COVID-19: Turning Point for Globalization?

Protectionists assign blame for the COVID-19 pandemic on the trade, travel and migration associated with globalization. This overlooks how globalization has delivered prosperity and benefits. Still, an interconnected world cannot avoid shared risks, and even the most protectionist nations struggle to shield themselves from crises, whether the global financial crisis of 2008 or climate change. The media and global health officials issued early warnings about the COVID-19 threat and the specific dangers of large numbers of infected people spreading contagion while showing no symptoms. Despite images of suffering, closures and devastation in China and Italy, many leaders assumed that their countries were resilient. “Globalization is not the culprit, but rather the lack of strong international organization and effective cooperative mechanisms, with unified messages based on the best science, to tackle the global crises,” explains Hans Yue Zhu, a graduate teaching fellow at Yale University. US suspension of its funding for WHO will not help. “To salvage the fragmented globalized system, the international community must reflect on the existing framework to resolve global crises and strengthen the leadership role of international organizations in emergencies.” – YaleGlobal

COVID-19: Turning Point for Globalization?

Weakened global institutions and leaders who reject scientific advice, not globalization, are the culprits of the COVID-19 pandemic
Hans Yue Zhu
Tuesday, April 21, 2020

WHO secretary-general shakes hands with Chinese president; separate photo of Donald Trump at podium giving health briefing, with hand raised
Global governance fail? WHO declared a global emergency on January 30, yet many global leaders did not prepare; Director-General Tedros Adhanom Ghebreyesus meets with Xi Jinping, and President Donald Trump suspends US funding for the health organization

NEW HAVEN: Over the past few decades, globalization represented the growing interdependence of economies, cultures and populations across the world, along with prosperity and rapid economic growth. Yet, modern globalization with liberal travel and trade also became a catalyst for the COVID-19 pandemic.

Built on the theoretical foundations that champion specialization and international trade, most people were enthusiastic about a globalized community, and few cast doubt on the outgrowth of globalization. As economist Anne Krueger observed, “growth prospects for developing countries are greatly enhanced through an outer-oriented trade regime.” The value of global exports in 2007 was more than 20 times that of 1950. Benefitting from economic integration and outward-oriented trade regime, South Korea and China followed Japan’s rapid growth and became prosperous in their own right. Empirical evidence has corroborated the theoretical basis that globalization benefitted the rich and poor countries alike, despite some scholars pointing out how globalization has heightened inequality within countries. For example, China’s Gini coefficient increased from 0.25 in the mid-1980s to more than 0.45 in 2009 after its integration into the global system.

 

As the world submerged itself in the gains brought by cross-border tr ade of goods and services and the relatively free flow of people, imbalances and cracks emerged. The associated dangers went largely neglected. Since 2008, a spate of misfortunes has weighed on globalization, including the global financial, refugee and climate change crises. An interconnected world means shared risks and people could not detach themselves from crisis. The global trade imbalance is one of the most prominent problems. The United States has run a continuous current account deficit since the 1980s, while Japan, Korea and China have gained surplus. The imbalance in trade has been a major headwind against globalization resulting in a series of skirmishes, peaked by the US-China trade war that began in 2018.

With the United States and China exchanging aggressive rhetoric, most recently blaming each other for COVID-19, the trade war's end is not within the foreseeable future. The world’s two largest economies have traded less since mid-2018, dampening optimism for globalization. The US and China traded $635 billion and $659.8 billion worth of goods in 2017 and 2018, respectively. Trade volume substantially dropped to $558.9 billion in 2019, a decrease of 15.3 percent. Rising protectionism against free trade and migration in the US, the world’s largest economy, erodes globalization’s luster and ravages people’s belief in a prosperous globalized community.

Global Moves on COVID-19 February 20 This virus is very dangerous, and it’s public enemy No. 1. But it’s not being treated as such. Director General, WHO. March 30 We can and must scale up the production of things like protective equipment, ventilators, testing kits — and ultimately treatments and vaccines. But we want manufacturers to be focused on maximizing output, not figuring out how to source domestically, or whether imported materials or components will ever arrive. – Director-General, WTO. March 31 Now is the time to show solidarity, act responsibly and adhere to our common goal of enhancing food security, food safety and nutrition and improving the general welfare of people around the world.  –  Joint Statement, Directors-General of FAO, WHO and WTO. April 9 We are responding to an unprecedented number of calls for emergency financing – from over 90 countries so far. – IMF Managing Director. April 10 The pandemic also poses a significant threat to the maintenance of international peace and security – potentially leading to an increase in social unrest and violence that would greatly undermine our ability to fight the disease…. Indeed, a signal of unity and resolve from the Council would count for a lot at this anxious time. – Secretary General, UN

Furthermore, the pandemic, which emerged in Hubei, China, in November, is a double whammy to the already fragile global system, bringing economies and globalization to a near-complete halt. COVID-19 has infected more than 2 million people, killing more than 130,000 globally with astonishing pace. The devastating pandemic, with its high mortality rate and so many displaying mild or no symptoms at all, shows little sign of waning. Globalization along with convenient and affordable transportation is a major reason that the disease spread to virtually every country in the world in a few short months. The liberal flow of people and commodities, once a major driving force of prosperity, transformed into a sprawling behemoth that could ruin lives of countless human beings.

Although media closely followed the outbreak with truthful reports and clear warnings that offered a chance at containing the virus, policymakers paid little attention. According to a January 23 CNN news report, Charles Li, CEO of the Hong Kong Stock Exchange, said in Davos that he hoped the world could react better to the coronavirus than it did to the SARS outbreak, referencing governments, institutions, hospitals and the media. The Washington Post also reported that US intelligence agencies warned President Donald Trump about an impending pandemic as early as November.  Even the devastation in China and then Italy failed to alarm most policymakers.

By March 30, however, most European countries were on lockdown to curb the spread of the virus, and other countries soon joined. Australia limited public gatherings to just two people, while New Zealand’s nationwide isolation began March 25. Most US states issued stay-at-home orders for more than 250 million people, and by mid-April only seven refused to comply. Countries try closing borders for non-nationals, while global major airlines have eliminated most international flights. In the world’s once crowded and profitable route between London and New York, passengers number in the single digits.

Making matters worse, the pandemic still accelerates, while globalization is in retreat. People cannot avoid asking: What went wrong with globalization? Could some reversals become permanent?

Strengthening multilateral cooperation is key to maintaining prosperity. Globalization is crippled, but not fatally wounded. The lessons from the Great Depression almost a century ago proved that anti-globalization and protectionism are not antidotes to sluggish economic growth. Instead, international trade and mobilization of resources offer strong momentum for growth in the developing world while also benefiting consumers in developed countries with low-cost imported commodities.

The root cause of the chaos lies in the laggard, obsolete international organizations as well as poor global governance. Amid the spreading virus, the World Health Organization, which aims to “prepare for emergencies by identifying, mitigating and managing risks,” could only issue advice to sovereign countries while lacking authority to implement tangible measures. In addition, WHO’s COVID-19 response was insufficient. China first reported the new virus to WHO on December 31, three weeks after doctors tried raising alarm. Even after China took draconian measures to lock down the city of Wuhan, WHO failed to provide useful, urgent recommendations throughout January to tackle the new contagious disease.

Of course, WHO is not the only culprit pushing the crisis beyond repair. Instead, weak inter-country cooperation and international institutions’ lack of authority perhaps bear the most responsibility. Some politicians may blame WHO for belatedly declaring a pandemic on March 11. Still, WHO undertook a number of measures to contain the disease. On February 11, WHO Director-General Tedros Adhanom Ghebreyesus called the outbreak a “very grave threat for the rest of the world,” and sent another warning on February 20: “This virus is very dangerous, and it’s public enemy No. 1. But it’s not being treated as such." One day later, he emphasized that the window of opportunity to contain the outbreak is “narrowing.”

Only a few days later, leaders of the second and third most populous countries in the world, Narendra Modi and Donald Trump, held a joint rally in India attended by more than 100,000 people. Trump insisted COVID-19 was “very well under control in our country.” Likewise, UK Health Secretary Matt Hancock suggested that the risk to the UK population was low and “we are well prepared and well equipped.”

During the one-month window period to contain the epidemic, from WHO first ringing the alarm on February 11 to Italy’s implementation of nationwide lockdown on March 9, the international community failed to take effective measures either due to confidence in domestic healthcare systems or fear that halting economic activities might exhaust already weak economic growth. Myopic complacency and undue pursuit of economic growth blinded policymakers and made global outbreak inevitable.

Today, behind ascending numbers of cases and deaths, millions of people suffer from the disease or the loss of livelihoods. Meanwhile, diplomats and politicians continue to disregard advice from professionals and cling to conspiracy theories.

Donald Trump announced suspension of US funding for WHO pending an investigation, but he should act to strengthen rather than weaken such organizations.

Globalization is not the culprit, but rather the lack of strong international organization and effective cooperative mechanisms, with unified messages based on the best science. To salvage the fragmented system, the international community must reflect on the existing framework to resolve global crises and strengthen the leadership role of international organizations in emergencies. In particular, WHO should take the lead in the current pandemic, while countries should implement serious policies based on WHO recommendations. Instead of each country fighting its own battle, there is pressing need to set up a joint ministerial committee under WHO's leadership as a decision-making body to contain the virus with cooperative efforts.

The world will eventually tide over this pandemic, but if steps are not taken to improve global governance, COVID-19 will not be the last pandemic that devastates globalization.

Hans Yue Zhu is a graduate student at Yale University’s economics department and a research assistant at the Yale Jackson Institute for Global Affairs focusing on public policy and development economics. His research touches on China’s economic reforms and its macroeconomic efficiency.

This article was published April 15, 2020.

© 2020 YaleGlobal and the MacMillan Center

Comments

Backlash of globalization could not alleviate current damage brought by COVID-19. Governments, regional and international institutions need collaborate more effectively and closely and combat pandemic to save people, reduce economic loss and stabilize chaotic society. Sufficient and timely precautionary reactions by governors in the world are supposed to take place when epidemic spread across borders.
Historically, globalization has not been reversed even during several tremendous disruptions, e.g. WWII, creating social, cultural and political linkages. New transportation, trade and investment, capital and wealth, Internet and etc. make globalization a natural phase of development.
COVID-19 shows the negative aspect of globalization. Yet, it is “laggard and obsolete collaborations” and “weak global governance” rather globalization cause the huge loss of pandemic. Multinational collaboration among ministerial level are needed to better cope with the COVID-19 pandemic.

And all your cheer-leading to prevent it's demise isn't going to stop it. China and the CCP's culpability for this pandemic will be laid bare for the world to see.

The cause of the chaos lies in the very idea of "global governance." Such an idea is an expression of globalization, not a creator of it. Global governance doesn't exist because globalization can't create it. Ultimately, it can't exist. Globalization cannot be sustained because global governance is impossible. It's not a practical technocratic matter. It's a question of political legitimacy and the basis of human societies.

wow, you are really blind, aren't you? Americans do not care about cheaper goods. Nor do they care about globalism and it's attendant religions. They care about quality, safety, and keeping the American worker prosperous. That was before COVID, which has killed globalism dead as a door nail. China lied to the world about the origin of the virus - it comes from a lab in Wuhan and was accidentally released. China allowed large numbers of tourists to visit Iran and Italy during Chinese New Year. Throughout this period, and to this day, China is continuously lying about the numbers of dead and the numbers of infected. WHO covered for them by decrying Trump's travel ban and saying that this was an "over reaction" and that "there was no pandemic." Then the Chinese government had the gall to run a propoganda campaign that has blown up in their faces, including, asking the state of Wisconsin to pass a resolution praising the CCP's COVID response? These are all facts. And guess what, America is done with China. No American company will ever again, risk using China as a sole source in their supply chains, and many will just leave for less expensive and less perilous options including bringing work back to the the American worker. Huawei is dead in the water, as no Western government trusts them. So, we look forward to the superior Chinese government system helping them figure out the way forward on their own without American help.

Combating the pandemic is one issue, but the more serious and apparently non-negotiable situation of "the end of globalization" in entirely a different issue. Undoubtedly, the Covid - 19 pandemic, which has wrecked the global economy, and brought many poor countries to the stage of economic annihilation, has added fuel to the debate of who has benefited from globalization, from economic integration, from liberal trade regime imposed by WTO. This would continue to be debated for a long time to come, but majority of World population would increasingly reject the idea of continuing with the existing global trade regime. Frankly speaking, except for some individuals and countries, neither rich nor poor countries have benefited from the global trade order in a real sense. Countries and their populations, in fact have "consumed themselves" to keep up with the pace of this global order.

Using the rules of game under the liberal trade regime prescribed by the WTO, there is only country (and we know who this is), which became rich and prosperous in real sense. It outsmarted America and Europe and thrashed them under their rule of trade inside their house itself. Additionally, globalization has heightened inequality within the countries, rich or poor. Handful of businesses and rulers becoming rich and prosperous, and 99 percent of the population rendered debilitated and exhausted by the constant struggle for making money. Rather than debating for a system, which does not appear to have any future under this changed global situation, it is desirable now to think of promoting a mechanism of regional cooperation, based on geographic, natural, technological, skilled HR advantages each partner countries possess. Like minded countries, having common interests and having natural affinity and bond should try to forge such alliances. If there is any love or lust still remaining in us for "old golden regime", bear in mind that it would have a devastating effect on the economic resurrection of many poor and rich countries, in the post-Corona pandemic scenario.

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