Globalization Persists Through the Pandemic
Today I’ll be taking my first air flight since March 2020. It’s not an international flight, just Jet Blue from JFK to LAX, but the past year and a half has seemed strange and stationary. I am not one of those people who love travel and can’t wait for the next adventure, but professional work has brought me to many places, and it has seemed almost unnatural to limit those contacts to Zoom and email. Even as the pandemic continues and the delta variant has many people on edge, we are learning to navigate this COVID era and resuming our paths around the planet. Both people and goods are on the move, and even the risk of COVID-19 can’t stop it.
Global supply chains have been disrupted, but purchasing agents are finding back-ups. Global shipping is under enormous stress due to changing patterns of consumption. Shipping containers have been in short supply because normal patterns of supply and demand have changed. In a fascinating piece on problems in the shipping industry, the New York Times reporters Peter S. Goodman, Alexandra Stevenson, Niraj Chokshi and Michael Corkery observed that:
“Viewed broadly, the volume of global trade dipped by only 1 percent in 2020 compared with the previous year. But that doesn’t reflect how the year unfolded — with a plunge of more than 12 percent in April and May, followed by an equally dramatic reversal. The system could not adjust, leaving containers in the wrong places, and pushing shipping prices to extraordinary heights.”
The point is that the global pandemic has changed but not reduced the presence of global trade and the importance of global supply chains. The pandemic is disrupting manufacturing and shipping and material shortages are fueling inflation, but like water flowing downhill, global trade exhibits an almost gravitational force. In China, aggressive moves to contain the virus have disrupted but in no way reduced international trade. The strength of China’s export economy and the chaos of China’s shipping industry was the theme of a story by New York Times reporter Keith Bradsher who on July 13 wrote that:
“China’s General Administration of Customs announced on Tuesday that the country’s exports surged 32.2 percent in June compared with the same month last year. The increase caught many economists by surprise, as one of China’s biggest ports was partly closed for most of June and China’s exports of medical supplies have begun to level off… One of the world’s largest ports, Yantian Port in the southeastern Chinese city of Shenzhen, partly shut down from late May through much of June. Shenzhen acted in response to fewer than two dozen coronavirus cases. When the port fully reopened on June 24, shipping executives and freight forwarders hoped that trade would start returning to normal. It has not worked out that way. Dozens of huge container ships fell far behind schedule when they had to wait weeks to dock in Shenzhen. That meant ships later showed up in bunches at ports in other countries, causing further congestion. Chinese export factories also sent goods by truck to alternative ports, like Shanghai’s, leaving them overcrowded as well.”
What is remarkable is not the disruption of trade, but its persistence in the face of numerous pandemic-induced restrictions. The patterns of supply and demand established as the 21st-century economy turned global are proving remarkably durable. People have gotten used to seeing the entire planet as a single social and economic system.
When students are applying to undergraduate colleges or graduate schools, many no longer limit their search by local geography. Students that want to study in another country have proven reluctant to abandon their dreams. Here at Columbia University, we are seeing the determination of our international students to come to New York City. Last year, the sudden and unpredictable move to online instruction coupled with travel restrictions resulted in large numbers of graduate professional degree students deferring their enrollment in our programs. This year, those students who waited to start their studies are joining newly admitted students for what may be large increases in graduate enrollments. Students have learned how to navigate the gauntlet of visa, travel and immunization requirements and have already begun to arrive for programs that begin at the end of the month.
At Columbia, all students, faculty and staff must be tested and vaccinated, but nevertheless, remain aware of the risk of COVID-19 and know we must take steps to reduce exposure and risk. But after a year and a half, the shock of these restrictions has eased as we learn to navigate the greater risks incurred when traveling or assembling in group settings.
All of us are eager to resume normal life. Family gatherings and social events were called off for over a year and are now back, even though COVID appears to persist. Global tourism has resumed, although not at pre-Covid levels, and global business travel is slowly starting to return, with full recovery likely to take years. One of the issues with business travel is expectations. If customers and colleagues do not expect to see you in person, the pressure to travel is reduced. However, once that expectation returns, competitive pressures will require travel, irrespective of risk.
The persistence of the global economy relates to the logic of its creation. Ironically, globalization resulted from the importance of place. Each geographic location has its own ecosystem, culture, demography, and history resulting in comparative advantages in the development of specific goods and services. When combined with low-cost information, bar codes, computation, communication, and low-cost containerized shipping, it became possible to build goods and services that are globally sourced. A supply chain built on these distinctions will be more effective and efficient than one limited by geography. That in turn makes globally sourced goods and services less expensive and higher in quality. As these products compete, global products tend to win.
During the pandemic, even though we could not travel to other locations, we could see and imagine them through Zoom calls, Netflix shows, and social media. In normal times, those images stimulate the demand for travel. In COVID times, global images were a lifeline to what we remembered as the real world and hoped would not turn out to be an illusion. My sense is that, just as our students are eager to begin their studies, there is a great deal of pent-up demand building for global travel. When the pandemic recedes, I expect that we will see a boom in travel as people seek to make up for lost time.
COVID has distorted globalization, and the threat of additional pandemics may cause further changes in international trade and travel. Xenophobia and extreme nationalism have provided a counterforce to immigration, global travel, and international trade. But the behavior of global trade during COVID is empirical evidence of the persistence and durability of globalization. Technology has made the planet smaller and increased our ability to interact with each other. Professionals in the fields of research, education, arts, entertainment, manufacturing, services, technology, and sports increasingly operate globally. The pandemic has impacted all these fields, but people have managed to work together despite distortions. One graphic example of pandemic-induced persistence is the 2020 Summer Olympics, now underway in Japan during 2021. Athletes are testing positive for COVID-19, and their replacements are flown in and competing shortly after arrival. The world’s top athletes are competing a year late in venues that are both eerie and empty- but they are competing and while TV ratings are down millions are watching.
It is now clear that our recovery from COVID-19 will be one of two steps forward and one step back. We will learn to manage rather than end the pandemic. We will adapt to our new reality not by hiding from other people but by learning to engage as safely as possible. The global economy will persist, and its technologies will continue to advance. And eventually, we will find ourselves in a post-pandemic world where COVID will be gone but far from forgotten.
Travel safely Professor!