In the COVID-19 pandemic, there is a debate about what will happen to globalization now? With globalization slowing down, will all countries move towards defensive policies? And if so, when will globalization begin again? The answer to this question is not that simple. And is there any relationship between globalization and COVID-19? Or what is this globalization and when did it start? To answer these questions, we can understand what will be the future of globalization.
Globalization means that any country can have free relations with other countries in the world. These relationships can be the exchange of goods and services, new technologies, capital and human resources, and beyond this. Currently, this kind of relationship is nothing new for countries like India and the rest of the world. The history of mankind as a whole, tells us that human beings love to interact with other people and, also, with countries from any parts of the world. In fact, because of such exchanges and interactions, humans have made great advancement in many areas.
Globalization is nothing new for our country. Some people believe that globalization started in 1991 but this isn’t the whole truth. In the pre-independence period and even before that, before the arrival of the British, our country had a good share in world trade. In the aftermath of this period, our trade dwindled, and after independence, given the experience of the British monarchy and the global export slump of that time, our strategists permanently isolated our economies from the rest of the world. We are all familiar with the model of ‘Planned Economy’ as a result, the country’s economy plummeted. And our country jumped into the third wave of globalization through borrowing from the World Bank and the International Monetary Fund, and then the new economic policies and reforms suggested by the then policymakers.
When Exactly Did Globalization Begin?
Roughly two full and third waves of globalization have been going on so far. The first wave was generally between 1870 and 1914. Britain was at the centre of the first wave of globalization and this wave ended with the beginning of World War I. This was followed by the Great Depression of 1929 and World War II. As this World War drew to a close, a number of international organizations were formed to prevent such a World War from taking place. On the other hand, many countries like India came out of imperialism and the second wave of globalization began. This wave was there from 1945 to 1969 and the United States of America was at the centre of this wave.
The second wave of globalization had come to an end as the formation of the Organization of the Petroleum Exporting Countries (“OPEC”) started; an organization set up by petroleum-rich countries to control petrol prices and due to this, the prices of petrol and petroleum products increased, this started to increase in the deficit in the balance of payment in many countries including the USA. As a consequence, many countries started imposing various restrictions on foreign trade and relations with all countries. But, furthermore, the third wave of globalization started in 1989 and continues till today. And in this wave are developing countries, including China and India are at the centre.
This third wave of globalization is very different. There are various characteristics of this wave like the market-driven, innovative technologies and inventions, bringing developing countries to the forefront of development, developing major markets in developing countries, competition for the world’s largest companies, the establishment of the World Trade Organization and active participation in international trade, the comparative cost theory of international trade benefits taking away from the developing countries, etc. This wave of globalization has benefited developing as well as developed countries. But at the same time, there are many disadvantages.
Globalization and the COVID-19 Epidemic
This globalization has led to a huge increase in transportation in recent times. There are many reasons like the growth of trade, travel to abroad for education, attending various meetings and gatherings in a foreign country for business purposes, the globalization of information, the curiosity of various types of foods and places in various parts of the world, and this led to the boost of tourism business in the recent time because many people have the dream to go to that country. Due to all these, there has been a huge increase in air travel.
In the same way, in this wave of globalization, a chain of suppliers has been formed in the last decade. All of these businesses are based on the above all businesses. China is the centre of this wave of globalization since China is connected to many countries in terms of both imports and exports. Moreover, China wants to establish its dominance over the whole world.
If we try to tie all of the above points into a single thread, it looks like COVID-19 started in China, spread all over the world due to the massive increase in communication and air travel, and almost all the countries in the world started imposing restrictions after seeing this widespread fear. It would not be wrong to say that this is the bad side of the third wave of globalization. The benefits of globalization are many, but the COVID-19 epidemic has spread around the world like the 2008 recession.
The first wave of globalization brought an end to the conflict between political interests and ideology. The second wave ended with the formation of OPEC by the oil-producing countries and the deteriorating balance of payment of the USA.
What Will Happen To Globalization?
The third wave is proving to be a great revolution in all areas of the world. The developed countries are succeeding in finding markets for their products, with many manufacturing companies making huge profits as with low production costs. And, contrary to this, the developing countries are experiencing an increase in employment, foreign investment, easy access to new technologies and techniques, increasing the pace of development, and rising voice about global warming in the policymaking process at the global level. It was predicted that this wave of globalization would create jobs in developing countries and bring comparative cost benefits to sectors like agriculture; it will take all the countries in the world to a place with the least development gap and raise the living standards of all people in the world. But today, three decades after the beginning of the third wave of globalization, the developing countries are far from the dreams set out at the start.
This wave started and in the decades that followed and many countries benefited from employment growth, economic growth and improved living standards. But this was limited to a few countries, and after the 2008 recession, things began to change. This was mainly due to robotics, Artificial Intelligence (“AI”), automation and the changing nature of such products. And now, due to COVID-19, the situation changed drastically.
The future of globalization depends on how long the COVID-19 epidemic would last in the near future and which countries succeed in overcoming it at the earliest. At present, it seems that it is not easy for any country to get out of globalization and build its own nest. It’s a difficult task to separate the economy of any country from globalization and make it self-reliant. Isolation is needed to prevent the spread of the COVID-19 epidemic.
The world after COVID-19 will move towards robotics, artificial intelligence etc. and the countries that are at the forefront of this will be able to take advantage of globalization and take the economy back to different heights to improve the lives of ordinary people. This means that globalization will not end, but will continue in different ways. The decision is now in our hands, whether to invest in basic social infrastructure (health and education) and be equipped and self-reliant to face the dangers posed by globalization in the coming years.
This article is authored by Dr. Jivan Biradar, Assistant Professor (Economics) at School of Commerce, MIT World Peace University, Pune.
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