It is not globalisation anymore - it is slowbalisation!

It is no more GLOBALISATION  - call it SLOWBALISATION now. This was the call pre-Covid-19.

                                                           (Courtesy - The Economist)

The Economist in January 2019 coined a new term adapting a term used by a Dutch writer - Slowbalisation - to indicate the current reversal of openness in global trade and investment.

Globalisation has slowed from light speed to a snail’s pace in the past decade for several reasons. The cost of moving goods has stopped falling. Multinational firms have found that global sprawl burns money and that local rivals often eat them alive. Activity is shifting towards services, which are harder to sell across borders: scissors can be exported in 20ft-containers, hair stylists cannot. And Chinese manufacturing has become more self-reliant, so needs to import fewer parts.

On the fundamental principles of national treatment and most favoured nation treatment, it had this to say:

Less glaring, but just as pernicious, is that rules of commerce are being rewritten around the world. The principle that investors and firms should be treated equally regardless of their nationality is being ditched.

On the eternal question of whether we need to globalise or not, it had this to offer:

Globalisation made the world a better place for almost everyone. But too little was done to mitigate its costs. The integrated world’s neglected problems have now grown in the eyes of the public to the point where the benefits of the global order are easily forgotten. Yet the solution on offer is not really a fix at all. Slowbalisation will be meaner and less stable than its predecessor. In the end it will only feed the discontent. 

Mitigating the costs of global trade has been the quintessential question - how does it impact our producers, workers and industries? How will jobs be impacted in our country? How will it impact local businesses? What impact would it have on local supply chains? How much should we depend on foreign suppliers? How much sovereignty would we lose? What policy space is left to enact laws and regulations to ensure local communities benefit or are not impacted? 

These are some of the questions that policy makers have to engage in before deciding on appropriate trade policy. Too little has been done to mitigate globalisation costs, it is said. But the question is do governments have the ability to mitigate the costs at all?

Will slowbalisation now, post the pandemic, lead to ultra-slowbalisation?