The coronavirus pandemic may bring the start of the end for globalization as we know it. For the second time since 1870, globalization takes a step back due to exogenous factors.
One was the interwar war era between 1914 and 1945. The world was literally split between countries that produced for countries at war. Those not involved in the two conflicts were the ones experiencing one of the biggest growth rates of the century.
The postwar rebound brought a boom fueled by oil. As humankind learned the benefits of petroleum and discovered more goods (and services) derived from it, the world became smaller and smaller as it became easier to reach any part of the world.
The liberalization era in the 1980s and until the 2008 Great Financial Crisis was marked by the Internet companies taking over the world. The shipping industry made it possible to ship goods in an instant based on a simple email sent from the other hemisphere. Trade flourished. But so did the world’s dependence on distant regions – i.e. Asia, China in particular.
Slowbalization – The Aftermath of the 2008 Great Financial Crisis
Since 2008 when the financial system as we know it almost got crushed, globalization took a step back. More than a decade later, the coronavirus crisis merely reminded us that protectionist policies were already in place before the health crisis. Moreover, the world becomes polarized with a larger regional influence.
Russia, China, Turkey follow their own interests. The power held by a few does not change hands, with effects on increasing regional policies. The emergence of the European Union’s single market created another sphere of influence in the world, albeit regional. And then there is the United States – a different United States under Trump than the one the world got used to before.
The pandemic serves as a reminder of the bad things globalization brings. Among others, the dependency on cheap labor from Asia for producing goods for the Western world. At the height of the pandemic in last March, the West found itself unprepared and undersupplied to face a wave of hospitalization. Goods from China were not produced fast enough as they were needed in the West.
If we step back and check what happens since the 1870s, we see that globalization is responsible for everything we take today for granted. Without it, societies, as we know them today would not have the same experience and knowledge.
Globalization united nations towards one single goal – economic growth and prosperity for everyone. The fact that for more than a decade, globalization took a step back is as worrisome for future economic growth as the 2020 pandemic is.