These are upheavals that have shaken the very foundations of globalization. Container ships stranded in ports, food stocks growing beyond transportation, shortages of semiconductors… Between the Covid-19 pandemic and the war in Ukraine, the sustainability and efficiency of our trading system has never been questioned. The question is raised about the future of globalization, be it deglobalization, globalization “in the circle of friends”, “fragmentary” globalization.
“The long-held vision of a world without borders is no longer credible.” After the Davos forum, which brought together the heavyweights of politics and economics in Switzerland, economist Joseph Stiglitz did not hesitate to speak. In a message published in Project Syndicate, the former Nobel Laureate in Economics writes: “After four decades of championing globalization, it’s clear that the Davos mafia did the wrong thing.” Indeed, hyperglobalization is no longer at the party in recent years. If trade continues to grow, it will slow down from 6% a year before the 2008 crisis to barely 3% today.
The pandemic has dealt the biggest blow, highlighting the shortcomings of globalization. Shortages, slow delivery times, skyrocketing costs… the well-oiled cogs of globalization are jammed. Two years later, the war in Ukraine again weakened a system already in bad shape. Even BlackRock CEO Larry Fink, founder of the world’s largest property management company, sees the war in Ukraine as “put an end to the globalization we have known for the past three decades”.
Deglobalization, globalization among “their own”, fragmentation
China’s zero-Covid policy, which shut down almost 50 cities in the country for weeks, has also undermined the global supply chain. The closure of Shanghai, home to the world’s largest container port, has blocked the loading and unloading of hundreds of ships, creating monstrous traffic jams. “Globalization only works if maritime transport works. The blocking of the Suez Canal by Ever Given last year showed this well.” explains Paul Turret, director of the Higher Institute of Maritime Economics (Isemar).
“This crisis is the death knell for globalization as we know it and is changing global alliances.” adds European Commissioner for Economic Affairs Paolo Gentiloni. Specialists compete in terms that define this new era: deglobalization, “fragmentary” globalization, globalization “among friends”. “Covid-19 and the war in Ukraine have become catalysts for a structural trend,” explains Jeremy Ghez, HEC Professor of Economics and International Business. A World Trade Organization note explains that prior to the 2008 financial crisis, global merchandise trade was growing at twice the rate of GDP. But after the crisis, everything was completely calm, and the ratio between trade growth and GDP growth fell to an average of 1.
“A small disturbance can shake the whole system”
While some rejoice that a much-criticized system that has exacerbated inequality is failing, others warn that the end of globalization will not be happy. “The global economy may face its biggest test since World War II” This was announced by the managing director of the International Monetary Fund Kristalina Georgieva. “While geostrategic considerations will guide some sourcing decisions, this will not necessarily lead to a breakup.”, she urges, opting instead to diversify supply points to increase resilience. In the background it “the specter of global food shortage” that continues after the war in Ukraine, as UN Secretary General António Guterres reminded us.
The ultrafinanced food system is reaching its limit. Food prices are skyrocketing due to speculation, putting entire countries at risk of starvation, even with stocks available. For Guardian columnist George Monbiot, global food, like global finance, has grown out of billions of interactions so complex that “A small perturbation can raise the whole system above its critical threshold, after which it will suddenly collapse.” The journalist advocates a “despecialized” system in which wheat, livestock or vegetable production would not be carried out intensively in one country. “We need to create back-up systems that produce food in completely different ways. We must introduce spare capacity into a system that is threatened by its own efficiency.” he begs.