To globalise or de-globalise? Will de-globalisation become the new norm?
Globalisation has had substantial effects on global growth and has paved the way for enhanced trade and investment, and has fostered cross-border collaboration on various areas, such as innovation, technology and knowledge-transfers.
Many will define globalisation as simply being the increase in the flow of goods, capital, people and knowledge across borders. The effects of globalisation have been enormous and a key underlying part that enhances globalisation is trust and transparent communication. Globalisation does not just involve economic trade; the reality is that it also results in political and knowledge exchange, co-operation and activities.
Hence, when we find ourselves with conflict situations, such as in Russia and Ukraine, Mali, Burundi, the Central African Republic, Israel and Palestine and numerous others, it threatens the calm collaboration of globalisation. Without peace, mutual trust and transparent communication, globalisation falls apart.
When the Russia/Ukraine war started, it sent a massive shock to the global economy, especially in the food and energy market sectors, squeezing supply and pushing prices to unprecedented levels. This also resulted in the banning of Russian oil, gas and diesel across most countries in Europe and the world.
Russia itself then also put in measures to limit foreign trade with several other countries. We have seen how a series of coups or conflict in certain West African countries like Burkina Faso, Mali, Guinea and Niger threaten trade and investments. Another geopolitical looming conflict could emerge, as China is hell-bent on annexing Taiwan, claiming the island as its historical territory.
South Africa also had its own fair share, with its political stance in certain global issues threatening its trade stance with the US, especially regarding the Africa Growth and Opportunity Act (Agoa). The US has also imposed a ban on exports to China of advanced logic and memory chips and the machinery to produce them.
One can safely say that the world is slowly shifting from where there were numerous fruitful collaborations, such as with innovation, knowledge and trade sharing, to a situation of one that is more of protectionism and “if you do not support my interests or ideology, then you face the risk of being shut out”.
Yet is globalisation prevalent in our world today? The answer is an emphatic “yes”, it’s very much alive and kicking. Are the threats of de-globalisation? Probably yes. But the key question would be whether the threats are enough to result in full de-globalisation. The answer depends on the policy choices of each country.
But one thing is certain. There will be growing signs that the world would become more fragmented with various countries set up in different camps, which could result in cold wars. And survival could depend on whose camp you’re in. But on the flip-side, de-globalisation could also help boost individual economies and help countries thrive, rebalance priorities and focus on more localised or regional relationships.
In about a week, South Africa will host the Agoa forum, which is an initiative of the US government, which seeks to promote access to US markets for sub-Saharan African countries. It is important to note that globalisation remains key to a better world, but also to a world where each country values the partnership and sovereignty of the other, where we all together work for the common good of a better, peaceful conflict-free world and society.
In closing, Covid-19 proved that we can overcome much more if we all work together in harmony for our planet and our people at large. Now, with the world possibly facing growing protectionism, we have to avert the threat of an economic, cultural and political trade war that continue to rear its ugly head. The biggest losers would be start-ups and small business owners.
Kizito Okechukwu is the Executive Head of 22 On Sloane, Africa’s largest start-up campus; and co-chair of the Global Entrepreneurship Network Africa.
BUSINESS REPORT