Reference no: EM132993744
Has covid-19 killed globalization?
The flow of people, trade and capital will be slowed
"Trade will suffer as countries abandon the idea that firmsand goods are treated equally regardless of where they come from. Governmentsand central banks are asking taxpayers to underwrite national firms throughtheir stimulus packages, creating a huge and ongoing incentive to favour them.And the push to bring supply chains back home in the name of resilience isaccelerating. On May 12th Narendra Modi, India's prime minister, told thenation that a new era of economic self-reliance has begun. Japan's covid-19stimulus includes subsidies for firms that repatriate factories; European Unionofficials talk of "strategic autonomy" and are creating a fund to buy stakes infirms. America is urging Intel to build plants at home. Digital trade isthriving but its scale is still modest. The sales abroad of Amazon, Apple,Facebook and Microsoft are equivalent to just 1.3% of world exports.
The flow of capital is also suffering, as long-terminvestment sinks. Chinese venture-capital investment in America dropped to $400min the first quarter of this year, 60% below its level two years ago.Multinational firms may cut their cross-border investment by a third this year.America has just instructed its main federal pension fund to stop buyingChinese shares, and so far this year countries representing 59% ofworld GDP have tightened their rules on foreign investment. Asgovernments try to pay down their new debts by taxing firms and investors, somecountries may be tempted to further restrict the flow of capital across borders."
Adapted from : The Economist May 16th2020https://www.economist.com/leaders/2020/05/14/has-covid-19-killed-globalisation
a)There are several facets of globalization,briefly explain the two main facets discussed in the class.
b)From the excerpt, which facet of globalizationis affected by the coronavirus pandemic? Explain and provide examples from theexcerpt to support your answer.