Professor of Economics,
University of Hamburg,
Postcoronomics does not mean that after Covid-19 a new era is beginning. The corona pandemic is not a game changer. However, it is an eye opener. And it accelerates the speed of change.
Covid-19 does not affect significantly the long-term economic trends like the impacts of a still growing world population, the catch-up processes in poorer economies and the global need for more efforts to protect the environment and to avoid climate change and species extinction. Nevertheless, the corona pandemic speeds up the structural change from industrialised economies that are producing and trading goods to digitalised economies exchanging data.
Globalisation has been already under stress since the late 2000s. The global division of labour had lost momentum with the aftershocks of the financial market crisis and has not yet regained its old dynamics. The advantages of specialisation were visibly diminishing, but the disadvantages of high transaction and transport costs as well as increasing dependence on foreign intermediaries had become steadily more important. Corona will accelerate further on-going de-globalisation processes.
Globalisation will not disappear. But it will continue to change its face. Localisation – from local touch to local products for local clients – will celebrate a comeback. Glocalisation as an intelligent mixture of globally standardised mass production and tailor-made local specification might become a clever new strategy. In the aftermath of the corona crisis, various links in global value chains are likely to be brought back into the neighbourhood. Anyone who has been importing inputs from far away in the last decades, will tap other sources and increasingly look for alternatives in the vicinity. Global supply chains have been too vulnerable in the corona crisis. National supply security has become too important.
Digitalisation will complement and substitute globalisation. Data flows will replace trade flows. Video meetings will make business trips superfluous. The home office will replace the business office. In the wake of the pandemic, population and businesses people across the countries were made aware of what digital technologies are achieving. What was first tried and tested as an emergency measure as a result of the corona virus can and will be retained in many areas and activities even after the pandemic.
The pandemic-related surge in digitisation will change production processes forever. As soon as people start communicating and working digitally with each other and go shopping and exchanging online, and as far as smartphones, I-pads, computers and apps dominate everyday life, work and leisure, they will enter the data playing field where algorithms, artificial intelligence and self-learning systems take the lead and set the rules. Then everything and anything becomes measurable, evaluative and comparable always and at all times.
In the age of data and digitisation optimization, standardisation and scaling become the new measure of all things. What has proven itself as being efficient and effective somewhere, will be copied everywhere. Completely new connections of centrality and decentralization will be possible. Many things are programmed, specified, organized and implemented uniformly. Some things, however, are done, produced or printed out on site, at home or at the customer’s premises.
“Hybrid” will be the new magic word of the post-corona era. It refers to the intelligent crossing of standardisation (to take advantage of the benefits of standardisation, i.e. economies of scale) and diversity (to meet different individual needs) into new hybrid forms. In education, face-to-face and distance learning are combined. In business, companies will mix homework and compulsory attendance into modern work and time models, thus enabling employees to better combine work and family life and to achieve a balanced relationship between work and leisure. Firms will develop core competencies at their headquarters and then market them worldwide but will specify cultural characteristics and individual customer requirements on site in accordance with their own specific needs.
However, data economy and digitization are accompanied by new existential threats to the population and economy. Hacker attacks on Twitter accounts of prominent entrepreneurs and politicians in the US and EU or the suspected attempt by Russia to illegally access computers of Corona researchers in the US are warning shots enough.
There are also viruses in cyberspace that can cause immense damage. And of course, they endanger human lives and societies just as much as bio-chemical viruses. Attacks from cyberspace have a devastating effect when entire cities are left without electricity, light or water. It would destroy normal life, when the data centres of public service utilities, mobility and communication centres or intensive care units of hospitals are paralyzed because the Internet is paralyzed. And the damages would be immense when stock exchanges and banks remain closed because online transactions cannot be verified in electronic data and payment transactions.
Security in cyberspace will be one of the central state functions in the post-Corona era. It is important to prevent a virtual pandemic from following the biological pandemic. Security in cyberspace will be expensive and in turn demand additional tributes from the taxpayer. Insufficient protection against cyberattacks and cybercrime, however, is far more expensive. It can destroy livelihoods and, in the worst case, call into question the stability of Western societies.
The article is an outcome of a research project “Remeasurement of the (World) Economy” sponsored by the NORDAKADEMIE STIFTUNG Elmshorn/Hamburg.
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