By Tapiwa Gomo
There is ongoing debate on whether there will be a post-COVID-19 era or the world will just learn to live with the virus while continuing with efforts to suppress its spread or eliminate it.
However, what is not for debate is the indelible dent the pandemic has caused on a wider spectrum of modern lives. But it is not COVID-19 alone that has been reshaping the world as it is gradually retreating from globalisation under our watch.
Globalisation is a process of interaction and integration among people, companies, and governments worldwide. Its origins can be tracked back to the 18th century spawned by advances in transportation and communication technology.
Globalising processes affect and are affected by business and work organisation, economics, sociocultural resources, and the natural environment. Academic literature commonly divides globalisation into three major areas: economic, cultural, and political.
The shrinking of time and space and the increase in global interactions have caused a growth in international trade and the exchange of ideas and culture. Underlying globalisation is massive economic growth because of the expedited process of interaction and integration that is associated with these social and cultural aspects.
In 2000, the International Monetary Fund (IMF) identified basic aspects of globalisation: trade and transactions, capital and investment movement, migration and movement of people, multilateralism and the dissemination of knowledge. Analysts and economists such as Dambisa Moyo track these to establish how globalisation is performing over the past decade.
What is coming out of the findings is that these pillars have taken a knock and were or are under threat and strain. Some of these emerged long before the pandemic. There are several factors to this but the main one is protectionism and later the COVID-19 pandemic. It is worth noting that the pandemic found the world in retreat as protectionism started long before the outbreak of the pandemic.
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Once the United States (US) former President Donald Trump’s largely protectionist policies took centre stage in 2017, global trade of goods and services slowed down massively. This was mainly due to the tariffs imposed by his government on major trading States and the situation was made worse by retaliatory policies to the US.
This behaviour also slowed down growth in technology owing to disagreements between Chinese technology companies and the US government.
The US was not the only driver of global trade slowdown. The United Kingdom (UK) and its BREXIT caused a fairly huge trade rupture as traders struggled to adjust to a UK that would not be part of the European Union anymore. These and others saw nearly a quarter decline in global trading.
The global recession in the last decade compounded by the protectionist policies in the US, UK, Europe and retaliatory policies from Asia plus the impact of COVID-19 have together seen a huge decline in foreign direct investment. This means countries that needed both development and humanitarian funds either received less or the same as in previous years or none at all as wealthy nations focused on resuscitating their domestic economies.
By the time the pandemic started in 2020, global foreign direct investment had fallen to $1,3 trillion in 2018 from $2 trillion in 2016 before plunging to only $572 billion by 2020. This means that the gap between wealth and poor nations widened while vulnerable States are now in a worse off situation than a decade ago unless they come up with locally-driven wealth generation approaches. Rwanda and Ethiopia are among those emerging from the woods.
Migration — one of the pillars of globalisation was also severely affected. Protectionist policies did not only affect ordinary migrants but limited corporates’ ability to draw on global talent — a scenario that has largely contributed to global technological growth. In the US, there was hire American, buy American. In Europe, anti-migrant campaigns grew, while BREXIT re-imposed “border” and visa requirements between the UK and Europe. These limited States’ ability to exchange skilled labour and affected movement of people in general.
The danger with protectionism is that it fosters State-individualism which in most cases means that States are compelled to break or disobey some of the global rules in order to make statements. And this has negatively impacted the transfer of knowledge and information between States.
Most notable over the past decade is the growing fragmentation of the internet and mobile technology companies. Technology and the knowledge on its platforms are fast getting divided between Asia led by China and the West led by the US, resulting in the silos similar to those of the World War II.
For the past 75 years, the World Bank and IMF have been at the forefront of globalisation, reinforcing the centre-periphery established by colonisation.
This status quo is under threat with the recent rise of China, India and Russia bringing in a new dimension to global multilateralism and challenging the existing hegemony. Bringing on board Brazil and South Africa to form the BRICS has been a major mover and shaker which is reconfiguring globalisation.
The establishment of the BRICS development bank is a direct challenge to IMF and the World Bank.
The question for struggling nations such as ours is whether we want the current global status quo to remain or seek opportunities in a world that is deglobalising.
