June 14th, 2020
Today is Flag Day in the United States, and it commemorates the resolution passed by the Second Continental Congress in 1777 stating that “the flag of the United States be 13 stripes, alternate red and white,” and that “the union be 13 stars, white in a blue field, representing a new constellation.” Old Glory herself has been the center of attention as we wrestle with liberty, justice, freedom, love of country, and respect of our differences. Flags are powerful images of identity in a globalized world, and we honor Flag Day as we also strive to understand what others see in the stars and stripes.
“The only reason for time is so that everything doesn't happen at once.” That was Albert Einstein, and his words seem prescient in the weeks since COVID-19 rolled our idea of contemporary history up into a paper ball and tossed it into the trash. Everything has changed, and there is no turning back.
Some pundits have predicted that COVID-19 has accelerated popular reticence toward globalization. One writer in the The Economist described this process as “slowbalisation,” pointing out that foreign direct investment (FDI) had nosedived since 2015, from 3.6% of global GDP to 1.6% in 2018. Both of these figures are far cries, however, from 2007’s peak FDI of 5.4%, after which it exhibited some strength but continued on a downward trend. The United Nations Conference on Trade and Development has predicted another 30-40% reduction over the next two years, plummeting FDI to levels not seen since the turn of the century.
Perhaps the most striking aspect of decelerating globalization that COVID-19 has lain bare is that it is nothing new. Before the current strain of coronavirus ever leaped into its first human host sometime in late 2019, Sino-American relations had devolved to a low not seen since the start of detente. Between tariffs and trade restrictions, nationalist chest-thumping and cargo droughts, the new cold war had become so frigid that the WTO publicly predicted trade could contract by as much as a third.
There are other signs of the creep away from globalization as well, including US skepticism toward cross-border deals. On May 21st, the Department of the Treasury proposed a rule change that would limit Chinese access to US technology. Although this rule aligns with one of the Trump Administration’s well-known policy objectives, it could also create barriers to investment for multiple other industries. Following the American lead, the German, Italian, and Spanish governments have introduced policies that would put foreign investment through ringers of their own.
It is difficult to say the precise ways that globalization’s deceleration will help and hurt, and whom it will help and hurt, but it will pose more difficulties for some than for others. Low- and middle-income countries, for example, will struggle to adapt to the changes that it presents. The World Bank has already observed lower remittances to developing countries, and in 2020, it expects global remittances to fall by 20% due to the economic crisis that the pandemic has induced. Critical for nutrition, healthcare, and education, these fund transfers are drying up just as COVID-19 has rendered developing countries more vulnerable than ever.
The deteriorating global economy, meanwhile, had already struck across Latin America, which is now morphing into the frontline of the battle against COVID-19 itself. Juggling curve-flattening with economic stimulus has proven especially daunting for Latin America, where approximately 55% of workers are in the informal economy, according to the World Economic Forum, and where crowded metropolitan areas have made social distancing nearly impossible.
In India and other developing countries, the challenges are similar. This begs the question: what will happen to developing countries suffering under COVID-19 for a prolonged period in the absence of the safety net? How will trade and investment change and reshape their economies? We may find out sooner and in more devastatingly detail than anyone would like to imagine.
Meanwhile, protests against racism, injustice and police brutality brought thousands, maybe millions, of people together, a unifying experience in defiance of social distancing. People flooded American streets in solidarity and voiced their anger over the killing of George Floyd. Profoundly, the protests took place on three additional continents and in capital cities including Berlin, Paris, London, Sydney, Seoul, and Tokyo.
COVID-19 restrictions may have made our universe feel small when confined to our homes and neighborhoods, but the protests remind us that globalization is not merely an economic phenomenon. Its flattening effect is intensified through social media and other forms of communication, which alerted likeminded global citizens to take to the streets as they shirked off fears of infection.
Globalization is multidimensional, with each dimension moving at different speeds. Localization and regionalization may come to replace the 20th-century conception of economic globalization faster than we may expect. This would mean wide-reaching and difficult-to- reverse changes to the infrastructure and public perception of such disparate sectors as leisure
travel, trade, and services. Whether these changes will become apparent in ten weeks or ten months, no one knows for sure.
Globalized means of communications, however, are unlikely to be slowed by a virus or trade collapse. They have permanently shrunk time and space, making us continuously aware of the achievements and struggles of others across the world, especially when an event, that is both painfully common and tragic, unite us.
-Kevin Speers and Billy McIntyre for Metro Group