COVID-19’s Impact: Reshaping Globalization and World Order
The Impact of COVID-19
As we know, COVID-19 is having political, social, health, and economic effects. But are we aware of the impact this can have on the international order or on globalization?
The current pandemic and its effects could reshape globalization. Furthermore, due to the consequences experienced by the great powers, a new world order will eventually be established. To understand this, we will address new changes in communication, trade agreements, oil relations, and democracies.
New Forms of International Relations and Trade
According to Patric Zweifel, a German economist and head of Picket AM Spain, a reason to believe in this remodeling is the new forms that international relations and trade are taking. The pandemic has reduced the trade in physical goods and the mobility of people, but digital globalization has become increasingly important. Confinement has shown businesses and governments the effectiveness of the Internet in relation to telecommuting and online services. Video conferencing versus face-to-face meetings can be more efficient and save time, and online health appointments often offer more flexibility and speed.
Another reason, as the economist argues, is that supply chains are likely to be less global and more regional. This has already happened in Asia, where intra-Asian trade, which accounts for 28% of the region’s total exports, rose to 46% in 2018 and is expected to continue to rise after the pandemic.
The Crude Oil Factor
A second factor affecting the above-mentioned consequence is crude oil. In April, for the first time in history, American crude reached a negative value, losing 305% of its value. This fall reflects the collapse of demand, a consequence of the paralysis of productive activity.
The drop in demand is compounded by the confrontation between Russia and Saudi Arabia, which has overwhelmed the market’s ability to absorb production. In March, Russia rejected the Saudi offer to cut crude production in the face of declining demand, and Saudi Arabia responded by increasing its oil injection into the market.
The Reputation of Liberal Democracies
Finally, the reputation of liberal democracies is at stake. Everything points to the legitimacy of the Asian regimes of collective discipline (South Korea) and state coercion (China) being strengthened. The responses of democratic governments have been uneven, erratic, and uncoordinated, each acting independently and completely ignoring multilateral measures. This makes it the “invisible hand” in the global market of nations that will establish the new balances, fragile and precarious, from now on.
Conclusion
To summarize, we must be aware that this pandemic will trigger strong impacts. This change in globalization and the world order is not only due to the above-mentioned facts: changes in trade relations and agreements, and the future of oil and democracies; but also because environmental agreements are being set aside, and the refugee crisis will become more acute. There are a thousand factors at stake, but to address it, you have to start by being aware of what this virus is really driving.