End of globalisation post COVID-19 – and the rise of self-sufficient cities
Will we see the emergence of self-sufficient cities and signals of deglobalisation after COVID-19?
May 22, 2020, Hanna Veltheim
In our new article series, we zoom in on some specific areas and industries in the world that will emerge after the COVID-19 pandemic. This first instalment focuses on deglobalisation and the self-sufficient city post COVID-19. The article is based on an analysis by Futures Platform with insight from two futurists: Futures Platform’s Content Director, Dr Tuomo Kuosa and Aleksi Neuvonen, Co-founder of Demos Helsinki.
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To start with, it needs to be made clear that COVID-19 has not caused, nor will it cause, globalisation to end. What the pandemic may do, however, is to speed up the development that was already in the cards.
According to Tuomo Kuosa, the trade war between the US and China, globally rising nationalism and Brexit are a few signs of what was already brewing: globalisation has not made life better for everyone and people had started voting against it.
“Brexit, from its part, even brought up some signals implying that if this development is left unchecked, the end of nation-states and re-emergence of city-states could take place in the distant future,” he says.
Simultaneously, businesses had been in the process of realising that the utopia of globalisation does not deliver for every industry, all the time.
“During the past 7 years or so, especially large businesses have started wondering if the optimisation of cost through global supply chains is always the best choice or whether it would actually make more sense to bring production closer to the buyer to make it quicker and more secure,” Aleksi Neuvonen describes.
He also adds that global trade never really took off in many fields such as expert services, probably in part due to differences in standards and legislation.
“Global recession and slowbalisation seem like certain things, now, with the way the pandemic has exposed the vulnerability of national and global supply chains.”
Dr Tuomo Kuosa, Content Director, Futures Platform
And then there was the emerging drive for self-sufficiency. On the one hand, it is in-built in the nationalist-conservative and protectionist ideologies and on the other hand driven by the trend of hyperlocalisation.
The link between slowbalisation and the idea of self-sufficiency is complicated. Tuomo Kuosa brings up Brexit again:
“The people of London voted to remain while the people in the countryside voted to leave, which made the mayor of London suggest that perhaps the City of London, which is far more wealthy and productive than the rest of the UK, should declare independence and stay in the EU.”
Hyperlocalisation, in this context, stands for a very local and communal way of living. Importantly, it is closely connected to the circular economy – especially the concepts of localised food production and energy self-sufficiency. “Signals suggesting emerging hyperlocalisation include, for instance, trials of regional currencies such as the Brixton pound in London,” Tuomo Kuosa says.
So, all of this was in motion before the pandemic. And then it came, creating a wave of impacts across the society.
“People outside the healthcare sector are certainly following the global shortage of protective equipment, no doubt wondering what it would take for the same to happen in their industry.”
Aleksi Neuvonen, Co-founder, Demos Helsinki
A bounce back to normality or deglobalisation post COVID-19
According to Aleksi Neuvonen, the COVID-19 pandemic is a lot about previously identified risks coming true at force for the first time.
“The global shortage of personal protective equipment for healthcare is probably the most glaring example. People outside the healthcare sector are certainly following it closely as well, no doubt wondering what it would take for the same to happen in their industry.”
On broader terms, the pandemic is severely damaging global trade and economy.
“Global recession and slowbalisation seem like certain things, now, with the way the pandemic has exposed the vulnerability of national and global supply chains,” Tuomo Kuosa says.
A lot depends on the eventual depth of the economic turmoil. And the depth is likely to depend on the length of the pandemic and, at the moment, nobody knows for sure how long COVID-19 is going to stick around.
“The question is: shall it be a V-curve – a gloomy period with a bounce back to normality once the crisis is over? Or are we going to see five or more years of global recession and protectionism?” Tuomo Kuosa asks.
He believes that in the case of the latter, the pandemic could even launch an entirely new geo-economical era in history. If it did, what would it look like in practice?
Heavy industry may return, but not to the way it was
Tuomo Kuosa suggests that outsourcing of production to low-cost countries may come to an end as governments start favouring supply chains that improve domestic security of supply and economic resilience.
“Countries need to boost their own declining economies and unemployment rates with any means they have.”
Aleksi Neuvonen agrees, highlighting that this will not mean things will return to how they were decades ago.
“The logic of manufacturing is based on is certainly going to be re-evaluated. As manufacturing is more automated now, for instance, it will not create as many jobs as it used to. Similarly, service-based economies feel the impact of this slowdown acutely and consumer behaviour may change permanently, so we need to think what it means in terms of where the future jobs will be.”
Over time, the inevitable next step will be deglobalisation post COVID-19, Tuomo Kuosa believes. In terms of global trade, the world could be divided into three competing economic blocks, for instance, those led by the US, EU and China.
“They would have very limited inter-block trade. Japan, India, Brazil, Russia and others would collaborate with the blocks less formally. Cities and regions could potentially have more autonomy inside these blocks than they used to have during the era of strong nation-states.”
Continental blocks make sense in the sense that supply chains based on them are more secure than genuinely global ones, while still allowing specialised production and a sufficient amount of trade.
“As people start demanding local security of supply, suddenly national stockpiles, supply chains and especially decision-making may start feeling like a bottleneck.”
Dr Tuomo Kuosa, Content Director, Futures Platform
Self-sufficient city post COVID-19, with local food and energy
In the case of a prolonged pandemic and recession, it is likely that food security will be disrupted in many parts of the world – the first alarms on the topic have already been sounded.
In most countries, neither the pandemic nor the impacts of it are felt evenly across the entire country. Inevitably some areas are better off and some are worse. This will mount tensions.
“As people start demanding local production and security of supply, suddenly national stockpiles, supply chains and especially decision-making may start feeling like a bottleneck,” Tuomo Kuosa describes.
This may once again fuel protectionism, but fragmenting countries even further. Federal states could start to crumble, unions dissolve, and even nation states split into city states and independent regions.
Dire as it may sound, however, this deglobalisation post COVID-19 and these associated impacts can bring about some positive changes as well.
According to Aleksi Neuvonen, the idea of bioregions is a hundred years old, but an event like this could be that final push making it the most viable solution.
“Bioregion is a concept where the starting point for city planning is that the city and its surrounding region are a sustainable, living organism that produces most of its food and energy self-sufficiently,” he describes.
This could mean big initiatives in the field of vertical farming for the self-sufficient city post COVID-19. But it could also mean something far simpler – such as people growing part of their own food, or communities supporting and being served by their local farmers.
The same idea could be applied to other industries as well, resulting in new kind of business models such as public-private-NGO collaboration and fragmented ownership.
“Culture production is an example of a field that could be set up in a new way – people could pay a regular fee that allows them to attend to local cultural events while simultaneously guaranteeing that the service continues to exist,” Aleksi Neuvonen concludes.
“People could pay a regular fee that allows them to attend to local cultural events while simultaneously guaranteeing that the service continues to exist.” Aleksi Neuvonen, Co-fouder, Demos Helsinki
If you want to take a wholesome look at the impacts of the pandemic, check out Futures Platform’s free “World After COVID-19” radar.