Has globalisation gone too far, or have we fallen behind?

Globalisation is a very trendy term nowadays. While it had fallen out of fashion for a while, the concept appears to be making a comeback. And, just to be clear, ‘globalisation’ here should be taken to mean the integration of markets through the liberalisation of goods and services, free flow of people and capital on a worldwide level. With the outbreak of COVID-19, it has become obvious just how volatile this massive level of connectivity and interdependence really is.

We knew we were able to fly to every corner of the world – we were even able to do so very cheaply. We also knew we could purchase goods through e-retailing giants like Amazon or JD from around the world, all within 24 hours. A majority of those goods were probably just bought on a whim, whether it be Chilean or Norwegian salmon, Hungarian Tokay, French Bordeaux or Swiss Gruyère. Most people go through with these purchases without a second thought given to the products’ journey through the value chain.

As a result, the current situation of lockdowns, limitations on international travel, and even cruise ships being converted into hospitals, seems absolutely surreal. But it also gives us a moment to pause and reflect: has globalisation gone too far? Do we need to rethink production processes and step back from the traditional ‘comparative advantage’ model?

Will we reach a level where authoritarian models seem more appealing? That is to say, controlling the movement of people, their eating habits, whom they meet daily and when they check their temperatures and blood pressures? While this is a mere thought experiment, there are legitimate concerns to be had about civil liberties.

And it’s not like this is unprecedented. The first cold shower of globalisation already occurred in East Asia in the mid-nineties, with the collapse of the financial markets. While it mostly affected East Asian countries at the time, it had repercussions elsewhere as well. There are three major lessons we can draw from that crisis.

First of all, it revealed the functional connectivity of East Asian markets and the true scale of their economic integration. It brought into sharp relief their fragility when faced with volatility in neighbouring countries.

Secondly, it exposed the need for regional mechanisms to respond to the crisis and avoid another ‘contagion effect’. An ASEAN+3 Dialogue was set up, along with discussions about the creation of an ‘Asian Monetary Fund.’

Lastly, it showed that the ‘American approach’ does not always work. That was eye-opening for many countries in the region and steered them towards closer regional cooperation. The ‘Washington consensus’ was replaced by a ‘post-Washington consensus’, and a discussion on a ‘Beijing consensus’ followed.

The next big shock came with the 2004 tsunami. This, again, sparked broader regional cooperation. The Quadrilateral Security Dialogue – informally referred to as ‘the Quad’ – was set up for countries affected by the tsunami – namely Australia, India, Japan and the United States.

These initiatives to build broader cooperation were indeed valuable, but they were all ex post reactions. They failed to lead to any coordinated mechanisms in times of need, or to build any regional mechanism for cooperation and coordination in time of pandemic. Apparently, health was not on the agenda.

A multilateral coordinated approach hardly seems to be on the agenda of anyone. The ASEAN+3, ASEAN, the Quad, the EU, not to mention the African Union, all failed to issue statements in the early days of the virus. And it is worth noting that Africa – which already faces its shares of difficulties – has yet to bear the full brunt of this pandemic.

The world will definitely be different after 2020. While some had hoped the ’20s would be a new Golden Decade, COVID-19 has been a slap in the face. It revealed the lack of global mechanisms to react to global crises. It also clearly and sadly showed the lack of US leadership and China’s growing influence.

However, there may be a silver lining to all of this. It is now obvious that there is a need for rapid, coordinated multilateral action. From a European perspective, this is something we have not seen since, perhaps, the Second World War. But who will take a lead? Maybe we are facing the end of the world as we know it – a paradigm shift or a civilizational passage. Are citizens of the world ready for that?