Decades after its golden age, globalisation still seemed to be faring at breakneck speed, transcending even more barriers. Yet, some factors prompted it to hit the brakes, especially over the past 3 years – a phenomenon termed as “slowbalisation” by the Economist magazine. Will Marshall McLuhan’s “global village” still continue to strive despite the slowdown?
After reaching its apex in the mid 2000s, the growth in trade has plummeted. From the US-China trade slashing Chinese investment in the US by 78% to the drastic fall in international trade owing to the pandemic, “slowbalisation” is bound to stay for a long period of time – if not forever. The book “Levelling: What’s next after globalization” underlines that political decisions such as Brexit are daily reminders of how global commerce is faltering. Indeed, actions seem to speak louder than words. Netherlands – the major exporter of fruits and vegetables to the UK – expressed its difficulties in exporting to the UK as the regulations resurfaced with the UK leaving the European Union. Similarly, as Covid-19 started to spread its tentacles, Bangladeshi factories working high end fashion streets abroad stopped operating. The Bangladesh Garment and Manufacturing Association estimates that around $3.2 billion of financial losses were reported due to cancelled exports from January to June 2020.Retrospectively, the financial crisis in 2008 – initially sought as a banking crisis – was in fact inching the world closer towards “slowbalisation”. These are just a few of the many examples of declining trade.
Should economists be worried about this paradigm shift in international trade though ? The answer probably remains in the negative if we think about the problems globalization brought along. Far from being more desirable than globalization, this slower growth in trade may generate a concomitant benefit. Let’s take a minute to ponder about the main global issues: climate change and inequalities in the distribution of income and wealth among others. The Intergovernmental Panel on Climate Change(IPCC) has warned stakeholders that unless draconian actions are warranted to forestall the effects of climate change, global temperature could rise up to 1.5 degrees Celsius by 2050. To that end, “slowbalisation” might be a blessing in disguise: a way to reduce our carbon footprint. Cargo ships are one of the largest contributors of sulfur emissions – a greenhouse gas fuelling global warming. As economies tend towards the trade of services, a significant decline in emissions is possible.
Furthermore, global disruptions in supply chains have expounded the importance of self-sufficiency. Imagine the potential havoc caused to developing countries such as Mauritius if crises like covid-19 were rife. In Europe, the German Economy Minister, Peter Altmaier says he wants to support strategic industries in Germany by cutting down on imports of key reagents from Asia. Not only may this make Germany more resilient to external shocks but also promote national sovereignty. Further, regional ties may be strengthened. In this case of pharmaceutics, a common European project for medicine might be developed. Regional growth might redistribute some of global income from powerhouses USA and China to other countries. “Slowbalisation” might also reorient national economies towards local growth. Battered by the crisis, the Mauritian economy is already witnessing a rapid rise in unemployment rate. Hence, the government could earmark more funds towards SMEs in order to witness a faster recovery. It is important to note that consumer’s preferences have evolved with time – many people are turning towards local produce. The ‘Made in Moris’ campaign could gain higher success if the authorities rationally judge the importance of local production as covid-19 has taught us.
Slowbalisation is gearing the world towards local production lines and away from complex international supply chains. This might sound somewhat beneficial, for many small businesses and local enterprises are receiving much support from the state, but it is far from being a “seamless scenario”. The localisation of ideas and products definitely means higher costs in terms of decision-making. Compounded with the extortionate costs of rare raw materials available only abroad and restricted access to crucial markets, the economic cost behind the “going local” concept cannot be ignored. In the running age of Covid-19, where everyone initially believed that online shopping would rule our lives, shipping costs on even the cheapest goods on websites like eBay and Aliexpress have soared, making online purchases history for many laypeople.
A couple of years ago, the world was literally the so-called “global village” where ideas, technology, people and merchandise continuously moved on a worldwide scale. Multinational companies and franchises were basking in success. Most countries depended on one another – directly or indirectly. Slowbalisation – like globalisation – exacerbated the economic crises around the globe owing to this very interdependency. The pandemic led to heavy restrictions on international flows, leaving many – if not most economies – in the tatters. Many are still grappling with their economic problems. It is especially the case for countries like Mauritius and Singapore – with major tourism, trade and freeport industries. Simply put, nations who benefited from globalisation by harnessing their key resources suffered the worst hits, especially those relying on imports for survival, for they are not self-sufficient. Obviously, the global economic slowdown fuelled unemployment and froze the transfer of technological know-how, thereby leading to more inequality, widening the digital divide and throwing millions into the shackles of poverty.
In essence, “slowbalisation” might, despite the economic downsides, prove to be beneficial. The bottom line is that it has probably, mitigated the effects of what could have been the result of overproduction, overconsumption and the desperate pursuit for wealth and power by economic juggernauts. Still, we should bear in mind that globalisation has, for long, been the lifeblood of modern businesses and “slowbalisation” spearheaded by the pandemic only blurred physical transactions. Addressing this problem will, perhaps, fasten the pace of this “slowbalisation”, albeit slowly.
Bhavini Dhondea (Lead Author)