Is Globalization dead as a result of Covid-19?
The coronavirus pandemic has exposed our global supply chain to be too interdependent to serve the interest of national security. Today we see countries struggling to meet their own medical procurement needs from ventilators to face masks. Our over-dependence on a few countries seems to have left us all vulnerable.
Globalization is an incredible innovation that has led countries to overspecialize in a few areas while depending on others to fill the gaps. This pandemic has caught every country by surprise and should be treated as the fire drill for things to come.
With respect to the current challenges we are facing, globalization seems like a weak idea and the obvious solution is to rely on national resilience. However, if the lockdowns have taught us anything it is that we all need to play together, and it is no fun remaining isolated.
While looking at a part of the data, choosing national resilience seems like a logical step. The reality however is that globalization offers incredible benefits in terms of knowledge, capital and resource transfer that can never be achieved with a strict inward-looking strategy.
At the end of this Pandemic, even the most open economies who have faith in globalization will create opportunities for local businesses. We will find countries all around the world investing in local production of PPE, medical supplies and strengthening their warehousing and supply chains. Food security will make it back to the top of the agenda and dependence for essentials will dramatically reduce as a result of a short terms knee-jerk reaction.
This is now the opportunity to become a local manufacturer of essential products in each local market in which you operate. This move will be greatly encouraged by governments because it will help achieve an additional goal of creating employment. This however will be a short-term boom. To ensure sustainability, economies of scale will have to be achieved. Once we overcome that hurdle, the logical step would be to sell products in the global market. That would bring us back to where we started this journey.
When it comes to services though, we might see the opposite happen with people realizing that communication barriers have been bridged and accessing expertise and services at a global scale is far easier and the infrastructure tried and tested. We will see an increase in cross border consulting and service exchanges facilitated by video conferencing and the internet. There will however be a conscious attempt not to put all our eggs in one basket and use services from different regions so as to never be held to ransom when things turn sour with one nation or region.
Now is the time to see the opportunities that are being created in services and manufacturing around the globe as we take global strides while building local footprints. What we need to remember is that putting all our eggs in one basket is a huge risk even if the basket is our own. We need a novel approach to production, distribution and strategic stockpiling that will have to replace our existing thought process as we redefine the globalization parameters.
Globalization is not dead; it has just been struck by a virus. The solution is building up some immunity in the form of national resilience and the installing preventative measures. Right now, opportunity is locally available globally.