Discussion on economic globalization during covid 19
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MD4099ExampleEssay_1.docxMD4099 Assessment 1: Individual Essay
Essay Question:
‘’COVID-19 is uprooting economic globalization’’ (WEF, 2020). Discuss the impact of the novel coronavirus pandemic (Covid-19) on international trade for ONE of the countries listed below: UK
India
China
USA
Japan
Discuss the economic implications of Covid-19 for this country, including: trade relations with main trading partners, FDI inflows and outflows and the country’s economic growth forecast. Drawing on the economic principles covered in this module, assess how the country has responded to the health pandemic with their economic policies I.e. examples of supply-side and/or demand-side economic policies.
Example Essay Extract
This essay is going to critically assess the economic impact of the coronavirus pandemic to one specific country. In these critical discussions, this essay will focus upon India and assess how the health pandemic has affected Indian trade, FDI trends and economic policies. The points made in this essay will be supported by relevant economic theory, financial and economic measures (such as FDI and GDP) as well as draw from wider literature to result in a critical appraisal of the situation Comment by Victoria Jackson <School of Management>: An attempt at an introduction – this is informing the reader of what the essay will be about Comment by Mark Stephen Peter Rees <School of Business>: It is also something to potentially revisit at the end - has the essay achieved these aims, and what were the main findings?
Firstly, this essay will now provide an overview of globalisation and international trade before moving on to specifically focus discussions upon the UK. Globalisation has been defined as Comment by Victoria Jackson <School of Management>: Signposting the reader
The global Foreign Direct Investment flows have contracted during the covid-19 pandemic. Foreign Direct Investment (FDI) provides a means for creating direct, stable and long-lasting links between economies (OECD, 2008) but the covid-19 health pandemic has meant that this international investment (FDI) has contracted by 40% so far in 2020 (WEF, 2020). However, much of this contraction will be felt more in emerging economies, rather than in developed economies, so FDI trends are projected to differ according to different types of economies (OECD, 2020). The reasons offered for reduced FDI flows to developing countries, concern the sectors that have been severely impacted by the pandemic, which include manufacturing sectors, and these account for a larger share of FDI in emerging economies than in developed economies (Moody’s Analytics, 2020). Applying this to the OLI framework (Dunning, 1973), multinational enterprises (MNEs) choose to invest in particular countries depending on their location advantages (such as growth potential, market size, as well as social and policy-oriented characteristics). Part of the decision to invest in a country therefore, involves an appraisal of what location opportunities there might be, but if there are a lack of advantages in that location and growth potential is declining, this will influence Foreign Direct Investment inflows to that economy. Comment by Victoria Jackson <School of Management> [2]: Attempt at defining a key term /concept Comment by Victoria Jackson <School of Management> [2]: referencing using the Harvard system – evidence of engagement with related reading and providing support for the points being made in the essay. Comment by Victoria Jackson <School of Management> [3]: Attempt to apply to relevant framework / theory and referenced appropriately
Applying the above to India, India is classified as an emerging economy (McKinsey, 2018) and as such would be set to receive reduced amounts of FDI and international trade during the covid-19 pandemic as investors and MNEs look to review and potentially shorten their Global Value Chain’s (GVCs) to protect themselves from supply-chain disruptions during the pandemic. India was ranked as 30th on WEF global manufacturing index (2018) and it was one of the high growth sectors in India. Prior to the global pandemic, the Prime Minister of India, Mr Narendra Modi, launched the ‘Make in India’ program to place India on the world map as a manufacturing hub (IBEF, 2018). However, once the pandemic hit India, the economic implications began as supply chain material disruptions occurred, as several states in India went into lockdowns with intermittent relaxations in place (IDC, 2020). Comment by Victoria Jackson <School of Management> [2]: Attempt to apply this to the country in question that the essay is focusing upon Comment by Victoria Jackson <School of Management> [2]: Brief mention of an industry example in the country being discussed – although more details would be required Comment by Victoria Jackson <School of Management> [2]: starting to address the economic impact of Covid to India
The next part of the essay will start to look at India’s response to the covid-19 pandemic in terms of the proposed domestic and foreign economic policies. Comment by Victoria Jackson <School of Management> [2]: Sign posting the reader…..guiding them through the essay as to what is being addressed now and reference back to the essay question
According to Keynesian economic theory, government intervention is necessary to moderate recession periods in an economic trade cycle (IMF, 2014). In times of recession, demand-side economics reduces, in that the demand from customers drops as their overall spending goes down given high unemployment rates often seen during recession periods. The uncertainty caused by Covid-19 as well as unprecedented national and regional lockdowns, mean that customer spending in India has reduced. A report by ET Money (2020) reveals that overall spend by Indian consumers between March and June 2020, was reduced by nearly 40% from the level of last year. As a result, under the Keynes approach to encouraging more demand for products and services (demand-side economics), the Finance minister of India announced an INR 1.7 trillion (~USD 22 billion) relief package for Indian citizens in view of COVID-19 outbreak (KPMG, 2020) to encourage spending and lift demand from domestic markets. Comment by Victoria Jackson <School of Management> [2]: Discussing economic trade theory Comment by Victoria Jackson <School of Management> [2]: Adding in details – such as data and research data to support the points being made
For international trade however, in 2019-20, India’s trade with South Asia, Asean (Association of Southeast Asian Nations), the Gulf nations, China, and North America reduced (Chakraborty, 2020). The essay will now look more closely at India’s international trade amidst the covid-19 pandemic. Comment by Victoria Jackson <School of Management>: Identification of India's main trading partners / trade bloc
