Globalisation boosts our prosperity
Local and internationally, media organisations have been reporting growing speculation that ‘globalisation’s days are numbered’.
Covid-19’s rapid spread around the world hasn’t exactly been a glowing advertisement for globalisation, though that word has become one of those for which a whole host of unrelated things are often blamed.
Internationally, many governments are facing calls to move the production of their goods onshore and lessen their reliance on other nations, particularly when it comes to goods that contribute to the safety and security of their country. These calls have been loudest in countries that have struggled to source the medical equipment they need to protect their own populations. Even in countries where factories have been producing equipment — like Japan — governments have not always been successful in securing the amounts they need.
It is a hugely stressful situation for any government to be in, trying to manage the pandemic and minimise human suffering.
Other countries, such as India, have always had a strong inclination to be self-sufficient.
Rather than support open and free trade, they have preferred to incentivise foreign direct investment to stimulate their own economic growth. It is not surprising, therefore, to hear Prime Minister Narendra Modi advocate for ‘‘self-reliance’’ in his speech to the nation on May 12.
And of course, the gold medal for ‘‘self-reliance’’ (or ‘‘Juche’’, as it is known in the official ideology) is North Korea.
We’re seeing increased questions being asked about supply chains and the effectiveness of the international trading system.
Countries such as the United States wonder whether it might be easier to go it alone, striking bilateral deals that aren’t beholden to multilateral trade rules, which the US argues facilitate the rise of China at its expense.
Globalisation and free trade have defined the post-WWII era. And they certainly have their critics, particularly in relation to environmental impacts and wealth inequality. But there is no question that the global trade system as New Zealand has known it – and indeed has contributed to shaping — has significantly improved the prosperity and well-being of New Zealand and our neighbourhood. David Ricardo — the man who put forward the notion of comparative trade way back in the 1800s — was right.
New Zealand has thrived in a globally connected world, and particularly with Asia. Export volumes have grown exponentially, amazing Kiwimade innovations and products are being sold offshore, New Zealanders have been able to travel and work overseas, and our young people have been able to study in the best institutions throughout the region. More than 600,000 New Zealand jobs are related to exports, and export jobs pay more than domestically focused ones.
As a result of global connectedness, New Zealand has also enjoyed a diverse array of goods and services in our own market. I for one am glad the repetition of ‘‘meat and three vege’’ has been replaced by the diversity of food choices I can now regularly enjoy. Not to forget the way that the migrants New Zealand has invited here have enlivened our cities and regions.
At this time of economic need, it’s important that New Zealand celebrates and supports domestically made products, and we all want to see our industries thriving. But there is only so much demand for our products a country with five million people can generate. And if we want our domestic industries to truly thrive, we’ll need to continue to engage with the outside world to keep abreast of developments and trends, and make sure we have the best technology and practice.
New Zealand is a country that has been held up internationally as successfully tackling Covid-19 through clear leadership, strong science, world-class healthcare, and collective action as a society. But we have also shown leadership in Asia, championing trade connectivity with Singapore in recent weeks and working to progress trade agreements that will help economies re-grow. While bigger countries might try to focus on building self-sufficient, insulated economies, in New Zealand we’ll need to work to reconnect to Australia through our transTasman bubble, and then with the Pacific and Asia.
We’ve had many weeks inside our household bubbles, and it’s perhaps natural to want to continue to look inward in response to a threat that came from outside. But we’ll have be on guard against this bubbling over into xenophobia. New Zealand is better off connected, playing to its strengths, and working with other countries that are smart and brave enough to understand that working together enriches us all.
As we take stock and begin New Zealand’s recovery, let’s not forget the good that engagement with Asia can and will play. . It’s early days, but Asia will be a key part of New Zealand’s recovery.
- Simon Draper is the executive director of the Asia New Zealand Foundation Te Whı¯tau Tu¯ hono