This was supposed to be the age of anti-globalisation. Until COVID-19’s rude interruption. The new order of nation-first has been sent into disorder with a reminder that globalisation is still around. Probably, it will never leave. It is a mistake to believe that globalisation is mainly about the movement of goods and services (free trade) and the movement of people in search of opportunity (immigration). Globalisation is also about movement across borders, period. It could be the movement of goods and skills as much as terror or a virus.
This movement is greatly enabled by two things. First, technology, which has made connectivity faster and cheaper than ever before. Second, prosperity, which has empowered many more people to move (on business and for leisure) across borders than at any other point in history.
The anti-globalists do have the instruments and the popular support to raise some barriers to trade and to make immigration harder, but they don’t have the instruments and popular support to reverse advances in technology or ever-increasing prosperity. Even authoritarian regimes struggle to block technological advances like the internet. Information and ideas find their way through firewalls. Even the ardent anti-globalists haven’t tried to stop the cross-border flows of finance, direct investment, and tourism. These are much too core to economic growth and prosperity.
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Taking a cue from the financial crisis
The world has never been very good at collective action, even in the era of globalisation. But over a decade ago, when the global financial crisis hit the US, the world was quick to note that it was not merely an American problem, but a global one, not just an advanced country’s problem but an entire world issue. The G-20, until then a talk shop, was quickly upgraded to a head of government-level and concerted, coordinated action was taken to mitigate the negative effects.
More than two-and-a-half months into the COVID-19, now a pandemic, which has massive implications for both global public health and global economic well-being, there is absolutely no sign of collective action. The outbreak was initially viewed as China’s problem. Then East Asia’s problem. Then the Middle East’s problem, before finally spilling over into Europe and the US. Now, it is quite obviously a global health problem and fast turning into a global economic challenge, but the responses on both health and economy are still very country-specific.
The World Health Organisation, the main UN body in charge of global public health, has hardly asserted its authority. Like other UN bodies, it is probably held hostage to the politics of its major member states and the inertia of a large bureaucracy habituated to carrying out routine activities but unable to rise with alacrity to a crisis. In the economic sphere, the International Monetary Fund (IMF) and World Bank, well past their sell-by dates, are unable to display leadership or undertake policy coordination.
It is probably asking too much of these organisations, which have been moribund for a while, to lead a crisis response now. In the earlier era, the US and UK, the leading internationalist nations and guardians of the globalisation order would have probably ignited some sort of global cooperation and coordination. But not under their new nation-first leaderships. The G-7 or G-20 leaders ought to have met (over video conference) more than once by now in view of the escalating crisis. Finally, at the insistence of the only internationalist leader of a P-5 country, Emanuel Macron of France, the G-7 will confer by video-conference on Monday, 16 March. Whether that, or other attempts at international cooperation will succeed is not known. Remember that there is a great deal of distrust between some of the leading power blocs which has been fuelled by a nation-first political narrative: US and China; UK and EU.
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COVID-19 knows no borders
The anti-globalisation, nation-first worldview is fundamentally based on viewing the world in a binary of ‘us versus them’. COVID-19 doesn’t make any such distinction. It doesn’t recognize borders. The world is affected as one. The economic impact will also be across the board affecting every country without exception. Therefore, the response should be united, at least coordinated, rather than fragmented.
As the health and economic impact of COVID-19 spreads itself ever wider, perhaps there will be some coordination after all. There is too much to lose from non-cooperation. Perhaps also, this is the right time to rethink and rebuild the institutions of international cooperation that were set up after the Second World War, which have outlived their utility. The fact is that even in a nation-first world there will be significant global spillovers of good and bad things. The world needs institutions that can amplify the former and mitigate the latter. A crisis gives a good context for reinvention. Prime Minister Narendra Modi has reached out to SAARC leaders to cooperate. He could reach out to Messrs Trump, Johnson, Merkel, Macron and Xi as well.
The author is chief economist, Vedanta Resources. Views are personal.