It has become commonplace to suggest that globalisation is at a crossroads. From Brexit to the election of President Donald Trump, from the western backlash against migration to the growing trade barriers across the world, this period in world politics has been termed as an era of de-globalisation. The high octave optimism of the “end of history” hypothesis has given way to the constant dribble of pessimism about the ability of the world to come together. The liberal order of the global elites is being challenged like never before, and multilateral institutions are crumbling under the weight of their own contradictions.
The world was at an inflection point even before the threat of coronavirus had entered the lexicon and our daily lives. It has been a linear progression from the global financial crisis of 2008/09 to the extant global economic disruption — all leading to questions about the credibility of the political and economic elites to provide effective governance, and to manage the aspirations of the have-nots.
Now, as nation after nation quarantines itself, the spread of Covid-19 is challenging the way we have become used to living and arranging not only our daily lives, but also the global order. The vulnerabilities of millions are out in the open and the experts do not seem to have credible answers.
At one point, when it had started, this had looked like a Chinese problem. So much so that the US commerce secretary, Wilbur Ross, had suggested that the virus would “help accelerate” the return of jobs to North America. As the global magnitude of the coronavirus crisis becomes clearer by the day, the talk of its impact on global supply chains is de rigueur. For a global economy that was already struggling, this shock might just take away even the last shreds of support for enhancing the international flow of money, goods, and people. While there might be a temptation to think of economic advantages for those countries that might seem less vulnerable to disruption, this is a chimera that will yield little in the long term.
Even though the virus emerged from China, generating an intense debate about the Chinese model of governance, there are those today who see in the Chinese Communist Party (CCP)’s response to the coronavirus “the good side of the Chinese model”, and are doubtful of the ability of countries such as India to handle this crisis. The impact on China is huge, but it still retains the ability to shrug it all off. The broader challenge for Beijing comes from the West turning its back on it after years of supporting its global integration. Trump’s high stakes tariff war with China had already ensured that the global assembly lines had started to move away from China. Now, a move towards trade and technological decoupling is setting the stage for a conflict which will involve challenging the fundamentals of globalisation as we have become accustomed to since the early 1990s.
{{/usCountry}}Even though the virus emerged from China, generating an intense debate about the Chinese model of governance, there are those today who see in the Chinese Communist Party (CCP)’s response to the coronavirus “the good side of the Chinese model”, and are doubtful of the ability of countries such as India to handle this crisis. The impact on China is huge, but it still retains the ability to shrug it all off. The broader challenge for Beijing comes from the West turning its back on it after years of supporting its global integration. Trump’s high stakes tariff war with China had already ensured that the global assembly lines had started to move away from China. Now, a move towards trade and technological decoupling is setting the stage for a conflict which will involve challenging the fundamentals of globalisation as we have become accustomed to since the early 1990s.
{{/usCountry}}This crisis will strengthen those who have been critical of the current churn in the international order and pushed for more and more openness — open markets as well as open borders. And it will weaken those voices who have, despite all the challenges, continued to champion globalisation. An ongoing backlash against globalisation will gain further momentum, especially as costs of global integration seemingly rise by the day. There was already a recalibration happening across the West, in particular, where even mainstream political parties have been changing their long-held positions on issues such as trade and migration.
As the world becomes more fragmented, the challenges to revive support for globalisation will only mount. This is a problem for a country such as India which has benefitted from the forces of globalisation, as the free flow of information, ideas, money, jobs and people has enabled Indians to prosper like never before. But as the global landscape evolves rapidly, Indian policymakers will have to figure out how to make the most of some of the opportunities that are emerging, as global supply chains get disrupted and a new trade and investment regime is being constructed.
Realists had long argued that greater interconnectedness leads to greater vulnerabilities. But this simple lesson became a casualty of globalisation hyper optimism. As that optimism recedes, the danger is that lessons that are being learnt will end up doing more damage. Obituaries of globalisation have been written many times in the past as well. It will surely survive this latest assault. But the form in which it might endure will also challenge us to think more creatively about the world we live in, and to provide adequate policy responses. Some of that rethinking had already begun before the latest danger had hit us. Now an acceleration of that trend is highly likely.