Why Covid Did Not Spell the End of Globalisation (And a good thing too!)

Probably the most common prediction about the world during the Covid pandemic was that this was the end of the era of globalization. The world as we knew it before 2020, with its daily merry-go-round of people and goods and services, would be gone forever. While some commentators deplored this, fearing a retrograde move towards greater nationalism and protectionism, many others eagerly welcomed the development. In February 2020, when Ewald Engelen and Marianne Thieme wrote in the leading Dutch newspaper NRC that the novel coronavirus “heralds the end of globalization,” they didn’t disguise their enthusiasm: globalization, after all, “is what turns an epidemic into a pandemic.” By travelling across the globe by the millions every single day, as well as hauling huge amounts of stuff back and forth (including both live and dead animals), humanity had been tempting fate for decades. As the French political scientist Romain Lecler put it in March 2020, “The spread of Covid-19 points to another global disease: our collective addiction to international mobility.” It was a wake-up call to start thinking about deglobalization.

These critics argue that the forces of globalization (or “neoliberalism”—which many seem to regard as an exact synonym) made our societies more vulnerable to disasters such as Covid. Suddenly, supply chains across the world were disrupted, and many western countries scrambled to find enough essential medical equipment to weather the storm. Long, complex production processes based on just-in-time delivery of components proved to be extremely vulnerable to factory closures in distant countries, and to international border restrictions. Having outsourced the production of face masks and other low-value medical supplies to China, we suddenly faced acute shortages. Moreover, because of the interconnected nature of global financial markets, the economic shock waves spread around the world even faster than Covid itself did, causing a global spike in extreme poverty. To many, the solution was obvious: less travel, less hauling back and forth of stuff, shorter and simpler supply chains, and more self-sufficiency and reshoring (bringing production or service provision back to a company’s home country), especially for essential products like medical supplies and food.

Now that the dust is settling, we can see how the post-Covid world is starting to look (at least, up until the Russian invasion of Ukraine, see below). Even though the virus has still not been completely defeated, especially in developing countries, it’s already clear that rumours of the demise of globalization have been greatly exaggerated. Researchers at Oxford Economics, after examining the impact of the pandemic on the economies of Europe and the US, found little or no evidence of any slowing down—let alone reversal—of globalization. Nor did they detect any significant reshoring, or reduction in the trade of components and subassemblies of finished products. In fact, the trade in intermediate goods has bounced back even faster than overall trade. After a few months of disruption and temporary reversals, most global supply chains are as dizzyingly complex as they were before. And most consumers seem eager to forget about lockdowns and go back to normal: as soon as restrictions were lifted, people could be found booking the same cheap flights to Venice and Mallorca, going on shopping sprees at Ikea and H&M and buying electronics (manufactured in China) at the Apple store.

Sure, there have been some changes. Business travel will never be the same again. In academia, we used to think nothing of flying halfway round the world to give a twenty-minute talk at a conference or symposium; those days are gone—and good riddance to them. Also, there are good reasons to reverse some recent globalization trends; western democracies are slowly taking back control of critical infrastructure, such as telecommunications networks and nuclear power plants, because they don’t fully trust their trade partners (read: China). Still, anyone who thought that the main thrust of globalization would be reversed by Covid is going to be disappointed.

In fact, much as people like to dunk on its alleged evils, the end of globalization would be far more devastating than any of its harmful side-effects—and it does have some. First, let’s get one thing clear: the pandemic is not the fault of globalization, unless you construe the term globalization so broadly that it is emptied of all meaning. In the Middle Ages, long before the advent of aircraft, container ships, motorways and high-speed trains, the bubonic plague managed to make its way around the world, at the leisurely pace of 1–2 km per day, wiping out a third of the European population along the way. Even if we went back to the levels of international economic integration of a thousand years ago—which we hope not even the most fervent anti-globalist would want—we would still have deadly pandemics on our hands from time to time.

But surely we could all benefit from reshoring (“bringing jobs back”) and increased self-sufficiency? Well, while both of those sound great in theory, they would have the opposite of the desired effect. The critics are trivially correct to point out that globalization makes you dependent on other people, but the fact is that being dependent on domestic production is far more dangerous. If the Covid crisis showed us anything, it is the amazing resilience and flexibility of our global trade networks, even in the face of major economic shock waves (including such unforeseeable events as the blockage of the Suez Canal in March 2021). Throughout the pandemic, most western countries never experienced any threat to supplies of food and other essential goods, despite some panicked buying of toilet paper and non-perishables at the start of the first lockdowns. (Well, there were some impacts on food supplies. In June 2020, Belgian media reported a hike in the price of peeled shrimp due to Covid-related staff shortages at processing plants in Morocco. The fact that there was space to report this suggests that the total collapse of the food supply chain was not exactly imminent.)

We did have a supply problem with medical equipment, such as masks and other personal protective equipment (PPE). There are certainly lessons to be learned here, though hopefully not—as many suggested at the time—that every country should reshore its own PPE industry. To produce face masks, for instance, you need highly specialized raw materials such as latex (for elastic strings) and melt-blown fabric (for filters), which require expensive machinery to produce. To be fully self-sufficient, we’d have to manufacture those machines ourselves. Reshoring mask production would just “take dependency up a notch,” as one analyst for the Robert Schuman Foundation has argued. And what if the next global crisis is caused by a pathogen that doesn’t spread through the respiratory system—or, for that matter, by a natural disaster or a terrorist attack with a dirty bomb? All the face masks in the world won’t help us then. Politicians and activists, like the generals in Churchill’s aphorism, tend to prepare for the last war they fought.

Building resilience to crises doesn’t mean that you have to make everything yourself. What it does mean is that you need to ensure that you have adequate stocks of essential equipment and supplies beforehand, and that you don’t make yourself vulnerable to a single bottleneck in the production process, or to the whims of an authoritarian single-party state (which may be facing the same crisis and hence be even less willing to export to you). Finland never ran short of face masks during the early days of Covid—not because it had its own mask-producing factory, but because it had generous stockpiles of medical supplies, oil and food in giant, purpose-built warehouses; due to their chequered history with neighbouring Russia, the Finns are always prepared for unexpected disasters. In a globalized marketplace, shortages are always temporary; within a few weeks, the world production of face masks had increased fourteen-fold and there were plenty available for everybody. And in case you were wondering, almost every disposable mask sold over the past year was made in China.

The worldwide integration of flows of people, goods and stuff is the result of deep structural processes that go back centuries, and even a feisty bug like SARS-CoV-2 isn’t going to unwind all that. Back in 2008, many pundits predicted that the financial crisis would spell the demise of globalization—those rumours turned out to be greatly exaggerated too. The spectacular decline in extreme poverty of the last half century has been in large measure the result of global free trade and what economists call comparative advantage. If each country or region produces what it’s best at, relative to other countries, and then trades it for what it needs, everyone stands to gain.

It is true that some people have benefited from this process more than others, and that globalization has also produced relative losers, as economists like Branko Milanovic have shown. Low-skilled industrial workers in richer countries have lost their factories and jobs to places with lower wage costs, and have not always been able to acquire the job skills needed in newer, service-based economies. Many governments have failed to support these victims of globalization, which has led to a nationalist and populist backlash, whose concrete manifestations include Brexit and the election of Donald Trump. Indeed, alt-right social media posts often rail against the globalist cabal.

But none this proves that globalization is a bad thing in itself; rather, it suggests that we need to be smart about how we go about it and mitigate any growing pains wherever possible. History shows that national self-sufficiency invariably leads to poverty, while interdependence and openness lead to greater wealth and prosperity. Many of the countries that have weathered the pandemic most successfully (South Korea, Taiwan, Singapore, Germany) have been highly integrated in the global market, in terms of the share of their GDP dependent on foreign imports. Moreover, nationalism and protectionism are often at the root of geopolitical conflicts, including actual shooting wars. The more mutually dependent you are on your neighbours, the less likely you are to get into serious fights with them.

Even for those who care about the climate, globalization can be a force for good—contrary to claims that we should buy local and that small is beautiful. Only about 6% of the CO2 emissions caused by food production can be attributed to transport—and for beef the figure is as low as 0.5%. (This is because raising cattle is such a major source of CO2 emissions that it doesn’t make much difference how far you ship the final product.) The remaining 94% of emissions are the result of land use changes (deforestation and tilling), diesel-guzzling tractors and combine harvesters, irrigation and fertilizer. When you live in Northern Europe and buy green beans from Kenya or tomatoes from Spain, the extra CO2 emitted during transport is more than compensated for by the higher efficiency of those farmers: more yield per hectare means less CO2 per kg of food. If you are looking for a climate-friendly diet, the type of food on your plate is a lot more important than where it comes from (meat and dairy are bad; grains, nuts and vegetables are good).

So the pandemic will not bring the end of globalization—and that’s a good thing. In fact, our victory over Covid-19 would have been unthinkable without the benefits of globalization. Back in the Middle Ages, our ancestors exchanged plenty of pathogens with each other, but far fewer smart ideas and technologies. As a result, they didn’t stand a chance against the bacterium that caused the bubonic plague and were even completely clueless about the nature of the threat. When the novel coronavirus appeared on the scene, however, we figured out almost instantly who the intruder was and what it would take to beat it—thanks to decades of globalized science and technology. In fact, the production of our most important weapon against Covid-19—by far—provides an almost perfect example of the benefits of globalization.

Let’s retrace the steps of the development of the Pfizer/BioNTech vaccine. By 10 January 2020, just a few weeks after the outbreak began, Chinese scientists had sequenced and shared the entire genetic code of the virus, down to the last letter. Dozens of universities and research institutes around the world began working on potential vaccines and antiviral medicines. Scientists had already mastered the principles of messenger RNA (mRNA) vaccination thanks to the groundbreaking work of a Hungarian immigrant to the United States called Katalin Karikó, who built on research by geneticists and molecular biologists from many other countries. Two Turkish immigrants to Germany—husband and wife Ugur Sahin and Özlem Türeci—took Karikó’s ideas and customized them to make a vaccine tailored to the SARS-CoV-2 virus. Their small company BioNTech, which was generously supported by the German government, joined forces with the multinational pharmaceutical giant Pfizer, based in New York and headed by a Greek-Jewish immigrant CEO (Albert Bourla, a veterinary surgeon by training) to make their vaccine available worldwide. Pfizer was able raise $2 billion from investors on the international capital markets to test, produce, and distribute the vaccine. And that’s just the inner core of the vaccine. The lipid nanoparticles containing the mRNA code are manufactured by a Canadian company (Acuitas). Dozens of other companies from around the world supply the adjuvants, glass vials, dry ice and other components of the finished product. Finally, to be able to deliver the vaccines to clinics while maintaining a constant temperature of −70°C, Pfizer relies on a complex worldwide cold chain distribution process involving multiple airlines, cargo companies, logistics systems and freezer farms.

The scientific triumph represented by the development of the vaccines, however, contrasts dramatically with the moral failure of their unequal distribution. While full vaccine courses and booster shots are readily available to anyone living in a rich western country, in many African countries less (and sometimes far less) than 20% of the population has had access to even a first shot. Pharmaceutical companies defend their intellectual property rights in order to maximize their profits, and western governments refuse to make exceptions to their patent laws. Despite a lot of lofty promises about making the vaccines available to all of humanity, western governments have prioritised their own citizens. Not only is this vaccine inequality immoral, but it increases the risk of the emergence of new variants, not all of which may be as relatively mild as Omicron. You can throw up rules and roadblocks for vaccines, but not for viruses. In a truly globalized world, everyone would have access to these miracles of science. Perhaps the world needs even more globalization today, rather than less?

The original Dutch version of this article appeared in February, just before Russia brutally invaded Ukraine. Right on cue, commentators have once again been prophesying that this time—really, for sure, definitely—the end of globalization is nigh. And it’s true that, as the western and Japanese sanctions against Russia have shown, when you bring the wheels of economic and financial integration to an abrupt halt, very dramatic effects can emerge very quickly—mostly for the country on the receiving end, but also for its trading partners. Will the rest of the world continue its process of economic integration, leaving Russia as a sort of new North Korea? Or will China—whose economy and concomitant weight in global trade is ten times larger than Russia’s—choose to side with Putin and turn away from the west, perhaps bringing about a new Cold War? Nobody knows for certain. But even if the era of globalization really does come to an end, this will hardly be something to rejoice about. The world order that was established after the Second World War—with supranational organizations like the UN, WHO and the World Bank—was far from perfect, but it allowed us to break free of the zero-sum thinking of the past and brought us seven decades of peace and prosperity. As Fareed Zakaria writes in his book Ten Lessons for a Post-Pandemic World: “it is now fashionable to bash ‘globalism,’ with little thought to the costs of the alternative.” Maybe we’re going to miss that much-maligned globalization more than we imagined.

(Areo Magazine, 19/04/2022. This is an updated, expanded version of a piece previously published in Dutch in NRC Handelsblad on 18 February 2022.)