The Pandemic effect: will it Spell the End of Globalization?
By Eirini Patlaka and Millena Kapamann
You have probably heard of the “end of globalization” since the beginning of the pandemic and the economic crisis. But could this pandemic actually end such a strong phenomenon? I can think of a lot of topics, but they probably would not justify the end of “globalization”.
What we are sure about is that: globalization is a complex phenomenon. It even appears to have penetrated every aspect of our lives. “Globalization” is beneficial for the economic growth of the countries. How can the pandemic abolish an essential element for trade?
When we talk about this topic, in reality, we refer to a high level of financial inter-dependence between nations around the globe. Moreover, this interdependence is not only related to economics. In fact, in many cases, it is also linked to culture and society.
Researcher opinion: the announcement of the end of”globalization”?
In history, major geopolitical events such as the opening of China to the world in 1979 and the fall of the Berlin Wall in 1989 stimulated the event. It has been more than half of a century that “Globalization” play an active role in trade.
Based on many studies, the economic situation decreased drastically since last year. But does this mean that this pandemic will spell the end of an Era? The idea of the potential “end of globalization” is mainly due to the current crisis. There is a drastic decrease in mobility between countries, especially since the last year.
Recently, the world trade organization shared DATA reports and analyses. The economic and sanitary shock are showing pessimistic scenarios. Here are the clear insights: we have a 13-32% decline in merchandise trade, a 30-40% reduction in foreign direct investment, and a 44-80% drop in international airline exchanges in 2020. Moreover, from 2019 to 2021,
there are tensions in the merchandise trade. But still, the rebound is possible if institutions take appropriate decisions; they will determine the future shape of the post-pandemic recovery.
The global division of labour is undergoing radical
Right before the pandemic, major political events are reversing certain aspects of “globalization”. In fact, strong protectionism and nationalism policies were rising. For instance, the Brexit politic was displaying the main protectionism themes. The limitation of goods movement between China and the USA is also illustrating domestic interests.
This crisis has also exposed a rather abrupt way the relationship of Europe with Asia in manufacturing and processing. One year into the pandemic, the assessment of the effects of the lockdowns are not sure yet. On the other hand, there is an alteration of the role of the nations. In a globalized society, there is a free market that regulates its own needs without national intervention. In contrast, now the state controls strictly cross-border trade.
We can not make an exact judgment of the end of “globalization”. As a reminder, “globalization” is a crucial part of business and worldwide cultural exchanges. Globalization is still relevant and, no country can stay isolated forever; every country is sustaining bilateral relations with at least one &-country because it is essential for development.
To sum up, the end of “globalization” was the main topic since the pandemic, however, we can not make an exact prophecy of the end of “globalization”. The question is why this topic was so common? The pandemic and many events are willing to pretend its end, but the phenomenon is still important not only for economic growth but also for relations between the countries.
The positive thing is that, since this pandemic, people are starting to realize which goods they require the most. Thus, we may expect some changes in our purchasing patterns after the destruction of the virus.