Certain signs may indicate that a kind of economic deglobalization has begun in the world. Supply chains have been disrupted by the pandemic, Europe is slowly disconnecting from Russian gas, China’s boycott is becoming more and more widespread, and the return of chip production to Europe and America is also pointing in this direction. Is this a new trend or just a temporary state? Economist Zoltán Pogátsa talked about this with economic journalist Endre Kántor on the Pogi Podcast in his latest broadcast. (We wrote about the previous podcast episode here.)
Endre Kántor highlighted that, in his opinion, the coronavirus started a double process, although it thoroughly confused the supply chains, it also accelerated the digitization processes.
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Exposure in the spotlight
There is no doubt that Covid has boosted digitization. We started zooming, we started shopping a lot more online, but digitalization in some ways replaces the relationships that used to be physical relationships. If I have a Zoom meeting, it can mean that I don’t have to travel to, say, the Far East for a face-to-face conversation. Personal business relationships have been significantly reduced by the effects and aftereffects of the coronavirus
– asked Zoltán Pogátsa.
He added that the digitization effect of the coronavirus was dwarfed by the fact that it was immediately apparent to what extent the supply chains had become blocked. “The trucks were congested at the borders, they couldn’t produce many raw materials and parts in the first place,” he recalled.
The economist pointed out that the “just in time” supply system invented by the Japanese in the 80s has taken its toll. The essence of this system is that it is not necessary to store it, but the given component arrives exactly when it is installed.
Multi’s supply chains, calculated precisely to the minute, spectacularly collapsed, which highlighted how strongly individual countries and companies depend on each other. A terribly sensitive system is when a company expects a lot of components from the other side of the world, this means exposure.
The result of the coronavirus is that many large companies have come to the conclusion that their supply chains must be shortened, “and this is deglobalization”.
It shows this, among other things
- the emergence of EU and US chip manufacturing ambitions and
- also the efforts of supermarkets to deliver food closer.
Freedom at a premium
Zoltán Pogátsa believes that it is also timely to deal with the harmful effects of globalization:
when we were freed from the Soviet-type systems, we experienced freedom, openness, the more positive side of globalization, but it must be seen that it also had negative sides.
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