LOOKING AT SOME CHALLENGES OF GLOBALIZATION AND THE POST-CORONAVIRUS WORLD ECONOMY

LOOKING AT SOME CHALLENGES OF GLOBALIZATION AND THE POST-CORONAVIRUS WORLD ECONOMY

By Kay Aderibigbe

By the time we are able to conceptualize terms such as deterritorialization, interconnectedness and social acceleration we shall then appreciate why "the processes of change which underpin a transformation in the organization of human affairs by linking together and expanding human activities across regions and continents" was referred to as globalization (Held, McGrew, Goldblatt and perraton 1999,15).

Human activities, with it concomitant resultant effects, have remained the subject of inquiry in almost every field of study at one time or the other from the time immemorial. This brought us into better thinking, which invariably invigorated globalization (an enhanced borderless and cross-cultural relationships in all facets of human endeavour). In the same vein, human activities became relatively better as a result global relationships. 

Whatever happens in a particular metropolis for instance, could directly or indirectly affect the people of another remote area within a short period of time. Moreso, since both the intended and uncalculated activities of nation-states are not unconnected spartially in the modern time; we can therefore say that man is not only globally homo-politicus but also, homo-economicus, homo-socialis, homo-spiritualis and homo-scientificus.

Undeniably, botherless-world - economically, socially, and in terms of foreign political policies is characterized with complexities in such a simultaneity with domestic irreconcilable realities in the face of compulsory or indispensable interrelationships among nations.

Originally, supra-national institutions (IMF, IBRD, World Bank and etc.) that came into being after 1945 signified the commencement of an era where world actors (in any material manner) could coexist peaceably and flourish, but the merits of such intermeshing via domestic and international ideals are the offshoots of a 'global world' whose rule of play is characterized with acute inequality, secrecy and beclouded by unwritten lawlessness.

Consequent upon this, the world gradually tilts from the post-Cold War unipolar to multi-polarity, which is good in a way, because of the economic influence of Asians - Indian, Koreans, Japan, Iran and China; and also detrimental, if considered from the angles​ of rules of engagement and interest articulations. World leaders could not claim to be nescient of the uniqueness of the kind of problem that would ensue when the platform with which differences​ in propositions could be sorted is somehow fragmented and could also be described to be systematically becoming inertia. The above explanation is what was termed "the gridlock of globalization" by David Held (July 3rd, 2018). 

Recent events in the areas of climate, energy and poverty for instance, have pointed to the ambivalence of major actors in critical times when they tend to legitimize the norm instead of bringing about a 'new normal'. The underlying factor in some of the cases is the immediate material interest which is likely at loggerheads with the thinking faculties of the decision makers.

The connection between the unequal relationship that is identical of the present day world order and the continuous acceptance of the deleterious effects of the lopsided globalized world is the bourgeoning material urge of the major actors and also, the need to protect the position of those ''known polars'', which could mean "time buying" or "time saving" depending on what is at stake.

Trying to understand the challenges of globalization from this perspective will reveal that, even, the extension of domestic liberal democratic tenets to the international economic system as espoused by some scholars cannot do much because of three reason: one, sovereignty is pure in relation to states, two, power is relative and states are relatively possessive of the idea of power, and lastly, globalization is not an end in itself but rather, a means to an end.

Since sovereignty, power and globalization are interwoven to the extent that one or two of the three must be jealousy guided in order to attain another one, it then becomes self-evident that actors in the international milieu simply adopt method(s) that must have been internally considered appropriate for their respective states before they venture into any agreement. This is the main reason there will always exist challenges of all sorts irrespective of the style the international economic system adopts under the present arrangement, whether in relation to trades or services.

Globalization is not only restricted to trade in commodities as many have put it. We also have services, ideas and virtual information, all these are reliant on people as the determinant factor. Even the trade in focus is amazingly too voluminous, as such, making supply chains indispensable, which is one of the risks staring us in the face. Tourism as a type of service for instance, has the risk of paralysing the institution of arts in times such as "the great lockdown" as this when tourists cannot leave their home countries or go about. Information as a brand of product from any supplier could also be useless when the consumers are incapacitated because of a pandemic like coronavirus. These are some of the reason Ian Golding, a professor of globalization at Oxford University, said "risks have been allowed to fester, they are the underbelly of globalization" (The butterfly Defects, How Globalization Creates Systematic Risks And What To Do About It, 2014).

How then does globalization affects the present world economy and what should we expect after coronavirus must have subsided??

The type of globalization that is in vogue is heavily reliant on unrestricted and unmeasured interconnectedness. For me, what actually makes globalization dangerous to the various domestic economies of the world is the volume, extent, rate, speed, dependency and the ease with which so many life-involving activities are carried out at profit-making intentions. 

It is axiomatic that the world is far more expanded and connected ideologically, in terms of trade, than what we can see physically on the maps. One thing that such issue has brought to bear is the fact that those who supply more of what is needed around the world simply become more relevant and at the same time more dangerous whether we accord such status to them or not. According to Prof. Beata Javorcik, the chief economist at the European Bank for Reconstruction and Development, for instance, he said, "when we look back at 2003, at the SARS epidemic, China accounted for 4% of the global outputs, now China accounts for four times as much, 16%. So that means that whatever is happening to China affects the world to a much larger extent". (BBC Business Report, "Will Coronavirus Reverse Globalization? April 2, 2020).

The world has come to a point where inflation, unemployment, scarcity, diseases, fashion, cultures, riots and all sorts of physical and virtual elements could be imported or exported from one country to another in the name of globalization. This explains why Covid-19 is more rapacious than Covid-2 of 2003. In fact, if actors in the international environment do not identify and treat with utmost seriousness​, the menace of uncontrolled dependency that we have sunk into as a global village, the next disaster that will happen to one or more of the major players in the international economic system is likely going to have a more devastating effect on us all than the credit crunch of 2008 and that of Covid-19 put together.

As it stands now, economies have started nose-diving into recession. The U.S, Japan, South-Korea, India, Germany and France to mention a few have already started coming up with bailouts that could be deployed to cushion the effects of drops in their expected economic growths. Last year, IMF forecasted 3.3% growth of the world economy but a total reversal is what has happened just in the first quarter of the year. CNN even puts it as 180° upturn of the world economic forecast. 'The Fund' is preparing for a 5.9% decline of the world economy, while the EU economy is expected to shrink by 7.5% at the end if the year.

In the same vein, unemployment in the USA is expected to jump to 10.4% while economic growth may shrink by 5.3%, 6.2%, 6.5%, 7.2%, 8% and 9.1% in Japan, Canada, U.K, Germany, Spain and Italy respectively (IMF Quarterly Economic Report, March, 2020). 

The implications of the percentage shrink to the British economy for instance is that, the bank of England will be selling bonds worth £200b to the state. Tax relief of about £30b will be granted. There will be an interest-free loans for a period of 12 months for medium scale businesses and the state shall step in to settle almost 6 million workers up to 90 days, in wages and salaries after a subsidy of £100b must have been injected into the economy. (British Treasury Quarterly Reports, 2020).

How many countries could boast of the economic capacity to draw up $6 trillion economic bailout fund like the USA? The response by the British government or the EU's €500 billion economic package is unattainable for the less-developed areas such Africa, Pacific and the Latin America. What this connotes is that the unequal economic features of the world system that was normalized by the old order is being made worse by the current pandemic and will definitely remain pronounced during the post-covid-19 era.

Another important problem is the fact that those developed economies that served as the sub-structure or originator of the major world supplies are even 'systematically stratified' among themselves or should we say they consciously or unconsciously divided the bulk of world production within themselves by apportioning who produced what, when, how and in what quantity?

The above assertion remains sacrosanct to the understanding of the acute shortage of medical supplies for instance, during the peak period of the pandemic. This is because it looked as if certain items could not be sufficiently sourced from some places unless the order comes from China.

Due to the adverse effects of the Covid-19 pandemic on various economies around the world, we have come to realize that there is a great imbalance in the current bases of world production, e.g., China alone supplied almost 70% of medical materials and intermediate health equipment. That is in fact, something to worry about. We can also, vividly point out new positive trends in the sourcing of local raw materials, the idea of work from home, tasking of the local financial markets, and as well as the adjustments of nation-state budgetary allocations to be in tandem with the obtainable realities. The lessons learnt from the above is that major players in international trade should rely less on what is happening elsewhere in order to determine what happens to them domestically.

The applicability of those new values or lessons for instance, can be useful, in that, economies who are mostly reliant on loans could actually plan (if they are indeed sincere and serious with development and their people) without buying those economy-wrecking loans. Apparently, it is bitter to digest, but China as a major supplier of essential produce for example, made a lot of profit during the pandemic while the rest of the world is still languishing in the trauma of Covid-19. The same China is a major creditor country while those indebted to her will still have to repay the loans with interests despite the great loss they all suffered as a result of certain catastrophe caused by the same China.

Another lesson is that the developed nations such USA, Germany, UK and etc, who have reached the high age of mass consumption according to W.W Rostow's stages of development, should formulate policies that can help promote their economies without moving their production bases from their domestic terrain. If we like we can it re-shoring or international capital plough-back. What actually matters is the need to strategize, by reducing to the barest minimum, the risk of globalization when orchestrating how to maximize returns/profits alongside reducing the cost of production.

The reality is that, one of the smoothest routes to the current imbalance in the structure of global production as it played out in the first quarter of 2020 was caused by the profiteering mentality of some capitalists, who in their own capacity, failed to assiduously gaze through the socio-economic whirpool or ambitions of the host communities that presented them with the guarantee of profit by not considering the warranty of unforeseen circumstances e.g natural disaster, war, plague and pandemic such as Covid-19.

As a matter of fact, many issues need to be raised and addressed in order that the world might not toe the path of the pre-second World War in the name of globalization. The salient issues revolve around five cardinal points: One, the type and mannerism of leadership that is needed at the global scene; two, the idea of regulation and moderation of activities; three, the question of inequality and poverty of the third world; four, the issue of ambition and power tussle which is capable of throwing the whole world into chaos such as the case of Covid-19 and what to do if such arises, and lastly, the review of some major pre-Covid-19 economic agreements, which if left alone could undermine whatever is being aimed at after working assiduously on the first four issues I highlighted above.

In conclusion, whether the pandemic remains with us longer than expected or not, many jobs will still be lost and some people will go on furloughs because many companies are already affected. Governments will draw up contractionary budgetary arrangements. Investors, will as a matter of national security or necessity, re-shore and put larger parts of their money within reach domestically. Individuals will change some of their consumption patterns. In all, the same global system that brought about enormous profits, development and pandemic will be indirectly re-shaped; but it is better such review comes into conceptualization via a global platform that is devoid of lawlessness and chaos.