In the past two or three decades, with the development of free trade, people mobility and universal value, globalization undoubtedly has become a politically correct belief. From the perspective of the basic macroeconomics theory of comparative advantage, although a country may have absolute advantages in all fields of production, she should still trade with the less advanced countries and ultimately every country benefits. The United States has the absolute ability to produce high-quality medical-grade face masks, yet China’s mask production accounts for half of the world output, which is in line with the comparative advantage on textbook. The world may have different perspectives on capitalism, however, no matter a civilized Western country, China, the Islamic world, or a developing country in South East Asia, they all settle transactions through the international banks and they will never burn US banknotes because of different political views. This reveals how the global economy is in perfect harmony.
From the socio-cultural perspective and taking the original Tokyo 2020 Olympic Games as an example, although the modern Olympics has more than 100 countries participate (including the Olympic qualification among small countries), it is really amazing to see the coordination of the rules for different games, the agreement on costumes and jerseys, and even the similar content of different national anthems. It is a good demonstration of a highly integrated civilization and globalization over last hundred years that people of different cultures, descents, colours compete on the same stage every four years.
The more important meaning of globalization in recent years is dealing with global issues. Economic development, climate change, nuclear weapons and the global pandemic of COVID-19 are the challenges that global people need to face together. If each issue is not properly handled, it could be a disaster for the world. The various supranational entitles such as the United Nations, the European Nations, World Trade Organization and World Health Organization, etc. are primarily established based on global interests because those issues often cannot be solved by a single country.
However, in recent years, some decisions made by those supranational entities not only have they failed to resolve the issue properly but also have highlighted the backwardness of political coordination. In the economic aspect, the original intention of globalization is to improve overall productivity so that each country, region and population can benefit. Nevertheless, the rise of protectionism these years reflects the unfair distribution of resources, structural unemployment caused by the highly globalized production, government subsidy under state capitalism, environmental pollution, and unfair competition due to the lack of labour protection, etc. turn the benefits of globalization into mirage. The European Union’s failure to deal with the debt crisis and structural economic problems in the region over the past decade, the disagreement on refugee handling among members, and the misjudgment and hindsight of COVID-19 are also very disappointing. If EU fails to reform in time, it will eventually be dissolved or reduced to an irrelevant role one day.
Recalling the relationship between COVID-19 and globalization, with the lockdown of cities, social distancing and the joint efforts of worldwide scientists on vaccine research, the epidemic can be controlled optimistically within a year. However, structural changes in globalization are foreseeable.
First, the shortage of medical and daily supplies during the pandemic causes the global production line and logistics returning to homelands. People would rather bear the high price than to reliance on other countries.
Second, the rise of authoritarian. Each government implements crowd control, rationing of necessities and heavy economic intervention out of epidemic control. Will this become new normal? After the outbreak, will it be easy to return freedom to citizens?
Third, the credibility of those supranational entities went bankrupt and became meaningless. COVID-19 exposed the corruption of WHO, not only did it fail to predict the outbreak of pandemic in time, but it put political interests over public health which led to global crisis. On the contrary, the more citizens do not trust WHO, such as Hong Kong and Taiwan, the better the epidemic control.
Lastly, digital transformation across different industries will become a significant driving force during economic recovery. Though, the big data and algorithms will bring new global order. Who can own the data? Do you believe in an authoritarian country or a multinational technology giants? Being used properly, technology may improve the global allocation of resources and human well-being. However, big data has become a tool for competition between great counties.
Those are big topics and we shall discuss in future articles.
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