When asked what will happen to globalization in the aftermath of the coronavirus pandemic, there are two things that most global experts seem to agree on — globalization is here to stay and it will look different going forward. These sentiments stem from an outlook that goes beyond current dismal travel data, and economic downturns, and are rooted in a strong belief that we are an interconnected world that is irreversibly global in nature.
The Simple Argument for Globalization
The simplified core argument for globalization is that without global collaboration and exchange, we lose the engine that drives innovation and forward movement, which industry and organizations of all kinds, as well as societies across the globe, rely on not just to flourish but to function on basic levels.
The argument for why globalization will change is even simpler — it has to in order to survive. As a matter of fact, while it may seem like globalization has more or less died in recent months, what it has actually done is changed.
Collaboration is still going on across borders. Countries are exchanging goods, services, and information, albeit in different capacities and ways compared to pre-pandemic days. People may not travel physically for business meetings right now, but we are still holding them virtually. Companies may not be sending employees to conventions across the globe, but many are attending online events because we know that the information exchange is critical, the view from the other side invaluable. We are a globally-minded world that has had to push the pause button on some of the more overt expressions of that globalism.
Stark Data to Suggest Troubled Times
There is, of course, data that shows that some of these overt markers are struggling right now. The most obvious — the number of international airline passengers — is in steep decline. Once the year is over, the decline is thought to be somewhere between 44-80% according to the Harvard Business Review (HBR). (For some perspective consider this — even if international airline passengers fall by two-thirds, there would still be more people flying abroad now than there were in 2003, according to HBR.) In addition, HBR is forecasting a 13-32% decline in merchandise trade and a 30-40% reduction in foreign direct investment.
But, as stark as these numbers are, there is also an acknowledgment that these are extreme circumstances that won’t last forever. The question is what globalization will look like coming out on the other end, and perhaps more importantly, what companies, organizations, and countries can do now to impact and shape how we go forward?
Globalization Has Been Questioned Since the Great Recession
When discussing the future of globalization at this moment in time, it’s important to remember that globalization as a concept started to be questioned well before the coronavirus pandemic closed down borders, disrupted trade, and put planes on the ground. Protectionist attitudes have been building in various parts of the world since the great recession, and the international business environment has been gradually destabilizing — the US and China trade war is just one example of this trend.
In addition, it’s clear that the pandemic has given a platform to those who are interested in building strong nation-states and aligning economies along regional lines, as opposed to working for international openness and movement of goods and services. In Covid-19, the nationalist voices that argue for closed borders and limited exchange have something concrete to put forth as evidence of the dangers of globalization.
In a Global World, We Need Global Solutions
On the other end of that spectrum is the recognition that the fighting of the pandemic itself requires collaboration across borders. In an article on Time.com Arjun Appadurai argues that the recent crisis has shown that neither science nor technology can succeed without globalization.
Arjun writes: “The best virologists, epidemiologists and public health experts are constantly in touch with one another across national boundaries. Drug companies rely on globally conducted trials and scientific talent drawn from a global pool. Emergency equipment is sent from various countries to one another. Although there is still a competitive race to find the best tests, equipment, vaccines and cures, the globalized model of corporate collaboration in the big pharma corporate world is sure to continue. And nation states that treat the pandemic as a zero-sum game, to be won or lost, are sure to fail.”
The worry about the economic damage, and its lasting effects, is real. Not knowing when international flows will start growing again is the type of uncertainty that no business likes. However, business leaders have some agency in shaping how we go forward. HBR writes: “Global business leaders can go beyond just watching disease trends and economic data — they can help tilt the balance from negative to positive feedback loops by contributing to health, growth, and international cooperation.”
Looking at it from a business perspective, there is a case to be made that the pandemic itself is providing strong business and export opportunities. Think of e-commerce, for example, or the remote work experience, both have flourished during Covid-19, and both have lots to offer globally for those who can perfect their offerings in their fields of business and expertise.
The Expectations of Business Leaders Have Changed
Another force that has emerged as a player in impacting the future of globalization is public opinion. The awareness in society of the forces that shape our existence is growing and customers and employees alike are to a greater extent expecting corporate leaders to take a stand on issues that arise. This means that companies who want to thrive in the post-pandemic business landscape will have to look at the bigger picture and take into account the driving forces of globalization — not just on a business level, but on a societal level, as well as a human level.
It’s undeniable that globalization has taken a hit and that the international movement of goods, people, and services have been disrupted because of the coronavirus pandemic. But whether globalization will survive or not, in the end, will have more to do with how we approach two opposing world views — protectionism vs. globalization — these two worldviews will likely continue to be debated long past Covid-19 has passed.
By: Felicia Shermis