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Nov 4, 20204 min read

Will COVID-19 lead to greater globalization or isolationism throughout the world?

By: Anish Beeram


In the midst of the COVID-19 pandemic, international relations across the world have become increasingly tenuous. Countries like Venezuela and Japan are reeling from an absence of leadership, and across the international political scene, countries have been forced to shift their focus from international relations to domestic affairs. With a 14% drop in world trade since April of 2020, the global community is in a quandary surrounding the future of international commerce. To understand the current international economic climate better, one must examine it through two lenses: short-term impacts and long-term implications.


What are the short-term implications?

In the short term, COVID-19 will serve as the vehicle for isolationism through policy changes and international positions. Prior to the emergence of the coronavirus, international corporations had a stable supply chain. Vital information was easily accessible through reliable methods of coordinated communication and response. However, the pandemic led to extremely reactive policies fueled by uncoordinated international and domestic responses.


In late January, China contracted Resilinc, a supply-chain resilience corporation, to analyze which of their suppliers had been forced to lockdown as a result of the coronavirus. They quickly found that both their domestic and international supply chains had been disrupted. Moreover, as the virus forced international travel bans and regional lockdowns, China was forced to turn primarily to domestic manufacturing and production. On a global scale, the pandemic has uprooted previously existing supply chains due to safety hazards and government security mandates. The only realistic solution to rekindle international supply chains is for countries to invest in supply network mapping, where new sources of supply are found to meet existing demand. This process effectively serves to mitigate risk surrounding supply and demand by remodeling where countries seek products from. The biggest drawback to supply network mapping is the immense amount of resources that are required, as the process demands a massive time, labor, and financial commitment. Consequently, companies like LG Electronics in South Korea have not yet engaged in supply remapping. The lack of international supply chains and a corresponding desire to remodel them will catalyze more isolationist policies through a turn to domestic manufacturing.


Another prevalent global problem, which pushes for further isolationism is the lack of economic confidence in the international economy. Investors fear that right now, countries simply will not have the means to make returns on any investments. As a result, foreign direct investment in the international community has dropped by nearly 40% over the last 7 months. This places massive economic pressure on already-hurting economies in Europe and Asia. In countries like Greece and Italy, which are already strained under heavy austerity, a lack of FDI has crippled their economy. A lack of new money has forced economic stagnation and as a result, inflation as governments inject money into the market to attempt and bolster corporations. This is evident in countries like Argentina, where currency controls and a lack of effective monetary regulation have caused the value of the peso to balloon. Due to the progression of the pandemic, fallen investor confidence was paired with a decrease in international travel. In 2020 alone, international airline travel has dropped by nearly 70%. Considering that about 44 countries across Europe and Asia depend on tourism and travel, the drop in travel has had widespread economic consequences. As a result, the majority of countries have redesigned their short term economic model to be domestically sufficient, as they cannot afford to depend on risky international markets. With countries like the United States and China pulling back from international trade, the rest of the global community has followed suit. Thus, in the short term, countries will be pushed towards greater isolationism out of necessity and self-preservation.


What are the long term implications?

However, in the long term, COVID-19 will motivate a stronger sense of globalization. This is because globalization is the main factor in bolstering domestic healthcare quality. The DHL Global Connectedness Index reports that more connected countries are more likely to have stronger economic prospects and more resilient healthcare infrastructure. Companies like Unilever, a consumer goods manufacturer, have already begun to extend their reaches internationally, and as a result, they have been able to produce pandemic supplies extremely quickly. In addition, the pandemic has led to the widespread advancement of e-commerce. Prior to the pandemic, technology was viewed as detrimental to international trading prospects as automation in domestic manufacturing served to decrease both trade and employment opportunities. However, with in-person industries taking large losses, e-commerce has been able to flourish, with global e-commerce sales exceeding $29 trillion. In the long-term, an expansion of e-commerce has a high possibility of resulting in cross-border e-commerce, which would expand business opportunities for start-ups and small businesses. The international community is able to reconnect itself through the framework of e-commerce, jumpstarting trade, and international investment.


Globalization will also benefit from cost savings and revenue-assurances. While countries are currently turning to domestic manufacturing, isolationist policies are not sustainable. In China, internal manufacturing costs $1.5 more per labor hour than it did prior to the pandemic, resulting in lower profits overall. Across the international community, domestic manufacturing has been more stable, but less profitable. Ultimately, it is more economically viable for corporations and countries to look towards the international community for products and services. Thus, to maximize profit and revenue, COVID-19 will drive countries closer to globalization in the long-term.


When looking at the international impacts of the COVID-19 pandemic, it has disrupted the economic models for countries across the world. While it will cause short-term distrust in the international community, the pandemic will ultimately better connect the world through the ties of globalization. If countries seek to return to normalcy, globalization is their best option.


Discussion Questions:

  • What role will e-commerce play in reviving globalization across the international community?

  • How has the COVID-19 pandemic acutely affected international supply chains?

  • Why is domestic manufacturing the only option for countries in the status quo?

  • Will isolationism better support economic growth for countries in the long-term?

  • How can globalization enable countries to better respond to the pandemic?


Sources Used/Further Reading:



1 則留言

Catherine Remington
Catherine Remington
2020年11月05日

This is an amazing article!

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