Globalization enabled mankind to quadruple our population to almost 8 bn today from 2 bn only 100 years ago. Globalization also enables us to tackle the challenges accompanying this growth, the strain on resources, climate change, the pressure on migration, and longevity, to name but a few.
Hubertus Väth: Some see Globalization as a cause of the pandemic, but not me. I believe globalization is clearly a big part of any potential solution.
Mankind’s inventiveness is underestimated. Nothing fuels inventiveness more than a connected, globalized world. The talents of great nations combined, motivated not by resentment but by curiosity.
Not everyone shares this view, not even in my country that is, like most of Asia, a winner from globalization. As a result, already prior to COVID-19, globalization is scrutinized simply because it knows winners and losers, even though the overall balance is clearly positive. It is tempting to exploit politically. Blaming others for your shortcomings is as human as can be. The coronavirus outbreak only served as an excuse to allow protectionist instincts to roam freely. Getting this genie back in the bottle, will be no easy feat.
Countries that closed borders earlier fared much better in the pandemic’s early days. With the virus spreading, more and more countries took emergency measures such as restricting people’s movement. However, these measure, which are clearly an acceptable means in a pandemic and undoubtedly a precondition to successfully restricting its spread absent a vaccine, were strikingly uncoordinated, even in a supposedly closely coordinated EU. I didn’t see any fruitful attempts to coordinate and harmonize restrictions, to establish the knowns of what helps and how much, which would have enabled each country to allow much needed travel safely and efficiently.
I completely agree efficiency is a cold metric and cannot be the key consideration in a pandemic. But, and this is a big but, we all know, with resources always scarce, efficient handling will save lives in the end, as more means remain for what needs to be done on the medical front.
It’s understandable to strike different national balances between various liberties. But what we saw were international organizations being side-lined, even reproached. The very need for international co-operation has been thrown into question. This costed dearly.
We must accept that globalization and our lifestyles it provides helped spread the virus, but by no means did it cause the pandemic. I maintain that between the first appearances and the weeks before it hit the shores of Europe and the U.S., valuable time was wasted due to a lack of efficient globalization by the way of early and institutionalized information exchange and early precise warnings. It’s painful to admit that there was a certain arrogance that led to a lack of learning from those exposed early on.
First and foremost: In an ideal world, the speed of information on an infection should exceed the speed of the spread itself.
The solution to this or any other pandemic is a stronger global health information and medical support system.
The proof for this is the scientific race to find a vaccine. It has encouraged unprecedented global collaboration. Just a few days ago, we heard great news from BionTech, a spin-off of my Alma Mater, Gutenberg University, named for the inventor of the printing press, in the small city of Mainz just 30 miles south-west of Frankfurt. BioNTech announced that the vaccine they are developing in cooperation with Pfizer and Fosun was found to be more than 95% effective. A China/US/Europe cooperation. What could better embody the power of globalization? Behind such a great achievement is digital connectivity, the rapid flow of ideas and knowledge from around the world. Drug companies rely on globally conducted trials and tests, cross-border flows of vaccines and medical equipment is decisive in saving lives.
Any economic recovery will be massively influenced by the degree of globalization.
The pandemic has severely tested existing supply chains. In China, what is known as dual circulation elegantly describes the challenge. Three centres: Asia, centred around China, the Americas, centred around the USA and Europe, centred around Germany must each strike a balance to make it’s crucial supply lines resilient and efficient. A headline from the Financial Times which read “If the past 40 years were about efficiency, the next 40 will be about resiliency,” overdid it in my humble opinion. Efficiency will continue to matter. Research from S&P shows that getting this balance wrong could cost up to 1/3 of growth potential. Comprehensive economic recovery requires globalization to allow efficiencies to play out. The absence of which will lead to negative externalities, wasted resources and ultimately a loss of wealth, and even lives.
The coronavirus won’t kill globalization. If it ever will be killed, it will be by negligence of us taking it for granted. It’s unfortunately the perfect bogeyman in the West. In the East however, 10 Southeast Asian countries, as well as China, South Korea, Japan, Australia and New Zealand signed the Regional Comprehensive Economic Partnership, or RCEP. It became the world’s largest regional free-trade agreement, encompassing nearly a third of the world’s population and gross domestic product. It’s not by coincidence that those countries coping well were also those to knew the best remedy for the kick start. Let us not tire in pointing to the huge human benefits trade and globalization brings. In spring this year, I wrote for AFCA: COVID-19 is a global crisis, don’t make it worse by making it a crisis of globalization. Globalization and supply chains will look different after the pandemic. We will see more globalized e-commerce and cross border digital services than ever before. It will be a better normal: more digital, more sustainable and more resilient. But globalization remains the road to prosperity. It will ultimately help us defeat this and whatever virus may come, as one day another one sure will.
Source: Keynote Speech addressed by Hubertus Väth, Managing Director of Frankfurt Main Finance, at the Asian Financial Summit Forum and Asian Financial Think Tank Annual Forum on December 2, 2020.