The pandemic accelerates the process of deglobalisation due to the vulnerabilities of global supply chains that have now been exposed.
Supply chains have been disrupted, not only because the supply of goods has stalled caused by the shutdown of factories in China for example, but also because governments have imposed travel restrictions to reduce exposure to the coronavirus.
This is creative destruction at a global scale.
The fact that the pandemic has not resulted in international cooperation to tackle the pandemic together, also contributes to the urge of businesses – supported by governments to prep up their economies – to deglobalise. To a large extent this is a selffulfilling prophecy.
These developments will accelerate a number of processes: For example, manufacturing processes will be relocated to reduce dependencies and vulnerabilities.
Relocation means more diversification, less vulnerability, and increased resilience of businesses and economic systems. To accomplish these new opportunities, governments and businesses must be agile.
However, this relocation comes also with costs, because global efficiencies can no longer be exploited.
There are also risks: Reduced dependencies on other business and countries can reinforce indifference to resources and problems we still share, and that require a shared vision and approach to be managed effectively; such as tackling the consequences of global warming.
Because in practice relocation means that countries and businesses limit their dependency on China, relocation will further intensify rivalries and tensions in the current already tense international political context. China also must adjust to this new reality and the challenges brings.
The cake that must now be shared is much smaller.
The question is which economic and political model is best able to take advantage of these new circumstances: The Chinese model of state-run businesses and a centralist political system, or the Western capitalist and democratic model? What system has the agility to exploit these new opportunities, while ensuring economic, financial and social stability?
Both centralized control and decentralized decision making have their (dis)advantages.
Other consequences for businesses are for example that robotization will receive a strong boost. Robotization means efficiency and reduces for businesses their dependence on a vulnerable workforce; for viruses for example.
The relocation of production facilities provides a good opportunity for an accelerated implementation of robotization: To kill two birds with one stone, so to speak.
This processes will take shape in the short term in a in a challenging (international) political and social context: And this context matters.
Apart from the fact that international cooperation has taken a new blow, an economic recession is inevitable, which will also contribute to rivalries and social and political volatility. These conditions make people receptive to radical ideas and extreme solutions.
The question is also whether and to what extent the United Nations can reinvent itself. Like the European Union, the United nations is now mostly just a bystander in this crisis. Governments take control, and reinforce their position and reputation.
It should be reminded, and that does not bode well for fundamental change that is now required: The United Nations was created to maintain the status quo of 1945, which is already obsolete, but can be perpetuated by the veto power of the one time”Big Five”, that still are in control.