Globalization in Context of Covid-19?Analyze various dimensions of globalization and the changes they are witnessing due to the Covid-19 pandemic.?

Introduction: Globalization emerged as an aspiration for integrating world into a global village, and subsequently transformed the economic, political and cultural dimensions of the world. The Covid-19 pandemic exposed the vulnerabilities of a globalized world. Pandemic compelled countries to impose restrictions on international travel, foreign investment, export of medical supplies and disrupted the global supply chain. It led to a new wave of protectionism, self-reliance and nationalism. 

Globalization is the spread of products, technology, information, and jobs across national borders and cultures. Economic globalization includes flows of goods and services across borders, international capital flows, reduction in tariffs and trade barriers, immigration, and the spread of technology, and knowledge beyond borders. Since its emergence, many studies found the positive effect of globalization on growth through effective allocation of domestic resources, diffusion of technology, improvement in factor productivity, and augmentation of capital.

However, the present crisis by Covid -19 pandemic has shown some of the vulnerabilities of the “Global Village”. Since the past few years, globalization’s impending demise is that the system is already strained to the breaking point. Even prior to the pandemic, globalization was challenged by a rising wave of populism spurred on by economic discontent in Europe, the United States, and China. Moreover, the pandemic came during a period of heightened inter-state strategic competition and trade wars, eroding the trust that serves as the bedrock for globalization. In this sense, the pandemic is just the latest and, as the argument goes, the final blow to globalization. 

 various dimensions of globalization and the changes they are witnessing due to the Covid-19 pandemic

Protectionism

Protectionism is a policy of protecting domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions. Since the past few years, protectionism was on a rise, the USChina trade war, strict immigration rules in many countries, and BREXIT reflect this trend. This protectionism got further momentum in the backdrop of the Covid-19, when countries imposed curbs on export of protective gears, masks, gloves, medicines and other medical supplies. Similarly, the trade in food items will see a downward trend as countries’ attempts to restrict food export as there are concerns that global food security could come under pressure.

India’s new FDI policy in April 2020, imposed restrictions on Foreign Direct Investment (FDI) from its neighbouring countries through automatic route. According to Department for Promotion of Industry and Internal Trade (DPIIT), this policy is to protect Indian companies from “opportunistic takeovers/acquisitions of Indian companies due to the current Covid-19 pandemic”. Similar trend was witnessed in case of Canada, Australia and France. The outbreak and spread of Corona Virus (Covid-19) will negatively affect global Foreign Direct Investment (FDI) flows. With scenarios of the spread of the epidemic ranging from short-term stabilization to continuation throughout the year, the downward pressure on FDI will be -five percent to -15 percent (compared to previous forecasts projecting marginal growth in the FDI trend for 2020-2021). The World Trade Organization (WTO) has now estimated that in a worst-case scenario, global trade could dip as much as 32 percent , indicating the kind of dislocation they expect in large economies.

Disruption in Global Supply Chains 

Global supply chains are networks that can span across multiple continents and countries for the purpose of sourcing and supplying goods and services. Global supply chains involve the flow of information, processes, and resources across the globe. Low-cost country sourcing is linked to global supply chains and refers to the procurement of products and services from countries with lower labour rates and reduced production costs than that of the home country.

Covid-19 has exposed the vulnerabilities of complex global supply chains built on lean manufacturing principles. The impact of China’s lockdown and its dominance in key areas of manufacturing have further highlighted the problem with modern supply chains. When Chinese factories were shut down, manufacturers struggled to pivot due to a lack of flexibility in their supplier base. One likely consequence is that global firms will now onwards diversify their supply chains, instead of relying only on China. Manufacturing hubs such as Vietnam, Mexico, and India are likely to benefit from that shift. It is expected that the post-Covid crisis, policymakers, and executives will look for remaking of global supply chains that are better connected with the local supply hub. More local supply can also enhance agility, as companies can be more responsive to changes in local demand. They can more easily sell and deliver products directly to customers rather than through intermediaries. 

International migration

The free flow of people across the borders is one of the key characteristics of globalization. The emergence of big Multinational companies has further promoted such movement of people in pursuit of better job opportunities. It has given rise to new class of citizens that are global. Developing countries like India and China are the largest contributors of such emigrants. They not only brought remittances back to their home country but also acted as a cultural link with other nations

However, during Covid-19 pandemic they were the worst affected. They not only lost their jobs but also faced a survival crisis due to higher living costs and the absence of social security net in these countries. As the situation worsened, countries sent their missions to evacuate their stranded citizens that constitute skilled and semi-skilled workers, students studying in foreign universities, tourists, etc. Some 15 lakh people returned to India between January 18 and March 23, 2020. It has not only impacted them financially but also psychologically, many of them will be less willing to go abroad again post Covid-19.

Culture

Apart from the economic impact of Covid-19, it has also impacted the emergent global culture. The globalization since the 1990s has significantly changed the society of developing countries in terms of traditions, culture, food habits, attire, etc. The westernization that has become an integral part of developing countries, has been questioned by many during the pandemic for its inability to deal with this crisis.

Countries are looking inward for the treatise of their traditional knowledge. In the Indian case, the praise for “Namaste” over “Hand Shake”; AYUSH ministry issuing guidelines for Ayurvedic herbs and chyawanprash to boost immunity ; Ramayana re-telecast on National TV recorded the highest TRP ratings, even surpassing the mostwatched entertainment shows; increasing demand of khadi masks and rising preference for yoga & meditation during lockdown over gym highlights this change. Similar trends can be witnessed in Sri Lanka, Africa, and other Asian countries.

Even though the Covid-19 pandemic has exposed the vulnerabilities of globalised world, its importance exists even more than earlier. Post Covid-19 pandemic, world will face the crisis of food security; massive unemployment; rise in multi-dimensional poverty; global recession; vaccination of marginalized sections, etc. To deal with these challenges, there is a need for an integrated globalized response that is assisted by robust and reformed multilateral institutions. The international NGOs can also play an eminent role in assisting the government response.