Covid-19 And The Future Of Globalisation

The past 30 years has been a period marked by rapid technological innovation, most notably facilitated by: the internet increasing the flow of information, and containerisation increasing the flow of goods. This has allowed for the development of globalisation (this being the name given to the growing integration and interaction of the world s economies). Economic growth has been boosted for both developed and developing countries. For example, the UK has seen the reductions in prices of goods, especially due to Chinese manufacturing. Meanwhile China has moved from a rural economy to an industrial powerhouse. The UK has also taken the opportunity to lead from the front in financial services across the world, with globalisation allowing London to become a world centre of financial expertise.

However, globalisation is in danger now more than ever.

Over the last decade we have seen a variety of challenges arise that pose a threat to the globalised world as we know it. Firstly, the financial crisis of 2008 began to expose the risks of global market integration, as a shock in one country (the collapse of the US housing market) spread rapidly around the world, leading to a global recession. Then along came Trump, determined to Make America Great Again at whatever cost to global relations. US foriegn policy and trade priorities have shifted from an emphasis on global free trade (under Obama), to increasingly an emphasis on protectionism (under Trump), particularly with relation to China.

Trump s desire to see the US triumph over its competitors has led to a tit-for-tat trade war with China, largely motivated by the trade imbalance between China and the US the sale of Chinese goods to the US far outweighs their much lower purchase of US goods. A tariff war broke out as both countries increasingly raised tariffs on imported goods a total reverse on the ideology and practice of globalisation. Under Trump s administration, the US has begun to step away from the policy of free trade that constructed the globalised world we see today. Are these just the anomalous policies of a rogue US president, or will other countries follow in America s footsteps? This is perhaps a question we will only be able to answer well after Trump has left the White House and the global economic effects of Covid-19 have, at least in part, receded. Will others follow? It seems that many have already hinted as much. Should others follow? This remains to be seen.

Whilst Trump s actions have been drastic, many assumed we were just going through a slower or possibly stalled period of globalisation that would then be followed by a return to normal progress. The Covid-19 pandemic could not have hit at a worse time for globalisation. Spread by cross border travel, the virus has led to closure of not only borders but of large parts of the global economy. It has triggered a collapse of international trade, exposing (like in 2008) the vulnerabilities of a globalised world characterised by interdependence. Firms have quickly realised the risk of relying on global supply chains, with transport disruptions preventing countries from receiving their goods and so halting production lines.

Furthermore, the responses of individual governments to the pandemic point to a world heading directly towards segregation. Governments have been quick to impose export restrictions on medical equipment and various food items, so that they can deal with the rising demand in their own country. Of course, this seems very reasonable to most of us a government should be supporting its own citizens and providing the essential items they need through the pandemic. However, do we fully realise the cost these restrictions will impose on poorer nations? The interdependence of the global economy means export and import restrictions will raise international food prices and potentially deprive impoverished countries of vital supplies. Rising food prices will inevitably lead to political instability and famine for many poorer countries, though the scale is unknown.

On top of these fears, climate change has begun to provoke questions about the long-term sustainability of globalisation. Global warming and the destruction of our natural environments is largely a product of the carbon-intensive economic growth that has underpinned our increasingly integrated markets. Balancing globalisation with sustainable development is an issue with which politicians and scientists are struggling. Perhaps the virus will be the deciding factor that prompts governments to reconsider their approaches to international trade, foreign travel and interdependency.

The world has arrived at a crossroads. Tension between globalisation and its opposing forces have reached a climax. Major decisions will soon have to be made that will push the world towards or away from a more globalisation future. Many are emphasising local solutions that move away from global cooperation, while others firmly believe that a unified world remains the best and only way to continue to make steps forward towards a healthier, happier and more equal world. So with which side do you stand?