Covid-19 shed light on how globalization can tackle inequality
The COVID-19 outbreak could be used as a cornerstone to strengthen international cooperation and strengthen the pillars of globalization.
Globalization is a multifaceted concept that describes the process of creating networks of connections across the world. It involves the interdependence of national economies and the integration of information, goods, labor and capital, to name a few.
In recent years, globalization has been the subject of growing discontent and criticism, especially after the election of former US President Donald Trump, Brexit, and the US refusal to appoint members to the United Nations Body. appeal from the World Trade Organization.
The backlash represents a major setback in the pace of globalization and paves the way for a rise in protectionism and nationalism around the world. Much criticism has been political, but the current COVID-19 pandemic has introduced new health threats to globalization.
In a sense, the pandemic illuminated both globalization (a virus globalized in a matter of weeks thanks to globalization and interconnection) and de-globalization (the collapse of international cooperation and the re-emergence of nationalism in personal protective equipment, medical devices and vaccines).
COVID-19 and globalization
In our recent research, we detail the impact of the pandemic on the global economy through three components of globalization: economic, social and political. The pandemic and the response of economic policies to the crisis have impacted all three aspects to varying degrees.
1. Economic globalization involves the flow of goods, services, capital and information through long-distance business transactions. Although the pandemic is global, regions and countries have experienced it differently based on various economic indicators.
Merchandise trade has contracted for the global economy, but the rate of decline has been more pronounced in advanced economies than in developing and emerging economies. Not only were trade flows affected, but the impact of COVID-19 on foreign direct investment (FDI) was immediate, with global FDI flows halving in 2020.
2. Social globalization has also been heavily impacted by COVID-19. It concerns interactions with people abroad, including through migration, international phone calls and international remittances paid or received by citizens.
Social globalization has been strongly affected by the COVID-19 pandemic as many countries have imposed travel restrictions on residents and foreign travelers. Border closures hamper migration, especially the movement of tourists and international students. Migrant remittances have also been hit, not because of formal restrictions on remittances, but mainly because of the pandemic’s impact on immigrant employment.
3. Political globalization involves the ability of countries to engage in international political cooperation and diplomacy, as well as the implementation of government policy.
The initial outbreak of the COVID-19 pandemic negatively affected international cooperation, in part because of the blame game between the world’s two largest economies, the United States and China.
Many nations later worked together to fight the pandemic. China, for example, has supported countries like Italy, which has become the epicenter of the COVID-19 pandemic in Europe.
Politically, the COVID-19 epidemic could be used as a cornerstone in the future to strengthen international cooperation and strengthen the pillars of political globalization.
COVID-19 and previous economic crises
Due to well-established and interdependent global production and supply chains, economic forecasts were pessimistic in the early months of the pandemic due to international borders and business closures.
The prospect of seeing the world plunge into another major, long-term economic recession similar to the Great Depression of the 1930s and the 2008 recession was a priority for economists, governments and citizens.
But predictions of the death of globalization were, in hindsight, grossly exaggerated. Recovery efforts took root early in these two major economic crises, suggesting that global trade is much more resilient than expected.
In fact, there is cause for optimism about the economic recovery from COVID-19 as well as the future of globalization.
Multinational companies have already had their stress test during the collapse of world trade in 2008-2009. This collapse sparked a process of de-globalization, but global merchandise trade and industrial production quickly returned to their previous highs – and they did so even faster during the COVID-19 crisis. The shock was brutal and immediate, but so was the recovery.
The so-called invisible flows (FDI, remittances, tourism, official development cooperation) have been hit hardest, and a complete recovery should not be expected until the deployment of vaccination has sufficient reach. global. Nonetheless, it is not unrealistic to expect a rapid economic recovery once the pandemic has passed.
The disease of inequalities
Ironically, the attacks on globalization were a symptom of an underlying disease – inequality – that was illuminated by the pandemic.
Globalization lacked benefits for those who needed it most. The pandemic has taught us that inequality is the breeding ground for the spread of literal diseases and the suffering that follows. To reduce vulnerabilities to future epidemics, these inequalities must be addressed.
But the fight against future crises cannot be limited to domestic developments alone, because inequalities are global. Adhering to the United Nations Sustainable Development Goals is therefore a high yield investment project.
The push towards de-globalization certainly still exists. But economies are now digitally connected like they never have been before.
This is a positive development, as ending the COVID-19 pandemic and preventing future crises requires international cooperation and a global effort to ensure that no country is left behind. Vaccines must be available and affordable for all countries, as the leaders of the G7 countries have just reiterated in their pledge to provide one billion doses of the COVID-19 vaccine to the poorest countries.
Just as globalization has ramifications for all countries, the health of a nation affects the health of all nations. It requires a comprehensive approach to ensure equality for all citizens of the world.