At the end of last year, Maurice Chang, the legendary founder of Taiwan's leading (and the world's) semiconductor manufacturer, announced that "globalization is almost dead." In a world where the functioning of global supply chains is disrupted by covid-19 and the strengthening of Sino-American rivalry, a whole range of commentators echoes this sentiment, and many companies have embarked on reorganization and started sourcing goods from nearby countries. But it would be wrong to conclude that globalization has ended. Many details from history explain why this is not so.
Globalization is simply increased interdependence on an intercontinental rather than a national or regional level. In itself, it is neither good nor bad, it has many dimensions and, of course, it is not something new. Climate change and migration have been contributing to the spread of humanity across the planet ever since our ancestors left Africa more than a million years ago; many other species did the same.
Similar processes always lead to increased biological interaction and interdependence. The plague, which started in Asia, killed a third of the population of Europe in the period from 1346 to 1352. And when Europeans arrived in the Western Hemisphere in the XNUMXth and XNUMXth centuries, their pathogens decimated a good portion of the indigenous population. We can talk about military globalization at least since the time of Xerxes, and then Alexander the Great, whose empire spanned three continents. And, of course, the sun never set on the XNUMXth century British Empire. In parallel, great religions spread on all continents - it was a socio-cultural form of globalization.
In the modern era, the emphasis is on economic globalization - the intercontinental flow of goods, services, capital, technology and information. This process is also not new, but thanks to changes in technology, costs caused by distance have been greatly reduced, and that is why today's globalization is deeper and faster. Back in the Middle Ages, the "Silk Road" connected Asia and Europe, but it is not even similar to the colossal scale of the movement of modern container ships, not to mention the Internet connection that enables the connection of continents in an instant.
Although in the 2000th century globalization was viewed primarily as an economic phenomenon, during the XNUMXs it became a modern, popular word in politics (both among its supporters and critics). When protesters in Davos smashed McDonald's windows to protest working conditions in Asia, it was an example of political globalization.
Today's globalization is clearly different from that of the 1600th century, when European imperialism formed a significant part of its institutional structure, but due to high costs, a much smaller number of people were directly involved in it. Western companies began to expand throughout the world as early as the 10s, and by the end of the 2010th century, the global volume of foreign direct investment (FDI) amounted to approximately 30% of world GDP. By XNUMX, global FDI already included investments from non-Western companies, and their combined volume was close to XNUMX% of world GDP.
In 1914, on the eve of World War I, the degree of global interdependence was very high and it related to the flow of people, goods and services. There was also inequality, because the benefits of economic globalization were unevenly distributed. Nevertheless, economic interdependence did not prevent major trading partners from starting a war against each other (that is precisely why people at that time called it the Great War). After four years of devastating violence and devastation, the level of global economic interdependence has plummeted. World trade and investment volumes did not return to 1914 levels until the 1960s.
Could something similar happen now? Yes, if the US on the one hand, and Russia or China on the other, make a mistake and start a big war. However, barring that contingency, a similar sequence of events is unlikely. Regardless of all the talk about the economic "rift" between the US and China, those breaks are quite selective and incomplete for now. The volumes of world trade in goods and services increased sharply after the drop in 2020, caused by covid, although their recovery did not occur in all directions equally.
As America erects new barriers, which impede the flow of certain goods of special importance to and from China, the volume of US imports from China increased by only 6% compared to pre-Covid levels, while imports from Canada and Mexico increased by more than 30% . It turns out that in the American case, regionalization clearly beats globalization in the pace of post-covid recovery. But if you look more closely, you will see that, despite China's share of US imports falling from 21% to 17% in 2018-2022, the volume of US imports from Vietnam, Bangladesh and Thailand has increased by more than 80%. These figures clearly testify that globalization is not dead.
It should be noted here that the new directions of Asian trade with the US in reality play the role of an intermediary for Chinese trade. America and its allies are, as before, deeply intertwined with China's economy, which was never the case with the USSR during the Cold War. Western countries can reduce their security risks by excluding Chinese companies (e.g. Huawei) from participating in the construction of 5G telecommunication networks in the West, but without creating excessive costs by completely dismantling all global supply chains.
In addition, even if geopolitical competition would significantly limit economic globalization, a high level of mutual dependence would still be preserved in the world due to - ecological globalization. Pandemics and climate change are subject to the laws of biology and physics, not politics. No country can solve these problems alone. The greenhouse effect in China can lead to high costs due to rising sea levels or extreme weather in the US or Europe - and vice versa.
Those costs can be colossal. According to scientists, deaths in China and the US have exceeded the normal level of deaths from the covid-19 pandemic (which started in Wuhan) by more than a million people partly because both countries did not cooperate in fighting it. To succeed in the fight against climate change or future pandemics, the existence of global interdependence must be acknowledged, even if one does not like it.
One of the main driving forces of globalization are technological changes that diminish the importance of distance. Those changes remain. Globalization is not over. Maybe she just became different from what we want.
The author is a professor at Harvard University
Copyright: Project Syndicate, 2023.
Translation: NR
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