How Has Covid Changed Globalisation?
Dr. George Easaw
Thursday, 27 August 2020

We hear that Covid has disrupted the world over the past four months. How has it impacted globalisation? Have the people of the world retracted or do they still have the urge to go out and take the world head on. This short article tries to understand this aspect of the Covid 19 influence on humanity.

While going through an article from the Harvard Business Review article of May 2020 by Steven Altman,  will Covid have a lasting impact on globalisation, it was interesting to note how the global Covid scare has

1. Brought down global merchandise trade by 13 - 32 % 
2. It has also brought reduction in Foreign Direct investment (FDI) by as much as 30-40% and
3. It has brought down international airline passengers by as much as 44-80%. Airlines were on average flying 90% less passengers on international routes and 62 % less seats on domestic flights.

In my opinion, Covid has brought about some impacts on the international community as can be seen from the below given 4 points.

1. Though Covid bought about initial disruption globally immediately after the Covid outbreak in China and elsewhere, of late it has contributed to the healthy growth of international cooperation between organisations. Major global organisations and MNCs like Unilever are now making faster payments to their suppliers to help ease the suppliers problems.  Urgently needed medical supplies in different parts of the world are being delivered faster.
   
   
2. There is a debate happening between the concepts of redundancy and reshoring. While international diversification and global economic politics would warrant redundancy, reshoring essentially necessitates fostering self-sufficiency through nationalistic politics.  
3. Fracturing of global economy on regional lines would essentially lead to a more regionalised world. Global trade will get affected. It may lead to a minor recession. 
   
   
4. During this Covid time we also see great ongoing technological shifts that have been accelerated by Covid influence. An example is the massive personal banking that has shifted to the online domain across the world. Online learning has come to stay in the world as two of the past four months have seen international and national faculty and students taking up to e-learning software like MOODLE to e-conferencing software like Microsoft Teams, Zoom etc..   
   
   

E-Commerce is an area that has got maximum push during this Covid time across the world. The chart gives the US ecommerce penetration over the past years. 

When Tim Berners Lee, the British Scientist, following the TCP/IP text based Internet of the 70s, invented the multi-media part of it, the World Wide Web (www) in 1989, never did he think, one of its applications  e-commerce, would grow so fast.

0-5 % in 20 years, 1989-2009
5 -17 % in 10 years, 2009-2019
17 - 34 % in Q1, first 3 months of 2020 ..

As we see here, ecommerce has been exhibiting exponential growth, not only in US bit across the world. 

Let us hope the post Covid period would bring the world together, allow faster transition and acceptance of technological developments across the world, though the negative aspects of regional thinking and nationalistic sentiments would be a negative factor.

The author is a Professor & Chair of Operations Management Area at Alliance School of Business, Alliance University.