With buzz like ‘Just-in-Time’, ‘Comparative Advantage’, ‘Outsourcing’ disrupted the supply chain in the name of profits and efficiency. No doubt the effort taken paid back well for the last few decades. But in the wake the outbreak of the virus, the entire supply chain has crippled and all major industries and economies are facing the brunt of over-dependence. China a manufacturing hub of the world and it gets most of its machinery from Germany. As China is unable to set in the manufacturing cycle, demand for new machinery from Germany has reduced. Germany is the major player in the EU, the impact of slumber in trade is felt in all EU countries. Such a phenomenon is called a domino effect wherein the fragility of supply chains is exposed, a major concern of globalism. The worst-hit industries are automobiles, electronics and more importantly drugs and medical supplies a crucial element for fighting the pandemic.
Scholars cite that the current situation of over-dependence and interconnectedness has reached an inflection point. They predict that from now the process of globalization may change its course and multilateral organizations may have to restructure their bargain. Certainly, nations like India and its neighborhoods will be the worst hit as they have always accrued the benefit of globalization in terms of employment, investments, etc. Countries may have to revamp their strategies to adapt to new realities keeping in mind the stakes on the economy at large.
Though globalization is inevitable, going back to its business as usual form post-pandemic recovery is highly unlikely. However, a sudden exodus from multilateral cooperation will certainly have greater ramifications that need thoughtful consideration. On the contrary, instead of fallback, it will be pragmatic for economies to restructure and prioritize. Targeted restructuring can reduce over-dependence and push for better control in stabilizing economies. Globalization is no doubt a necessary evil however the question is are we playing the right cards with it? Our focus was only to channelize factors of production across borders which is proving very dangerous.
