Globalization persists despite the pandemic
Globalization persists despite the pandemic
Today I will be taking my first air flight since March 2020. It is not an international flight, just Jet Blue from JFK to LAX, but the last year and a half has seemed strange and stationary to me. I’m not one of those people who love to travel and can’t wait for the next adventure, but professional work has taken me to many places, and it seemed almost unnatural to limit these contacts to Zoom and to emails. Even as the pandemic continues and the Delta variant has a lot of people on edge, we are learning to navigate this COVID era and resume our paths around the planet. People and goods are on the move, and even the risk of COVID-19 cannot stop it.
Global supply chains have been disrupted, but buyers are finding reinforcements. Global shipping is under enormous stress due to changing consumption patterns. Shipping containers have been scarce because the normal patterns of supply and demand have changed. In a fascinating article on the problems of the shipping industry, the New York Times journalists Peter S. Goodman, Alexandra Stevenson, Niraj Chokshi and Michael Corkery observed that:
“Overall, the volume of world trade fell only 1% in 2020 compared to the previous year. But that doesn’t reflect the course of the year – with a drop of over 12% in April and May, followed by an equally dramatic reversal. The system couldn’t adapt, leaving containers in the wrong places and pushing shipping prices to extraordinary heights. ”
The point is that the global pandemic has changed but has not reduced the presence of global trade and the importance of global supply chains. The pandemic is disrupting manufacturing and shipping, and material shortages are fueling inflation, but like sinking water, global trade exhibits an almost gravitational force. In China, aggressive measures to contain the virus have disrupted but by no means reduced international trade. The strength of China’s export economy and the chaos of China’s shipping industry were the theme of a story of New York Times reporter Keith Bradsher who wrote on July 13:
“The General Administration of Customs of China announced on Tuesday that the country’s exports jumped 32.2% in June from the same month last year. This increase surprised many economists, as one of China’s largest ports was partially closed for most of June and Chinese exports of medical supplies began to stabilize … partially closed from the end of May to a good part of June. Shenzhen has acted in response to less than two dozen cases of the coronavirus. When the port fully reopened on June 24, shipping officials and freight forwarders were hopeful that trade would start to return to normal. It didn’t work that way. Dozens of huge container ships got seriously behind schedule when they had to wait weeks to dock in Shenzhen. This meant that the ships then showed up in clusters at ports in other countries, causing further congestion. Chinese export factories have also trucked goods to alternative ports, such as Shanghai, leaving them overcrowded as well. “
What is remarkable is not the disruption of trade, but its persistence in the face of the many restrictions brought about by the pandemic. The supply and demand models established as the 21stthe economy of the century which has become global are proving to be remarkably sustainable. People have become accustomed to seeing the entire planet as one social and economic system.
When students apply to undergraduate colleges or graduate schools, many no longer limit their search based on local geography. Students who want to study in another country have been reluctant to give up on their dreams. Here at Columbia University, we see the determination of our international students to come to New York. Over the past year, the sudden and unpredictable shift to online education, coupled with travel restrictions, has led a large number of professional graduate students to postpone their enrollment in our programs. This year, students who have waited to begin their studies join newly admitted students in what could be a significant increase in graduate enrollment. Students have learned to navigate the glove of visa, travel and immunization requirements and have already started arriving for programs that start at the end of the month.
At Columbia, all students, faculty, and staff should be tested and vaccinated, but nonetheless remain aware of the risk of COVID-19 and know we need to take action to reduce exposure and risk. But after a year and a half, the shock of those restrictions has eased as we learn to manage the increased risks that come with traveling or meeting in groups.
We are all eager to get back to normal life. Family reunions and social events have been canceled for over a year and are now back, even though COVID appears to be lingering. Global tourism has picked up, but not to pre-Covid levels, and global business travel is slowly starting to return, with a full recovery likely to take years. Expectations are one of the problems with business travel. If clients and colleagues don’t expect to see you in person, the pressure to travel is reduced. However, once that expectation returns, competitive pressures will require travel, regardless of the risk.
The persistence of the world economy is linked to the logic of its creation. Paradoxically, globalization resulted from the importance of the place. Each geographic location has its own ecosystem, culture, demographics and history, which translates into comparative advantages in the development of specific goods and services. When combined with low cost information, bar codes, calculations, communications and low cost container shipments, it has become possible to create world-class goods and services. A supply chain based on these distinctions will be more effective and efficient than a chain limited by geography. This makes goods and services of global origin cheaper and of better quality. While these products compete, global products tend to win.
During the pandemic, even though we couldn’t travel to other places, we could see and imagine them through Zoom calls, Netflix shows, and social media. Normally, these images stimulate travel demand. In the days of COVID, global images were a lifeline for what we remembered as the real world and hoped it wasn’t an illusion. I have a feeling that just as our students are eager to begin their studies, there is a strong pent-up demand for travel around the world. When the pandemic recedes, I expect we will see a travel boom as people seek to make up for lost time.
COVID has skewed globalization, and the threat of additional pandemics could lead to further changes in international trade and travel. Xenophobia and extreme nationalism have provided a counterforce to immigration, world travel and international trade. But the behavior of global trade during COVID is empirical evidence of the persistence and sustainability of globalization. Technology has made the planet smaller and increased our ability to interact with each other. Professionals in research, education, the arts, entertainment, manufacturing, services, technology and sports increasingly operate on a global scale. The pandemic has affected all of these areas, but people have managed to work together despite the distortions. A graphic example of the persistence induced by a pandemic is the 2020 Summer Olympics, currently underway in Japan during 2021. Athletes test positive for COVID-19, and their replacements are flown in and compete shortly after arrival. The world’s best athletes compete a year behind in places that are both weird and empty, but they are competing and as ratings are dropping millions are watching.
It is now clear that our recovery from COVID-19 will be one of two steps forward and one step back. We will learn to manage rather than end the pandemic. We will adapt to our new reality not by hiding from others, but by learning to engage in the safest way possible. The global economy will persist and its technologies will continue to advance. And finally, we will find ourselves in a post-pandemic world where COVID is gone but far from being forgotten.