The Fate of Globalization

The fate of globalization is as uncertain as ever, and the COVID-19 pandemic has exposed its limitations. The pandemic has revealed the dangers of globalization, as arguably lethal dependencies on foreign industry (especially in Asia) led to fragile supply chains and colossal shortages in personal protective equipment (PPE) as well as other goods such as cars and electronics. Global trade and the GDP of most countries have fallen significantly, resulting in heightened tensions between economic superpowers. 

Workers arrange face masks to protect against the coronavirus at a mask factory where U.S. Health and Human Services Secretary Alex Azar visited during an inspection tour in New Taipei City, Taiwan, Wednesday, Aug. 12, 2020. (AP Photo/Chiang Ying-ying)

COVID-19 will lead to an imminent downturn in globalization via the reinstitution of industry in wealthy countries and the diversification of suppliers. Closed borders and rising internal manufacturing threatens the tight-knit globalized world of today. 

The raging pandemic brought with it the most profound and synchronized world economic collapse recorded to date. In addition to countries shutting their borders to keep the virus out, their economies were effectively shut down too, as the movement of goods and people halted throughout the world. Borders closed and factories were shut down—many are still not in operation to date. This shed light on some of the major shortcomings of globalization: the over-reliance on foreign partners and the inability to fully operate in a time of crisis. With many major companies relying on foreign manufacturing, the pandemic disrupted their fragile supply chains resulting in the stagnation of the global economy and the halting of the production and consumption of goods. 

For example, the production of PPE was so limited that there were shortages of equipment for medical personnel in many wealthy, western nations struggling with COVID-19, such as the US. Furthermore, nearly 60% of antibiotics, ibuprofen, and sedatives are produced in China. The pandemic slowed the shipment and delivery of these drugs, causing shortages in many nations during a time of need. These examples expose the extent to which healthcare systems in the west rely on foreign trade. 

The University of Michigan published a study that nearly a quarter of GDP drop in 64 countries was due to the disruption in supply chains. There were predictions that a pandemic today on the same scale as the Spanish Flu in 1918 could amount to 71 million deaths and a 5% decrease in global GDP. Thankfully, the death toll of the COVID-19 pandemic is nowhere near 71 million, but it is projected that world output may have decreased by over 8% in 2020. For reference, the recession of 2008 only decreased the global economy by 0.1%. 

Some nations, like Britain with their “Project Defend,” are taking action to limit reliance on foreign-manufactured drugs and PPE, as well as the internal manufacturing and supplier diversification of other products. 

Closed borders due to the pandemic have created division between countries, one similar to that before the jet age. This fact, combined with the rise of nationalist leaders, has also led to a growing desire for independent countries and economies.

The pandemic has only increased tensions between the US and China, causing more frequent trade disputes, heightened surveillance of foreign investors, and rejection of the other’s technologies, such as the Chinese 5G technology. Due to this, both the US and China are aiming to deviate from each other in trade. While the two superpowers are too integrated economically to fully separate, their tensions and omnipresent suspicions of each other, combined with their critical role in the world economy is alarming. These tensions, made worse by the pandemic, will challenge the growth of the global economy in the long run because they will force both superpowers to be more self-reliant economically.

With the re-emergence of internal manufacturing and rising nationalist agendas, spurred in part by the pandemic, de-globalization, or at least a significant slowing of globalization, is imminent. The COVID-19 pandemic has demonstrated the fragility of globalization in times of stress. Globalization depends on countries being receptive to open trade. The pandemic has revealed just how easily the system can experience shocks, and the desire of countries to minimize those shocks in the future will lead to great challenges to globalization itself.