Globalization in the stress test
While consumers and businesses benefit from services that globalization brings with it, it still faces image problems.
In crisis situations such as the current corona epidemic, it is once again clear how unstable the networked world is. Not just one country is affected, but directly the global economy. The last time this problem was brought to light was a good ten years ago, when the financial crisis kept the world in suspense.
At the moment, containers are stuck in China, in many countries workers stay at home and planes no longer take off. Slowly but surely, more and more sand is getting into the economy’s previously perfectly running gear. Nevertheless, there are still no signs that the trend is towards de-globalization. The advantages of such a connected world are still greater than the problems that may result from it.
Ilja Nothnagel is a member of the Executive Board of the Association of German Chambers of Industry and Commerce (DIHK) and explicitly emphasizes that Germany is not economically dependent on any one country. Currently, the fear of a recession due to the coronavirus is much greater than the losses caused by it so far.
At the moment, Germany is not yet experiencing any major losses due to the virus. The effects are currently only being felt by a few companies, and measures such as the KfW loans and the short-time working allowance are still sufficient to support the economy – no wonder, some experts estimate the financial buffer accumulated for this purpose at a good 50 billion euros.
Which conclusions companies draw from the Corona crisis
How supply chains are structured and organized is ultimately always up to the companies. The question that companies must now ask themselves is whether just-in-time deliveries save the costs that arise when the supply lines come to a standstill due to a crisis or whether it might not be more advisable to accept low storage costs in order to be able to continue production in an emergency.
Whether this will be enough remains to be seen. What is clear is that complete de-globalization would lead to immense welfare losses and a switch to exclusively national production would be counterproductive.