the vulnerable groups are protected.

COVID 19's Impacts on Globalization

Covid-19 not only has come as a race against time but also exposed the vulnerabilities of multilateralism and globalization propelled by the free flow of goods, services and capital backed by information and communication technologies (ICT). The deep penetration of ICTs in all spheres of life during global integration has paved the way for the Fourth Industrial Revolution. This in itself has the potential to change the balance of power among nations with the technological breakthroughs taking place in AI, big data, biotechnology, robotics, nanotechnology, 5th Generation telecommunication networking, internet of things and so on.

Novel Coronavirus is highly contagious and its transmission can find routes in the globalization’s public health linkages in today’s shrinking world in view of the four counts, firstly, the market-driven regulatory relaxations for the international travellers, labour, migrants and medical tourists, and those attached to liberal trade, investments and diffusion of technology encourage the spread of diseases at rapid speed. This is also true for Malaria, Cholera, Tuberculosis and AIDS/HIV up to some extent, secondly, international cooperation to control infectious diseases (smallpox e.g.) and their surveillance, prevention and treatment and international treaties from country to country or through global forums, such as, WHO, further facilitated by technology in the areas of sanitation, food handling, and their processing and sales do not really protect domestic populations, thirdly, globalization driven market forces with its profound effects on socio-economic, biological and ecological settings have led to the general fiscal retreat of the government along with its regulatory frameworks and consequently public health expenditures have declined (further reinforced with politically populist spending continued) leaving the governments unprepared to deal with disease pandemics like coronavirus, fourth, globalization-led health improvements and disease controls particularly with the irrational use of antibiotics no doubt has increased longevity but also encouraged overpopulation and overcrowding forcing people to live in small spaces filled with unhygienic conditions, which raises the potential dangers of infectious disease. Such interlinkages get further compounded because both globalization and health consequences are greatly influenced by a number of internal socio-economic, cultural and developmental factors and by the dynamics of federal-polity governance. The income levels, ‘social capital’ relationships and trading partners, principles and governance rules may not be any consequence as noticed in behavioural contrasts between Austria, China and Singapore on the one hand and Brazil, Italy and USA on the other.  Fingers are being raised on China at least for not raising the alarm, not taking the early adequate measures and suppressing the information. 

It is also important to highlight that the outbreak of COVID-19 besides threatening human life has already caused a serious “ripple effect” on the interconnected and interdependent global economy. The economic slowdown is significant along with restrictions on tourism, trade, commodity markets and disruptions in supply chains, shipments and logistics. And the impact is intense, significant and diverse by virtue of China’s global market presence and its economic size. For instance, China constituted about 4 percent of the international output in 2003 – the year of SARS epidemic, which has risen to 16 percent while accounting for 20 percent of global GDP at purchasing power parity in the recent years. It has become, in the pre-COVID 19 period, the largest manufacturing economy, the second-largest importer of goods (11%), and the largest exporter of goods (13%) supplying to about 5 million companies.  Besides, China provided its large labour force in a wide-open consumer market. 

Consequently, the global recession will set in, which as projected by the World Economic Forum is going to be unparalleled in the last 150 years.  The world output which was expected to grow at about 2.5 percent in pre-COVID-19, is estimated to come down to 0.9 percent in the worst-case scenario. This rate will almost become half of what was experienced during the global financial crisis in 2009 (1.7 percent). 

COVID-19 entered in the global world when it was passing through economic slow-down with well-grown seeds of social discontent, economic distortions, inequities and slowbalisation on the one hand and apathetic world order with trading partners questioning each other’s moves on the other. In such a background, the global thinking is likely to undergo a change on issues related to design ways and means to check bio-weapons/warfare and ill-effects of climate change while acknowledging that the planet belongs to humanity and it is a common habitat. The same may be supported by economies that have reaped benefits flowing from the free flow of ideas, information, finance and human resources. 

With the Covid-19 pandemic, all nations will prefer to be quarantined, thus stopping the forces of globalization. But historically, the globalization process continued in one or the other way through social, cultural, political networks even when the disruptions to trade and investments were caused by “yellow fever” during the 1870s, bubonic plagues spread over in port cities at the end of the 19th century, and the World War I, Great Depression, World War II, 9/11 attacks, and economic crisis of 2008 took place. The economies were seen coming together while forming the UN bodies and handling issues from disarmaments to women trafficking.

Challenges and Opportunites for India in the post-pandemic world

In the pre-pandemic period, the World Bank had estimated India to grow with a growth rate of 4.8-5 percent during Fiscal 2019-20, which is likely to decline to 1.5-2.8% during 2020-21, the worst performance since 1991. Also, India may not be largely impacted by the Chinese disruptions of supplies except for a few sectors (like precision instruments, pharma, machinery, automotive, tourism, real estate and communication equipment), though China is the third-largest export partner (5%) of India.  The percentage share of China in India’s imports in the pre-pandemic period was 45 percent for electronic items, 37 percent for organic chemicals, 36 percent for medicinal and pharma products, 33 percent machinery, 28 percent for dyes, 25 percent of automotive parts and fertilisers, and 90 percent of certain mobile phones. Given that these sectors have economic inter-linkages, and are important contributors to India's GDP, the impact will be noticed, more so because the economy was already in slow-down mode with the overall unemployment rate soaring up to about 24 percent in the first week of April, rising about three times over a month. However, the developing countries like India with innovative technologies and out of the box thinking may find opportunities with disruptions in global supply chains and till new trade, finance structures take place.

India will have an additional herculean task of balancing the pains of this crisis for the poor further making them worse off and, how the quality and pace of the recovery (in the long run) compensate them so that they are not further worse off over the period. Thus principles of economic distribution must recognise that India’s informal sector (with about 45% contribution to GDP) employs around 90 percent of its working population (84% share in the non-farm sector).  So is the case with micro-enterprises (plant/machinery less than 25 lakh), which constitute around 97 percent of MSMEs, which are generally not registered with the government (94%). This small household-run business needs serious protection in the recovery period because it was hard-hit by Demonetisation of the 86 percent of currency announced in November 2016, and the introduction of Goods & Services Tax in 2017.  It is more so because the existing income inequalities have already reached intolerable levels and the overall unemployment is very high. 

India with 1.3 billion people constituting about 18 percent of the world population to stay back home, given its fragile economy speaks about the serious pressure and also the helplessness to check Covid-19 pandemic, at a time, when in India vaccine for HIV or malaria are not available. But it has got the potential to recover soon to seize the opportunity arising out of the fact that the flow of ideas, virtual information and knowledge cannot be quarantined, particularly, when the world is connected through 40 billion (mini) computers and entering the Fourth Industrial Revolution. Indian political diplomacy must work to steer in a manner that India assumes the position of tilting the geopolitical economy balance in its favour when the polarisation changes in the post-COVID-19 period. 

A few countries such as Switzerland, USA, Netherlands, UK, Singapore, Japan, Germany, China, South Korea, Russia etc., are equipped with quantum computing and high-tech innovations and competing in the area of manufacturing, digital platforms, technology-use in solving societal problems, and the basic research in the future of computing, AI, internet of things, personalized daily learning, predictive medicines will configure new partners and collaborators paving the way for new world order. This is not to deny the need for taking the drastic measures for building up public healthcare management systems, structuring the work-place with a focus on workers’ well-being and security, prioritising of investments for economic activities while ensuring circular economy principles. The world will see the new global markets, and nations are likely to rework on and evolving a new world order with new geo-economics and global governance and monitoring agencies through the competent leaders with proven ethical standards, who are not amenable to misuse or to be used to one’s advantage by virtue of their economic size, power and personnel appointed in powerful global institutions.

NOTE: Guljit K. Arora is Professor of Economics and Principal, Dr Bhim Rao Ambedkar College, University of Delhi. 

(Disclaimer: The opinions expressed are the personal views of the author. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)

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