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Will COVID-19 mark a new era of deglobalisation and nationalism?

April 4, 2021
Editor(s): Nuoya Liu
Writer(s): Annie Zhu, David Li, Kailin Tan, Kaiyue Chen

Introduction

Before the COVID-19 era, one can say that globalisation takes precedence over nationalism due to the increasing levels of culture integration, free trade and business expansion. From an opportunity cost perspective, economic theories tend to advocate the idea of globalisation. In particular, international trades, as a form of collaboration, allow countries to generate more economic benefit from their relative advantages and hence created additional synergies to be shared among participants. Nevertheless, the impact of Covid-19 revealed the fragility within globalisation, leading to the question ‘Will COVID-19 mark the end of globalisation?’.

Adversely, the world has gravitated towards a more nationalistic state, whereby definition countries identify with advocating or supporting their interests and independence. This seemingly sudden change in trajectory is evident through not only the crumbling states of the US-China relationship and Australia-China trade war, but also the closed borders and decoupled supply chains – not to mention the rise of racial attacks. Taking a more detailed evaluation of COVID-19 policies, the strict travel ban, social distancing and lockdowns have caused a physical alienation between individuals, which now accurately depicts the deteriorating relationship between countries: remote and self-serving. It is undoubtedly fair that physical deglobalisation is an outcome of COVID-19, as these crucial policies protect the world’s health and reduce the spread. Yet, how much of this growing nationalism is transpired from the interests of independent superiority? 

The current political environment and social situation exhibit manifestation of reversing globalisation. Specific events include the race to find a vaccine and the utilisation of free trade as a bargaining tool for political manoeuvring. In essence, is COVID-19 the sole reason for disruption in globalisation or is it the source of exposing true nationalistic desires which consequently threw a spanner into the works of globalisation?

To answer the above questions, we will first look into the following aspects where nationalist believes are manifested.

1. Potential Trade Protectionism

COVID 19 has had tremendous negative impact on local businesses worldwide. For example, nationwide lockdowns and disruptions to global supply chains have led to businesses shutting down, rising unemployment and decreases in consumer purchasing power. From this aspect, it is no doubt that one of the biggest victims of the COVID-19 have been domestic jobs and enterprises.

In light of this situation, the question arises “How will the Australian economy recover in a post-COVID world?” Despite various discussions on what economic policies will be put in place, the exact answer still remains unknown. What we can point towards however, is that the pattern of policies that have been put in place so far, have been domestic-focused, almost nationalistic. This is evident in the shutting of borders, encouraging consumers to support local businesses over imported goods/services, Chinese tariffs on Australian commodities due to calls for an investigation into the source of COVID 19, vaccine hoarding, to name a few. With countries advocating for their independence and turning against one another, trade protectionism could potentially be a common theme across future economic recovery policies.

Indeed, in recent years, trade protectionism has been under the spotlight as an example of nationalist views and ideologies. In 2016, Donald Trump imposed steel tariffs against China in order to protect the US’ manufacturing industry — which had largely shrunk in size due to the competing Chinese manufacturers. Similarly, nationalist views also contributed to the success of Brexit and hence, the following breakdown of free movement of goods and people between Britain and the rest of Europe. These recent events all point towards an important limitation of the economic theory discussed in previous paragraphs, that although free trade brings about numerous benefits, they are often not immediate. Additionally, the theory also fails to account for the strongly negative public sentiment associated with domestic businesses losing out to international competitors. Thus, there can be pressure for domestic governments to implement trade protectionist policies in order to protect local workers who have already suffered greatly in the pandemic.

2. Vaccine Nationalism

In the immediate context of Covid-19, the negative impacts of a resurgent nationalism are clearly exhibited. In wealthy countries all over the world, politicians have been purchasing an excessive number of doses to boost their own popularity in the domestic political arena. Prior to the completion of phase 3 testing, the uncertainty regarding efficacy and side effects of the potential candidate vaccines caused countries to stockpile doses from multiple sources, drying up the global supply of vaccines. The most notable case is the UK, who had pre-ordered doses for 5 doses per person from a combination of labs around the world. Furthermore, populations are feeling increasingly justified in their government’s vaccine hoarding. The in-group status not only reflects bias on the part of the population, but also reveals flaws in their logical conception of global recovery from Covid-19. Their argument is along the lines of strengthening themselves before helping others. However, this is counterproductive in the long run, as global supply chains and travel can only return with the extermination of the virus worldwide. Hence, this type of tribalism supported and perpetuated by the government will produce highly detrimental effects on the global recovery from Covid-19.

Developing countries with significantly lighter wallets suffer greatly from the vaccine hoarding exhibited by 1st world countries. Having collapsed economies worldwide, Covid-19 has already drained much of the available public funds in African and South American countries. With their already fragile health infrastructure crippled by Covid-19, developing countries hit worst by the virus will have to wait as their citizens are sidelined by the monopsony of wealthy nations. As the saying goes, cash is king.

One path of redemption for the culprits is the WHO’s initiative called the COVID-19 Global Access (COVAX) program. It aims to reduce the effects of a rampant nationalism through a global fund to guarantee doses for those who cannot afford it. Although many wealthy countries have signed on (interestingly including China at its conception), major exceptions are the United States (under Trump, Biden has now signed up) and Russia. The widespread support for ex-President Trump’s and President Putin’s actions undoubtedly demonstrates the prevalence of selfish nationalism justified by patriotism, and the short-sightedness of nationalism itself. There is no way to achieve global herd immunity without vaccinating the global population, and whilst actions have been taken to remedy the previously disastrous situation of developing countries, it may have come too slow and too weak. COVAX still requires $2bn to achieve their 2021 goals and does not preclude participating nations from making independent deals with vaccine manufacturers.

Whilst nationalism promotes a clear distinction between “us” and “them”, the virus does not discriminate, and ignoring the implications of the unequal recoveries of countries will lead to a prolonged and more painful recovery.

Final words

In conclusion, there has been a stronger sentiment towards nationalism in many countries, which is further amplified through their COVID-19 policies. Specifically, the pandemic draws attention to the importance of independent productions and supply chains, especially in relation to manufacturing. It is true that some domestic-focused policies and actions, such as imposing tariffs and closing borders, were essential to support local businesses and the wellbeing of citizens, especially during the tough pandemic time.

However, with regard to the question we posed earlier – “Will COVID-19 mark the end of globalisation?” The answer is hardly yes. The world has been increasingly connected and integrated in the past decades. We have seen many huge successes of collaboration and globalisation. For instance, COVID-19 also fosters the technology development and online communication, which further helps to connect people worldwide and shape a more globalised world. Absolute protectionism and selfish nationalism may not be the optimal solution for the world development. In contrast, the future recovery from this pandemic will inevitably require collaboration between developed and developing countries, as the threat from COVID-19 will not disappear as long as the virus remains. It follows that seldom can we come back prosperity without achieving economic and health recoveries in the world. Perhaps what global leaders and citizens need to think about is how to work interdependently with resilience, which in return, may bring larger benefits to their home country.

References

(2021). Retrieved 24 March 2021, from https://www.youtube.com/watch?v=KJhlo6DtJIk

Gyngell AO FAIIA, A. (2021). Most Read of 2020: Australia in a Post-COVID-19 World. Retrieved 21 March 2021, from https://www.internationalaffairs.org.au/australianoutlook/australia-in-a-post-covid-19-world/

Journal, R. (2021). Squeezed by China’s Tariffs, Australian Farmers Cultivate New Markets. Retrieved 24 March 2021, from https://www.wsj.com/articles/squeezed-by-chinas-tariffs-australian-farmers-cultivate-new-markets-11614249003

Nationalism tugs at threads of vaccine makers’ global web. (2021). Retrieved 24 March 2021, from https://www.afr.com/world/europe/nationalism-tugs-at-threads-of-vaccine-makers-global-web-20210320-p57cg1

Trade: will COVID-19 drive further protectionism?. (2021). Retrieved 24 March 2021, from https://www.icaew.com/insights/viewpoints-on-the-news/2020/sep-2020/trade-will-covid19-drive-further-protectionism

The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ, our Partners and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.

Meet our authors:

Nuoya Liu
Editor
Annie Zhu
Writer
David Li
Writer

Hi! My name is David, and I am a second year BCom student majoring in Economics and Finance. Outside of uni, I enjoy playing guitar, watching the F1 and making cocktails.

David Li's Articles
Kailin Tan
Writer
Kaiyue Chen
Writer