Globalization dynamics in times of crisis

Abstract

The slowdown in globalization preceded by the 2008–2009 financial crisis and accompanied by stagnation in cross-border flows of goods and investments ignited the scientific debate about globalization shutting down. This paper assesses globalization on the basis of the observed flows of investment, data, population and trade for the period of 1998–2018. To do so, we propose the Index of Globalization (IG) that allowed us to highlight the key trends in the global economic development. Our assessments show that there was a sustained decline in the trade and investment components of globalization. The information flow demonstrates a slowdown in developed economies, but its growth rate remains stably high. The IG dynamics indicates a significant decrease in times of crises. In contrast to the 2008–2009 financial crisis and the outbreak of SARS in 2003, the COVID-19 pandemic has already caused a more considerable reduction in international flows of factors of production and global GDP. The changes in society behavior adopted during the COVID-19 spread are forecast to have long-term consequences. In terms of globalization, the pandemic has positively affected the dynamics of the information flow by increasing volumes of Internet traffic and intensifying the use of communications. The research results demonstrate that in the case of a significant slowdown in the trade, investment and population flows, an increase in the information flow will not have a substantial impact on globalization processes and will be unable to break the overall trend towards a decline in the Index of Globalization.