Question

1- What are the main risks facing globalization in general and international trade in particular?
 As a result of the spread of the Corona virus?  give some examples of these risks?

Answer 1

 

Products and services previously available within one country are made available to new markets outside the country due to globalization.

Risks facing globalization

People and goods are increasingly free to move creating new challenge to global health. Globalization is multifaceted phenomenon that can affect health in many ways. Its consequences can be either direct, at the level of whole population, individuals and healthcare delivery system or indirect through the economy and other factors such as education, sanitization and water supply.

Increasing trade is certainly good for economies. It also leads to globalization of health risks. Examples of such risk include tobacco, alcohol, global epidemics and trade in health services.

Example: Alcohol is an area in which the globalization of an industry has lead to more health risks. There is a strong relationship between alcohol consumption and liver cirrhosis. Another example is the current pandemic that our world is facing now – Covid 19. It is a humanitarian crisis on a global scale. The virus continues to spread throughout the globe, placing health systems under unprecedented stress in the battle to save lives.

The cost to the global economy from support packages through central banks and fiscal actions are very significant and complex effects on the management of sovereign and corporate debt. Major economies now looks set to enter recession and more serious scenarios cannot be discounted. A further challenge is, the uncertainty about covid 19 including interms of the scale and pace of infection, as the virus move around the globe.

There is a clear need to keep trade flowing both to ensure the supply of essential products and to send a signal of confidence for the global economy. Trade is essential to save both lives and livelihoods. Trade flowing requires corporation and trust. For example, the market will supply essentials that countries will not impose export restrictions and that imports do not pose health risks. This is a particular challenge at a time of trade tensions where the international trading system was already subject to an increased number of new restrictions and distortions from tariff increase among major traders. Efforts at dialogue to manage and prevent tensions through ongoing negotiations are now complicated by mobility restrictions. But in the context of severe economic strain from covid 19 it is more important than ever to avoid escalation of the current trade tensions.

Covid 19 impact is far greater and complex than first anticipated. Disruption in the supply chain is more visual, the pandemic has affected the demand side as well. When the demand for output falters or output falls because of the negative supply shock, trade naturally slows. The economics behind this is complicated because decline in demand or supply occurs not only in the high contact sector such as tourism but also in the low contact sectors as well. For example, people purchase less gasoline even though the gas stations remain open during the lockdown period, most of the business travels postponed, potential recreational trips such as Disneyland cancelled etc.