HAS COVID-19 KILL GLOBALISATION?

Introduction

Covid 19 has brought disruption to the globalized and interconnected world. the challenges of Covid
have led to a dark period both in terms of human suffering but also the damage done to of political
and social fabric. But before the pandemic, globalization was already in retreat. Now that trend looks
set to accelerate. This is a diminished world in many ways that we're looking at it's a world of
globalization from smartphones to toys today's globalized trading system has grown to rely on long
and complex supply chains but the pandemic has played havoc with them. Clothing is one industry
that has been hit hard worth 2.5 trillion dollars globally it employs over 43 million people in asia
alone. One of the most footloose industries when it comes to supply chain has always been the
garment industry. That's because it has a high level of human involvement and so the labor cost of a
product is much higher than you might find in an automobile. For example for that reason we've
always seen companies chase the lowest cost that means manufacturing mostly happens in asia and
the global nature of the industry makes it especially vulnerable to disruptions take a typical pair of
trousers sold on a high street in western europe. The label says made in bangladesh but many of the
parts come from other countries. Chinese factories making buttons and zips shut. During the
pandemic meaning the items didn't reach their next port factories. In bangladesh couldn't finish the
trousers and canceled orders to cotton suppliers in india and lockdown hit demand in the west as
customers weren't shopping on high streets. In america, clothing sales fell by 73.5 percent between
march and april this year. Bangladesh lost out on an estimated 3.2 billion dollars from cancelled
exports in just six months

The Roots of globalisation

and across asia millions of low-income workers were laid off goods taking long journeys from factory
to the high street have become one of the signatures of globalization the roots of today's heavily
globalized world were put down at the end of the second world war the allied nations created a
rules-based system for international commerce and finance designed to establish the economic
foundations of peace on the bedrock of genuine international cooperation this allowed companies
products science and technology to move across borders then in the 1990s the world entered an era
of hyper globalization becoming more interconnected than ever before a dream of money money

Hyper globalization

In this era, the big new player on the scene was China, which joined the World Trade
Organization. It grew to dominate global trade alongside the United States.
Multinational companies thrived, expanding into China and all over the globe. From
1990 to 2008, the total trade in goods and services increased from 39% to 61% of
world GDP. This great globalization boom enabled a billion people in developing
countries to lift themselves out of poverty, and in the West, consumers enjoyed
cheaper and more accessible travel and goods.

The 2008 financial crisis

COVID-19 struck a major blow to unfettered globalization, but before the pandemic
arrived, globalization had already taken two other big hits. The American financial
system is rocked to its foundation. Japanese stocks down 9%. The Hong Kong
market's down. Everywhere you look, the color is red, and no one, it seems, can stop
the bleeding. The first was the 2008 financial crisis when cross-border investment,
trade, bank loans, and supply chains shrank. Globalization started to slow down, a
process known as deglobalization. The global financial crisis a decade ago was
perhaps an early sign of the beginnings of deglobalization. It wasn't recognized as
such at the time because it seemed to be a banking crisis. The global economy
suffered.

The populist wave

And those who had already lost out during the heyday of globalization felt even
poorer. Opposition to the system grew, and we see this kind of sentiment across
Western democracies to bring the jobs back that were stolen when the factories
moved, particularly to China. Those who were left behind, very cruelly, by the
policies and people that supported globalization, that is, the blue-collar workers, for
example, in factories in northern England or in the Midwest of America, the Trump
voters. This desire to revive manufacturing and bring back dignity to workers spread
across the Western world. A wave of populist leaders were elected across the globe,
championing nationalist policies, attacking immigration, and the existing global
economy. "The future does not belong to globalists. The future belongs to patriots."

Trade wars
Free trade went out of fashion, and protectionism was all the rage. The number of
trade interventions, such as tariffs and subsidies, introduced by countries has been
increasing year on year. While some have brought liberalization, most have been
harmful to world trade. In this climate, globalization suffered a second assault.

"We can't continue to allow China to rape our country, and that's what they're doing."
A trade war blew up between the world's two largest economies. For years, the West
had accused China of flouting WTO rules, saying its trading practices were unfair to
Western companies. But President Trump turned rhetoric into policy. Since the start
of his presidency, tariffs on Chinese exports to the U.S. have increased six-fold.
China hit back, more than doubling its tariffs on U.S. goods.

Future of globalization

The advent of the pandemic this year was the third big disruption to globalization
within the last 12 years. Globalization has sped up this year. The IMF forecasts that
global GDP could fall by 4.9 percent, which is 50 times more than in 2009. The post-
COVERED world is likely to be a more fractious and regionalized one. What we saw
for 20-30 years with unfettered global trade, with unfettered global travel, with
sourcing from China, serving the world – I think we'll never go back to that.

What we're likely to see is a messier world and future one, with elements of
globalization continuing but many other countertrends that lead to either
regionalization, nationalization, localization, some form of de-globalization, and so
we're going to a spiky world. We're going to see much more disruption.
Multinationals try to navigate the challenges of the pandemic. The talk in the
boardroom is increasingly about how to be less global and more local. They have
seen how vulnerable their supply chains are to unanticipated disruption of a natural
kind. For the first time at the level of the CEO and the board, companies are
discussing supply chain risk and what to do about it, and how to ensure against it.
Now, they're seeing this as something vital to the business.

Zara

Some companies are ahead of the game. The Spanish clothing retailer Zara is one
of the most successful in the clothing industry, and its shorter supply chains have
helped the company weather the COVID storm. While most Western high-street
fashion brands have offshored manufacturing to Asia, where labor is cheaper,
distance equals time. So, retailers have to bulk order six months in advance, and in
that time, a lot can go out of fashion. Zara keeps its manufacturing base closer to
home for its higher fashion lines, meaning you can take a design to the high street in
a matter of weeks. That way, it doesn't stockpile inventory and can respond quickly
to consumer trends. That model is coming to not just to fashion, but industry after
industry is going to move in that direction, in part because the on-demand economy
is allowing us to express our tastes through social commerce. We've seen a
revolution that's driven both by fear of disruption on one hand but also by the
opportunities created by the internet economy.

The pandemic has disrupted the movement of goods, people, and capital around the
globe. But even without COVID-19, another pillar of globalization would be facing
challenges: the flow of data across borders. The Great Firewall of China has kept out
the likes of Google and Facebook for years. And President Trump's recent attacks
on TikTok and WeChat are deepening this splinter net between China and the West.
"We're looking at TickTock. We may be banning it."

It's not just software. We confronted untrustworthy Chinese technology and telecom
providers. We convinced many countries, many countries – and I did this myself, for
the most part, not to use Huawei.

The decoupling of Chinese and American tech also extends to hardware. I think this
is likely to lead to two worlds: a China-dominated world and an America-dominated
world on technology and software. And ultimately, we will have less innovation.

Developing countries

The unpicking of globalization may accelerate on a number of fronts irrespective of

when COVID-19 is brought under control. And this could be bad news for developing
countries such as India. The globalization boom allowed countries in Southeast Asia
to rise to middle-income status, but the likes of India may miss out on this.
There is a concern that we may see a leapfrogging in countries that are emerging,
the way that China had a chance to put its massive population to work in factories.
There is a worry that for developing countries that are just emerging at that stage,
that the world may move to a post-industrial economy and leave them behind. This is
a genuine concern, and they are not the only people who stand to lose out from
deglobalization. In rich countries like the US and Britain, those most in favor of
reigning in globalization could suffer the most. We're going to London to stop the
Brexit betrayal. Good morning! Economic nationalism will not prove to be a silver
bullet. It's very likely that uh policies of de-globalization or economic nationalism that
try to bring the factories back will discover that you can bring the factories back, but
you can't bring the jobs back. That's because when the factories are brought back,
almost always they will be more highly automated than they were in China. But even
as the world becomes more de-globalized, some of the biggest winners from
globalization will endure. Big digital companies like Netflix, Google, and Facebook
will keep getting bigger. With the pandemic accelerating the trend towards shopping
online, companies following the Amazon model of fast, direct delivery will also do
well. The top 10%, even in the worst sectors, worst-hit sectors could well emerge
with a winning business model. I think in every crisis, you find some companies that
fall behind; and those that are fundamentally able to re-jig their business models and
innovate are the ones that thrive.

Conclusion

In the post-covered world, some aspects of globalization affected by the pandemic

may shift back, such as freedom to travel. The world has grown too integrated for a
full unwinding of globalization. Covert will not kill it off; it will deepen the cracks.
However, this may not be all bad news. I'm hopeful that we'll learn the right lessons
that we need to make our societies more resilient, so that we don't resort to very
simple solutions that don't work, like shutting down the supply chain, building a wall,
keeping the immigrants out. We've tried those things before. I think the broader
solution is to make interdependence work with resilience. That's the challenge that
global leaders face today. I'm Vijay Vadis, Warren, U.S. business editor of The
Economist.