By Prince Lanre Sanusi
Introduction
Pandemics are known to trigger significant socioeconomic and political crises. The outbreak of coronavirus disease started in Wuhan China, in December 2019, and in a couple of months, it was declared a global health emergency. The pandemic is expected to cause greater human suffering compared to other contagious diseases. Apart from being considered as the greatest threat facing global public health, the disease has been considered as an indicator of existing inequity and deficiency in social advancement(Chakraborty &Maity, 2020). Currently, the global cases stand at 5.4 million, 2.2 recovered cases, and 342, 346 deaths. The cases are spread across 213 countries(Coronavirus update (Live). The discussion will focus on the impact of the pandemic on globalization and on politics.
Globalization
The rise of globalization has eased interaction between people, which has been beneficial and detrimental to the political, social, and economic aspects of the involved parties. One of the major developmental factors that have promoted globalization is the technological advancement that has eased the movement of people and has contributed to widespread pandemics, particularly the COVID-19. New trends of globalization features have been prompted by the pandemics with the latest data forecasting how leaders should plan to shape a scenario where anti-globalization and globalization pressures are still enduring features that make up the business environment. Given the uncertainty of the situation, predictions on the effects of the pandemic on globalization and politics can only be made roughly as the pattern may change with time. The pandemic has caused the fastest and largest decline in the international flows with a 13-32% reduction in merchandise trade, a 30-40% decrease in foreign direct investment, and an estimated drop of about 40-80% in international airline passengers (Altman, 2020). Although a fundamental collapse of the integration of the international market is not signaled, the numbers imply a major rollback of recent gains of globalization.
Key Drivers of Globalization’s Trajectory
Implications of the pandemic on globalization and the implications on the businesses can be predicted through an analysis of the major drivers of the globalization’s trajectory. A global growth pattern is a key driver. The macroeconomic cycle impacts international flows, where they grow faster even than the GDP with favorable factors and shrink faster when factors are unfavorable. Robust growth will be achieved after the pandemic is put under control. Positive growth patterns can be achieved by contribution towards health, international cooperation, and growth through efforts such as the manufacture of medical supplies and support market to soften the impact of the pandemic on the economy (Altman, 2020).
Supply chain policies can predict the impact based on whether countries consider international diversification or domestic self-sufficiency. Economic logic favors international diversification, but politics at many times forces domestic self-sufficiency, especially in the production of necessities, especially those related to health and security. Friction between the superpowers and the fragility of the situation also has an impact on globalization. The relationship between countries affects significant decisions such as raising capital, markets to invest, and supply bases. Predictions have been made that the pandemic will hasten the fracturing of globalization along regional lines with China and the United States being the centers of the competing blocs.Technological shifts, including e-commerce, use of robots, and videoconferencing. The pandemic induced shifts may be later used to strengthen globalization if protectionist policies are not introduced. Public opinion based on the direction in which the pandemic will take place also has an impact on globalization and can be used to predict the impact of the pandemic on globalization(Altman, 2020).
Impact of the Pandemic on Forces of Globalization
New developments and gradual changes drive globalization. Technological forces are the major drivers of globalization as they shape and set the foundation. The rapid growth of the internet is the latest technological force that has promoted globalization through e-business and enhanced communication. According to research conducted by Atlantic Council’s GeoTech Center, technology experts predict the impact of COVID-19 on technological innovations in fields such as health and medicine, artificial intelligence, data, space commercialization, and supply chains(Scott, 2020). The pandemic is expected to accelerate innovations in all other, apart from space commercialization, where the little impact is expected. Developed countries are expected to be at the forefront. Major developments are expected in the field of data and health technologies. Western nations such as the United Kingdom, the United States, Australia, New Zealand, and others are expected to experience innovations in the work-related fields, medical field, and supply chain. China and Russia are expected to experience development in AI and data fields.
The implications of the innovation are that the changing work practices of the free-market countries will require innovation, while employment will be created in government-controlled economies. Autocratic governments will face less constriction by disconnected datasets, privacy regulations, popular opinion, the innovation of more efficient AI and data, and their rapid integration into society. Innovations triggered by the COVID-19 will benefit different demographics to different extents.
The market forces have also been affected greatly by the pandemic. Markets for various products will be affected differently depending on the necessity of the product. The pandemic has drastically affected the movement of people across borders, the flow of raw materials, operations of industries, and other factors. More restrictive practices for certain commodities have been put by various countries to protect their own citizens. Markets for commodities for pharmaceuticals and protective gears have greatly increased at the national levels, and the market expansion fully relies on the raw materials that a country possesses. With the restricted movement of people market for certain services and products has been reduced, and demand has reduced. Such markets include the transport industry, tourism, and the entertainment industry, especially based on the nature of services (Scott, 2020).
For industries that can offer services online, the market has expanded through the adoption of relevant technologies, which has boosted and increased the size of the market. Certain markets have taken new strategies to reach customers, and the trend may continue even after the pandemic, depending on the effectiveness of the strategies. The pandemic may shape new markets, especially with the disruptions that have resulted in limited access to certain products countries that can no longer import the products that have resulted in the local production of the commodities. Depending on the ideologies of countries, such opportunities may greatly impact global markets for such products as countries experience the impacts of over-reliance on other countries for certain commodities, which has proven inconvenient.
The culture also drives globalization and impacts international trade, communication, preferences, mindset, and business relationships formed. The current crisis has impacted the culture of the people through protective measures that have been put into place. They include handwashing practices, working from home, maintaining social distance, and using technology for interaction. Globalization may be strengthened by new practices such as video calls and teleconferences rather than physical meetings as businesses may find the strategy more appropriate and continue with the trend. For example, businesses that have shifted their operations online may continue with the new markets that they entered during the pandemic.
Impact of COVID-19 on Globalization
Social Impact of COVID-19 on Globalization
Far-reaching social impact is expected on globalization with a tendency towards populism and nationalism as the pattern had already gained momentum before the pandemic. National sentiments are usually strengthened during a crisis as people focus on their countries and states, offering organizational, financial, and even emotional support that cannot be offered by the global institutions. Symbols of unity and belonging, such as flags and anthem, which offers patriotism, do not exist at the international levels. For example, the EU was criticized by the member states due to its failure to deliver on the promise of solidarity. According to xxx, nationalism and populism may result in xenophobia, hatred, and even violence. Special Rapporteur of the UN, Fernand de Varennes reported that fears surrounding the pandemic were being used by certain groups and even the politicians to scapegoat some communities, which could lead to violence against the groups. Such acts were evident in attacks against certain groups such as the Asians, and hate speech blaming certain communities for the spread of the virus. The situation is expected to change after the crisis, although the effects may be long-term(R Yacoub & El-Zomor, 2020).
The long-term social impacts of the pandemic are expected to positive. The pandemic has proven that technological advancements and academic developments, it might be impossible to foresee a disaster and make proper preparation. Global efforts have proven to be more effective in dealing with pandemics compared to nationalization. Nationalization reduces the ability to address pandemics and make countries more susceptible to other dangers that may occur. The pandemic has made it clear that countries may be hit by a common fate. According to Kojeve, a French philosopher contemplates the notion that nationalization can be overcome by citizens who suffer a common fate. The ideology that countries share a common fate will promote globalization at higher levels. The creation of the European Union and the United Nations that were formed after the world war II can be used to illustrate that global unity is promoted by a common fate. Despite the nationalization steps taken by various countries, solidarity among nations is very clear (R Yacoub & El-Zomor, 2020). For example, researchers over the globe are working towards establishing that will benefit all countries. Countries have been helping each other through the supply of health workers, protective gear, and other medical suppliesin efforts to mitigate the impact of the pandemic.
Political and Legal Impact of the Pandemic on Globalization
The short-term political effects of the pandemic have been termed as pathetic. International treaties are currently on hold in line with international law as the period is termed as a state of necessity to ensure that nationalist protection measures are taken to protect the health of the public. Closing of borders to maintain public health is a great move towards nationalization, and the act breaches international law, contributing to the fragmentation of the law, cosmopolitanism, and also globalization. Certain moves by nations such as the pause of the NAFTA as Canada and the U.S close their bounder, although the agreement is still valid and has a great impact on globalization. Other actions taken by various countries include restrictions by countries on the importation of certain products and protective steps to prevent the privatization of essential sectors. Bilateral Investment Treaties have been breached unwillingly. For example, Italy has breached over 70 bilateral investment treaties and risks damaging claims by direct investors after the crisis. The breaches could be rooted in certain obligations, including the Fair and Equitable Treatment, national treatment, direct and indirect expropriation, and full protection and security obligation. The claims listed can be defended based on the state of necessity, a provision by the international law given that the World Health Organization has termed the pandemic as a state of necessity. Therefore, Italy would not be liable to pay the damage claims (R Yacoub & El-Zomor, 2020). Although the long-term effects of the pandemic cannot be adequately predicted, various speculations can be made. Countries are expected to open their borders after the pandemic. For the EU to regain the free movement of workers and goods among the member states, it will be required to re-validate the Lisbon convention. The restoration of the international order will be restored after the pandemic, and trade between Canada and the U.S would kick-start after the renewal of NAFTA. A rise in foreign direct investment would be witnessed by most countries in the long-run as countries will encourage investment, especially the developing countries that do not have economic means of dragging their economy from the wreckage of the pandemic.
More understanding of the obligations of international law may be developed by International Investment Tribunals. Such obligations may involve human rights, state public policy argument, state of necessity, and full protection and security. Theoretically, a long-term rise in globalization and cosmopolitanism will be witnessed. According to the contemplation of Immanuel Kant, an era of decline cannot be guaranteed not to have started even if findings indicate that human race has been moving forward for an indefinite time since human beings act freely and even though one can dictate the actions to be taken, the action they chose to take cannot be predicted. Kant suggests that the possibility of progression towards cosmopolitanism and globalization for the advancement of perpetual peace should not be rendered impossible even in the face of any great reversal of progress (R Yacoub & El-Zomor, 2020). The argument can also be supported by the Secretary-General of the UN, who concluded that the pandemic could mark the beginning of a different type of societal and global cooperation if the right actions are taken. It is speculated that the pandemic may be concluded with more international treaties for dealing with future pandemics.
The pandemic has also raised questions of leadership across the globe. The ability of the leaders of the state is being weighed through the ability to handle the crisis in their countries. The state of sectors such as the health sector has been a major issue that has raised a fundamental political question of whether the healthcare industry should be considered a public good or should be termed as a personal choice. The healthcare policies have also been questioned, especially outside the U.S. A debate has also ignited about whether the federal government or the local government is more effective given the rate at which each government took action in addressing the crisis. Public perception of the coronavirus has also varied across political ideologies. In the United States, a different understanding of the pandemic has revealed political and cultural division in the country(R Yacoub, & El-Zomor, 2020). For the countries that are near elections, the opinions will count for the reelection of the leaders depending on how well the citizens, especially those sharing the same ideology, are satisfied with the measures of fighting against the pandemic. The U.S politics will be greatly impacted as the country head to elections.
Economic Impact of COVID-19 on Globalization
The most remarkable effect of COVID-19 on globalization is the most important aspect of globalization, which is the economic aspect of globalization. There are different arguments about the economic impact, as many argue that the pandemic has written the end of globalization, especially with the backlash experienced in recent years. Although immense economic effects will be experienced, globalization will not come to an end. The protective and preventive measures taken by countries to curb the spread of the virus has a great impact on the globalization and international trade. The economic integration has reduced given there is no free movement of goods and services among countries. The Director-General of the World Trade Organization notes that the crisis has created supply and demand shocks that cause major disruptions in trade. Various trade-restrictive measures, such as temporary bans on exports for certain products, including food, can harm international trade.
The economic impact on globalization is amplified by the lack of a global response to the pandemic despite global the argument that the pandemic is a global crisis that requires a global response. Most responses are taken in an isolated manner as countries are not cooperating in fighting the pandemic. The big powers have gone to the extent of attempting a tit-for-tat strategy in economic and diplomatic hostility among themselves. In the European Union, member states are responding towards the pandemic individually even though the region is considered as one of the most economically integrated union. The call by Italy for the union to use the fiscal tools, including the union’s bailout rescue funds, was met with skepticism, and no course of action was taken. The nature of the pandemic compromises the ability to have a global response as it not only involves the financial crisis but the risk of losing human lives. Lack of a strong economic international institution, which is central in establishing global response, is a major barrier. The operations of WTO are halted due to the lack of a law enforcement body after the United States blocked the Appellate Body’s appointments. There also lacks a global leader who can champion countries towards global response. Peter Navarro, the trade adviser of Donald Trump, stated that the crisis has shown how a country cannot necessarily rely on others for needed supply.
International cooperation is significant in responding to the pandemic since the global sharing of information and accelerated production and distribution of medical supplies is critical to the fight against the virus. R Yacoub and El-Zomor (2020)recommends a travel agreement between countries that allows the travel of essential travelers such as health workers, politicians, journalists, and business people. The cooperation is also viewed as important, especially to the developing countries due to limited capabilities.
The long-term effects of the pandemic will be experienced after the pandemic is over. It is expected that the extreme barriers put in place will be lifted, although it may take time before the trade return as it was before the crisis. It is significant to note how the crisis has revealed the fragility of the global supply chain that had been in existence before the pandemic. The current global economy is founded on labor specialization across nations and is in line with the comparative advantage theory(Gruszczynski, 2020). The specialization promotes the maximization of output and welfare improvement. The pandemic has proven that although the systems have great benefits, it can be costly. For example, a shortage of essential goods such as food and medical supplies was experienced after the outbreak of the virus in China. The situation is not likely to happen again, especially to the western world. The state may start to rely more on domestic production and impose trade barriers and protectionists policies.
Imposing barriers will be easier given the current state of WTO as it may be considered weak due to the lack of a law enforcement body. The pandemic may accelerate the backlash against globalization. The recent trends have seen invoices of the leftists and other politicians who had criticized the international trade before due to a lack of actions against certain aspects such as environmental destruction, violation of human rights, and keeping of refugees and illegal immigrants out. Such voices may gain greater attention and impact, given that the crisis has been as a result of globalization.
Lack of a global response may negatively affect globalization as it may signal a lack of significant benefits related to being a member of any international community due to the lack of any assistance from the international community. The scenario will increase the tide against globalization due to negative sentiments due to the lack of global cooperation and response in solving the global crisis. Depending on the course of action the states might take, globalization may take a different direction.
According to R Yacoub and El-Zomor (2020), the supply shortage related to the crisis is due to a concentrated supply chain rather than an international supply chain. Initially, production was allocated based on cost, but the crisis had shown that supply chains should be based onrisk competitiveness leading to diversification. Given the strong support that free trade and movement of capital have either in terms of ideology or interest, globalization will still be favored. The use of protectionism policies may not be favored as they may increase prices and fracture the supply chains. If businesses seek to replace foreign demand through trade barriers and other tariffs, the impact would be similar even though the intention would be to generate jobs. The effects would be shuttered supply chains and slow recovery. Based on history, waves of globalization are associated with poverty reduction, high growth rates, and increased standards of living.
Impact of COVID-19 on Global Manufacturing Industries
The manufacturing industry can be termed a major part of the global economy, given that it accounted for 16% of the global gross domestic product in 2018. Governments across countries have focused on encouraging the sector. The United Nations Conference on Trade and Development, the global FDI, is expected to shrink with an estimate of 5-15% given the reduction in manufacturing and the shutdown of factories. The airline industry, automotive, and energy industries are expected to affect significantly. Manufacturers of chemicals, electronics, automobiles, and aircraft are experiencing a shortage of raw materials. Production has reduced with new products of new products being postponed until the end of the pandemic. The movement restrictions across regions have impacted the flow of capital goods, distribution of finished goods, and the operations have been minimized. Most of the production has been limited to the domestic market. Countries that rely on China and India for larger proportions of the supplies have been affected negatively as countries impose trade restrictions, especially on necessity commodities such as pharmaceuticals(Research and Markets, 2020).
Conclusion
The impact of the pandemic on globalization will be mainly dependent on the actions taken by various countries, especially after the end of the pandemic. The pandemic has affected social interactions between people, operation of businesses, especially those involved in the international market due to restrictions put to curb the spread of the virus. Lack of free movement of goods and people between regions has created shortages forcing countries to concentrate on domestic production. The current events will have an impact on globalization as countries may realize the need for the global response to global threats. International trade may be threatened to shortages experienced in countries that rely heavily on others for the supply of necessities.
References
Altman, A. S. (2020). Will COVID-19 Have a Lasting Impact on Globalization?
Chakraborty, I., &Maity, P. (2020). COVID-19 outbreak: Migration, effects on society, global environment, and prevention. Science of The Total Environment, 138882.
Coronavirus update (Live): 2,867,984 cases and 200,430 deaths from COVID-19 virus pandemic. (1609). Worldometer – real-time world statistics. https://www.worldometers.info/coronavirus/
Gruszczynski, L. (2020). The COVID-19 Pandemic and International Trade: Temporary Turbulence or Paradigm Shift? European Journal of Risk Regulation, 1-6.
R Yacoub, A., & El-Zomor, M. (2020). Would COVID-19 be the turning point in history for the globalization era? The short-term and long-term impact of COVID-19 on Globalization. The Short-Term and Long-Term Impact of COVID-19 on Globalization. (April 6, 2020).
Research and Markets. (2020). Impact of COVID-19 on the global manufacturing industry, 2020. PR Newswire: press release distribution, targeting, monitoring, and marketing. https://www.prnewswire.com/news-releases/impact-of-covid-19-on-the-global-manufacturing-industry-2020-301042150.html
Scott, S. (2020). COVID-19’S Potential Impact on Global Technology and Data Innovation.
This is a research paper presented by Prince Lanre Sanusi, in pursuit of a higher degree in the United States of America (USA).
