Globalization is not dead, but it is different
Globalization has not collapsed in Covid-19.This is the latest DHL/New York University summary Globalization report, This is an annual in-depth study of global trade, capital, information, and personnel movement data. The wind direction on global connectivity is always a good finger, and it will reassure many FT people.
First, although connectivity does decline in 2020, the author says it is expected to rise by the end of 2021. This is partly because the United States and China still need each other-trade between the two countries actually increased during the pandemic (although it must be said that this ended after a sharp decline in 2019). Overall merchandise trade is already at pre-pandemic levels. Although cross-border investment portfolio flows have fallen sharply in 2020, foreign direct investment has increased in 2021.
One thing that surprises me is that although long-distance trade in goods has increased (again, partly because China provided a large amount of goods the world needs during Covid), the flow of digital information has returned to a slower pace after growth The long-term trend is at the beginning of the pandemic.
This is counterintuitive.There is an assumption that trade in goods will become More regionalThis stems from issues such as monopoly power, supply chain issues, emission costs, and geopolitics. People also hope to link production and consumption in a new industrial system based on flexibility rather than efficiency. (See mine Article is here, Why manufacturing is still important to most superpowers. ) Book by Dan Breznitz Practical innovation It also explains why this is so important.
But everyone believes that cross-border information flow will continue to grow exponentially, as it has in recent years.For more information on this, please read my colleague Gillian Tett’s column last year, where she wrote about why the report The death of globalization Was greatly exaggerated.
It may be that the suppression of capital and data between the United States and China is creating the beginning of a split network. So many regions, countries, and states may also have an impact on the global regulation of technology giants. Given the emergence of different regulatory systems, it is increasingly difficult for data to flow across borders so easily.
It’s also worth pointing out that some Trade regionalization This situation is happening, especially in fields such as semiconductor foundry creation, which may be a The course of ten years. It takes time to build, let alone rebuild it better.
I suspect that next year’s survey may show more regionalization, especially if we continue to see the differences between emerging markets and rich countries in the post-Covid economy, different systems in global technology and trade, and more travel restrictions. And continuous supply chain adjustments.
Ed, what is your bet? I am curious if you have any soft indicators or your own personal anecdotes that can be used to illustrate your views on the current state of globalization?
Gillian’s article on how to do this week Congress sausage making For Washington and Wall Street, it may end up with wrong legislation for the right reasons.
Catherine Eban wrote a worrying feature on Vanity Fair concerning the failure of the Biden administration to Distribute donated vaccines All over the world, so we don’t see more Covid variants. Also worth reading is Eban’s recent book on the problems in the booming generic drug business. A bottle of lies, Not getting enough attention.
I picked up my first issue of Hipster New Yorker, n+1, really like it this, Recording the early instant experience of the pandemic.
Edward Luce responds
Rana, I’m all about soft indicators, especially when I think hard indicators are too difficult to argue about.Our colleagues Alan Beatty, And FT contributors Megan Green Both of them have recently written articles about the restoration of normal globalization. What you wrote about the slowdown of cross-border information flow surprised me for the reasons you put forward, but it also resonated with some recent anecdotes. I agree with the view that Covid has not changed the contours of history, but has accelerated pre-existing trends-digitalization is a clear example. Another trend is the emergence of a cold war between China and the United States, which, as you pointed out, will increasingly lead to technological disagreements. Other countries have also noticed.
I was in Abu Dhabi recently and was unable to bypass local Internet censorship through my VPN, just like the last time I was there two years ago. In India, the change is even more pronounced. I suspect that within a few years, it will be normal for most of the world to be isolated from the global Internet, or at least from most of the Internet. VPN will not work. The data cloud will be nationalized. Information will be increasingly weaponized.
Covid has undoubtedly improved our ability to work remotely. But I think it also provides a cover for the government to implement control faster and more stringently than other methods. As a result, we have accelerated the digitization of our increasingly privatized lives, but limited the flow of information, and the degree of openness on a global scale is relatively low. I don’t like these two trends. If this week’s Virtual Democracy Summit can achieve any results, I hope it can make a strong commitment to open digital standards and the global Internet. I don’t have much hope that such a statement will have teeth. But the promise itself can sow more useful seeds.
Now our swamp man has a word. ..
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