Covid et mondialisation

The Covid-19 economy: does it mean the end of globalisation?

Since the 90s, the flow of people, goods, services, capitals, and ideas around the world has grown to such an extent that we sometimes feel that the earth is flat. All these flows created an interdependence of countries around the world. Did you know, for example, that a single car contains parts from over thirty different countries? We can then imagine how much covid19 health measures can wreak havoc with globalization.

Fear of contagion led countries to impose containment of the population and to close all borders. This means the paralysis of activity, starting with the shutdown of China, an essential pillar of the world economy. The activity of interdependent chains, such as garment industries, is heavily impacted by the pandemic. In addition, self-sufficiency leads the population to limit its consumption to basic needs.

Does it mean the end of globalisation?

For “The Economist”, we have to say “goodbye to globalisation”!

In fact, the global supply chain had already been weakened since the financial crisis of 2008. Thus, began a period called "slowbalisation".

But while the process of de-globalization was underway, the pandemic struck the heart of the global industry, having a significant impact on the flow of goods. Local production is then necessarily set up to offset the cessation of imports. We therefore have a return to regional value chains.

Vijay Vadis Warren, us business editor of the economist, says that “What we are likely to see is a messier world and future one with elements of globalization continuing but many other counter trends that lead to either regionalization, nationalization, localization, some form of de-globalization.” So, this disruption causes a structural change in trade.

To conclude, the pandemic only accelerates a process that has already started and that seems to be irreversible. As pointed out by Vijay Vadis Warren: “What we saw for 20-30 years with unfettered global trade, with unfettered global travel, with sourcing China serving the world, I think we will never go back to that.”

This system less and less dependent on world trade and more and more dependent on domestic demand may be the beginning of the end of dependence ...

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