COVID-19 Shed A Mild On How Globalization Can Fight Inequality – Philippine Canadian Inquirer
In retrospect, predictions about the death of globalization were grossly exaggerated. Compared to two other major economic crises in the past 100 years, recovery efforts started early, suggesting that world trade is much more resilient than expected.
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Globalization is a multi-faceted concept that describes the process of creating networks of connections around the world. It includes the interdependence of national economies and the integration of information, goods, labor and capital, to name a few.
Globalization has been the subject of increasing dissatisfaction and criticism in recent years, especially following the election of former US President Donald Trump, Brexit and the refusal of Americans to appoint members to the World Trade Organization’s Appellate Body.
The backlash represents a major setback to the pace of globalization and creates the conditions for growing protectionism and nationalism around the world. Much of the criticism was political, but the ongoing COVID-19 pandemic has brought new health threats to globalization.
In a way, the pandemic has shed light on both globalization (a virus was globalized in a matter of weeks thanks to globalization and networking) and deglobalization (the collapse of international cooperation and the resurgence of nationalism in personal protective equipment). Medical devices and vaccines).
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COVID-19 and globalization
In our most recent research, we describe the impact of the pandemic on the world economy using three components of globalization: economy, society and politics. The pandemic and the economic policy response to the crisis have affected these three aspects to varying degrees.
1) Economic globalization involves the flow of goods, services, capital and information through market transactions over great distances. Although the pandemic is global, regions and countries have experienced it differently based on different economic indicators.
Trade in goods declined for the global economy, but the decline was more pronounced in the industrialized countries than in the developing and emerging countries. Not only was trade flows affected, but the impact of COVID-19 on Foreign Direct Investment (FDI) was immediate, as global FDI flows decreased by nearly half in 2020.
2) Social globalization has also been significantly influenced by COVID-19. It refers to interactions with people abroad, including through migration, international phone calls, and international remittances paid for or received by citizens.
Social globalization has been badly affected by the COVID-19 pandemic as many countries have imposed travel restrictions on both residents and foreign travelers. Border closings hinder migration, especially the movement of tourists and international students. Remittances from migrants were also affected, not because of formal restrictions on remittances, but mainly because of the impact of the pandemic on migrant employment.
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3) Political globalization includes the ability of countries to participate in international political cooperation and diplomacy and to implement government policies.
The initial outbreak of the COVID-19 pandemic had a negative impact on international cooperation, in part due to the blame game between the world’s two largest economies, the United States and China.
Many nations later worked together to fight the pandemic. For example, China supported countries like Italy, which became the epicenter of the COVID-19 pandemic in Europe.
Politically, the outbreak of COVID-19 could in future be used as a building block 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 in the early months of the pandemic were pessimistic due to international border closures and plant closures.
The prospect of the world plunging into another major and long-term economic recession, similar to the Great Depression of the 1930s and the 2008 recession, was paramount for economists, governments and citizens.
But the predictions about the death of globalization were grossly exaggerated in retrospect. Compared to these two major economic crises, recovery efforts started early, suggesting that world trade is much more resilient than expected.
Indeed, there is reason to be optimistic about the economic recovery from COVID-19 as well as the future of globalization.
Multinational companies already had their stress test during the 2008-2009 world trade collapse. This collapse sparked a deglobalization process, but global trade in goods and industrial production quickly rebounded to previous highs – and even faster during the COVID-19 crisis. The shock was sharp and immediate, but so was the recovery.
The so-called invisible flows (FDI, remittances, tourism, official development cooperation) are more severely affected, and a full recovery can only be expected when vaccinations are sufficiently global. Still, expecting a quick economic recovery after the pandemic ends is not unrealistic.
The disease of inequality
Ironically, the attacks on globalization were a symptom of an underlying disease – inequality – highlighted by the pandemic.
Globalization lacked a leakage of benefits to those who needed them most. The pandemic has taught us that inequalities are the breeding ground for literal disease to spread and the suffering that follows. To reduce the vulnerability to future epidemics, these inequalities need to be addressed.
However, the fight against future crises cannot be limited to domestic developments, as inequality is global. Compliance with the United Nations Sustainable Development Goals is therefore a high-return investment project.
The drive towards deglobalization is certainly still there. But today’s economies are digitally connected in a way that has never been before.
This is a positive development because ending the COVID-19 pandemic and avoiding future crises will require international cooperation and global efforts to ensure that no single country is left behind. Vaccines must be available and affordable to all countries, as just reiterated by the G7 leaders in their pledge to deliver a billion doses of the COVID-19 vaccine to poorer countries.
Just as globalization affects all countries, the health of one nation affects the health of all nations. It takes a global approach to ensure equality for all citizens of the world.
Sylvanus Kwaku Afesorgbor, Assistant Professor, Agricultural and Food Trade and Policy, University of Guelph; Binyam Afewerk Demena, Postdoctoral Research Fellow, International Institute of Social Studies, and Peter AG van Bergeijk, Professor of International Economics and Macroeconomics, International Institute of Social Studies
This article was republished by The Conversation under a Creative Commons license. Read the original article.