Lecture 33: Deglobalization? The contours of the global economy after covid

Pre covid trends

• trade to GDP ration plateaued around recession

• declining import intensity since recession — early warning signs of deglobalization

• increase in country inequalities

• Brexit, Trump, US-China-Mexico trade wars, rise of populism

Danny Rodrick’s political trilemma

between democracy, national soveirngnty, and global integration, you can have 2 but not all 3

covid deglobalization pressures

• movements of people and capital slow, inward turn — restructuring of national manufacturing capabilities (e.g. competition for PPEs)

  • limits dependence on international supply chains

Uneven impacts

• 23% contraction of Spain’s economy

• European countries ‘bore the first covid brunt’

• ‘v-shaped’ recession → quick rebound

  • financial markets recovered quickly, middle class not so much

• CP barely declined for pandemic but has steadily increased since

• rich neighborhoods in montreal have lower mortality rates during covid

• minorities and women had more covid deaths — employed in health care or other face-to-face jobs

Inter-regional inequalities

• 25% of Nova Scotia doesn’t have internet — online school → educational inequalities

Will covid cause big city exodus?

• social scarring = fear of crowded spaces

• white-blue collar differences (remote work)

• cities still vital — provide space for agglomeration economies

• cities becoming younger

• cities efficient: dense, public transport, lower ecological footpring

Global poverty and covid

• steady downward poverty rate because of globalilzation and direct effort to include impoverished countries in economy

• covid baseline scenario: better than downside but reversed a lot of progress

• ** middle income countries contributed to 4/5 of the ‘new poor’

Peru case

• first to impose lock-down, longest lock-down

• BUT..

  • highest mortality rate — 4-5x greater than Canada’s, hospital system collapsed, impact depended on region but no income correlation

  • financial recovery but no social recovery — lost 6.5 million jobs

**rural areas less affected by covid than cities because the communities were closed, they didn’t let new boats in and tended to be fitter and healthier

• 70% of Peru’s workforce in informal center — market vendors got covid

• govt gave checks to support ppl during covid but ppl had to stand in lines to get checks and got covid standing in line

*pandemic triggered political turmoil!!

Global poverty and covid

new poor = middle income countries

urbanities: employed, higher skilled and educated, manufacturing, services and commerce, formal sector

• got covid cuz they couldn’t isolate

target policy measures for new poor: address damage done: health, education, jobs

promote pro-poor inclusive economic growth: inflation, political crisis, taxation reform, infrastructure investment