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28-Mar-2024
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Pandemic Crisis – Unimaginable 

           Pandemic has spawned new barriers at breath taking speed. Closed borders, travel bans, paralyzed supply chains, and export restrictions have prompted many to ask whether globalization itself might fall victim to the corona virus. In fact, globalization was already in decline well before the outbreak, having reached its peak before the 2008 global financial crisis and having never recovered since then.

The pandemic will certainly highlight the risks inherent in overdependence on global supply chains, prompt a renationalization of production, and put stress on the notion of international interdependence. The likely result is an acceleration of changes that have long been in motion towards a new, different, and more limited form of globalization.

The worldwide interconnectedness of goods, services, capital, people, data, and ideas have produced undeniable benefits. But during this

pandemic, the risks of dependency have fully entered the public consciousness.

After many weeks of lockdowns, tragic loss of life, and the shuttering of much of the global economy, radical uncertainty is still the best way to describe this historical moment. Will businesses reopen and jobs come back? Will we travel again? Will the flood of money from central banks and governments be enough to prevent a deep and lasting recession, or worse?

Nobel Prize winner Joseph E Stiglitz’s comment is worth notable. The pandemic will lead to permanent shifts in political and economic power in ways that will become apparent only later. The corona virus crisis has been a powerful reminder that the basic political and economic unit is still the nation-state. 

In a globalized world where borders don’t matter, they argued, we could always turn to other countries if something happened 

in our own. Now, borders suddenly do matter, as countries hold on tightly to face masks and medical equipment, and struggle to source supplies.

To build our seemingly efficient supply chains, we searched the world over for the lowest-cost producer of every link in the chain. But we were short-sighted, constructing a system that is plainly not resilient, insufficiently diversified, and vulnerable to interruptions. Just-in-time production and distribution, with low or no inventories, may be capable enough of absorbing small problems, but we have now seen the system crushed by an unexpected disturbance. 

The economic system we construct after this pandemic will have to be less shortsighted, more resilient, and more sensitive to the fact that economic globalization has far outpaced political globalization. So long as this is the case, countries will have to strive for a better balance between taking advantage of globalization and a necessary degree of self-reliance.”

There are fundamental changes that happen from time to time—often during times of war. Though the enemy is now a virus and not a foreign power, the COVID-19 pandemic has created a wartime atmosphere in which such changes suddenly seem possible.

This atmosphere, with narratives of both suffering and heroism, is spreading with the disease. Wartime brings people together not only within a country, but also between countries, as they share a common enemy like the virus. Those who live in advanced countries can feel more sympathy with those suffering  in poor countries because they are sharing a similar experience. The  

epidemic is also bringing us together in countless Zoom get- togethers. Suddenly the world seems smaller and more intimate.

There is also reason to hope that the pandemic has opened a window to creating new ways and institutions to deal with the sufferings, including more effective measures to stop the trend towards greater inequality. Perhaps the  emergency payments to individuals that many governments have made are a path to a universal basic income. In the United States, better and more universal health insurance might just have been given new impetus. Since we are all on the same side in this war, we may now find the motivation to build new international institutions allowing better risk-sharing among countries. The wartime atmosphere will fade again, but these new institutions would persist.