The Impact of the Spread of COVID-19 on Globalization: The Future of Globalization

The Impact of the Spread of COVID-19 on Globalization: The Future of Globalization

Lenka Nigrinová
DOI: 10.4018/978-1-7998-8339-5.ch011
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The text analyzes the changes in the process of globalization which have occurred in connection with the spread of COVID-19 and determines the possibilities for further development. It is based on the definition of globalization according to the OECD. Several years before the pandemic came, and globalization entered a phase of slowdown. It was called deglobalization. The main facts that caused this process were financial recession in 2008 and changes in USA and China economic relationship. The pandemic has weakened economic growth in many countries, reduced trade and travel, and introduced restrictive measures. The effects of a pandemic for individual states depend on the extent to which the states are connected in global production and trade networks. Three scenarios and their impact on globalization, trade, and the world economy are introduced.
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The concept of globalization is linked to a few main areas: economic, financial, political, social, cultural and also technological. Economic globalization is an interdependence of world economies due to growing cross-border trade in goods, services, capital and the rapid spread of technology. According to the author, economic globalization includes many processes related to the spread of economic activities among countries around the world. Economic globalization then represents the interdependence of world economies due to the growing cross-border trade in goods, services and capital, which has been facilitated in recent years by the rapid spread of technology. Political globalization involves the transformation of relations between political processes and states (Ougaard, 2004).

Social globalization is defined as information flows, personal contacts and cultural sharing across countries (Dreher 2006). The social dimension of globalization is related to the impact of globalization on people's lives and work, on society, culture and human security. The globalization of culture is manifested not only in the fact that all the most important scientific discoveries and outstanding literary works are translated into many languages. Popular songs and melodies, films, the best examples of fashion and dramatic art are spreading all over the planet at high speed (Chumakov, 2012). In this context, it is also important to mention Huntington's view that culturally based civilizations have a strong influence on people. They affect them more than political and economic systems or levels of development (Huntington, 2011). The spread of technology across national borders, data transfer and the Internet has greatly accelerated technological globalization in recent decades.

Globalization is a process that has been strengthened by the liberalization of markets, in particular by reducing tariffs and barriers to the movement of capital and by the movement of people. It is clear that globalization is connected with the behavior of states and governments (especially the strongest economies in the world), which actually create the conditions for liberalization and for the integration processes. In addition to liberalization and integration, the development of transport and information systems, technological innovation, the development of electronic data interchange systems, the speed of communication, the huge rise of multinational companies and the interconnection of financial markets are essential preconditions for the development of globalization.

The globalized world we live in today is a world that brings many uncertainties, frequent changes and also risks. Globalization is a spontaneous process that is not controlled by any central authority or institution. Many activities are mainly affected by the functioning of the markets and competition, which brings with it certain advantages but also risks. The main benefit of globalization is the increase in competition in the markets, which leads to lower costs, commodity prices, pressure for higher quality goods and thus increases the overall efficiency of the system. Limited resources are used better and more efficiently, and this in turn leads to economic growth for many countries. Thanks to their size and number of branches, multinational companies can offer a wide range of services and satisfy the needs of customers around the world. Multinational companies develop economic activities in several markets through full or partial ownership of branches. These companies have great geographical flexibility and therefore relocate their operations to other parts of the world according to the evolution of political conditions, the system of investment incentives, tax policies, cost of labor, the competitive environment and production costs in the territory.

Other advantages of globalization are greater choice (wide range of goods and services) and lower prices for consumers, satisfaction of customer preferences anywhere in the world. Globalization also contributes to the spread of technology and knowledge, leading to stronger and faster communication. Gains come from the sharing of ideas and also skills across national borders. To summarize the consequences of globalization, we can say that globalization generally leads to resource efficiency and the allocation of production to a place with higher labor productivity, but production costs and revenues are often unevenly distributed, which can result in global imbalances.

Key Terms in this Chapter

Pandemic: A large-scale epidemic that affects multiple continents at a given time.

Globalization: It is a continuation and deepening of integration processes in the world. Globalization is a process that has been strengthened by the liberalization of markets.

Regionalization: It is the decomposition of the world into smaller economic units and regional integration groupings.

Integration: Involvement of states in higher units. In the case of economic integration, trade barriers are removed, and economic cooperation is promoted.

Deglobalization: It is a process of slowing down globalization, reducing interdependence and integration between states and thus reducing trade.

Multinational Company: A large company established in one country, which through branches in one or more other countries produce or sell goods or services.

Global Value Chains: It includes distribution and production processes that are located around the world. The companies wanted to optimize their production and supply processes, so they deployed different stages of production in different places.

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