We are living in interesting times. Brexit just happened a few days ago. Earlier last month, President Trump proudly proclaimed the success of his policies in Davos. Leaders of some other countries are now looking to follow the examples set by the leaders of the USA and UK. Many are calling this the decade of deglobalization.
In this context, it is ironic that the coronavirus, first identified in the Chinese city of Wuhan is now reminding us that we live in a global world. Our problems are common and the solutions have to be found in a coordinated way globally.
As of 2nd February, the coronavirus continues to spread at a rapid pace. More than 14,000 people have been infected globally and more than 300 deaths have been reported. These numbers are expected to rise significantly in the next days. More than 100,000 people worldwide are at risk of infection and the virus has been confirmed to be present in more than 25 countries.
While much remains to be understood about the characteristics of the coronavirus, it is believed that the virus is easily transmitted through human to human contact, even before symptoms of the infection are visible. Given the global movement of people in today’s world, it is hard to control the spread of the virus without close global coordination. Some nations such as the USA and Australia have taken the extreme measure of restricting the entry of foreigners who have visited China in the recent days but it is not clear whether these measures are sufficient and if so, the length of time for which they should be applied.
Leaders of universities and business schools are impacted by the the global movements of mainly students, but also facutly and staff. A confirmed case of an infected student has been reported on a UK campus and it possible that other campuses may be affected in the coming days. As students return to our schools to start their Spring semesters, we need to be more aware of global best practices in containing the Coronavirus. We need to educate all members of our campus communities to be more aware and to take precautionary measures in case of any doubt.
The economic impact of the coronavirus is still unfolding. While stock market jitters have resulted in significant declines in many indices, the overall impact of the virus on the global economy is still unknown. Given the large scale presence of China in global supply chains, stoppage of production in Chinese factories will certainly have an impact on prices and the availability of many products in global markets. Tourism related industries around the world will be impacted severely as people travel less and also the number of Chinese tourists venturing abroad decreases significantly.
On the macroeconomic level, it should be borne in mind that China has been and continues to be the largest contributor to global growth. If we extrapolate what happened during SARS in 2002-2003 then, as this new pandemic continues, the forecast is that the Chinese economy will lose 1% of its annual growth with a contribution to the global slowdown of 0.25 and 0.35%. As the US dollar strengths in the current situation, emerging currencies could fall, the yuan included.
China is clearly making all possible efforts to contain the coronavirus. Online videos of more than 50 cranes on the outskirts of Wuhan preparing the land to build two hospitals with more than 1,000 beds in 10 days, shows the resolve of China and its capacity for undertaking large infrastructure projects (it is worthwhile to note that the five largest construction companies in the world are all Chinese). However, China alone cannot solve the Coronavirus crisis. China has appealed for help from the European Union and many other countries are helping with medical supplies and logistical supplies. Research scientists around the world, including in the USA are working in close collaboration to help understand the new virus and to find a solution.
As we hope that the coronavirus will be contained soon and the tragedy of infections and deaths will end soon, we should not forget the lesson that the virus has taught us. We are living in a globalized world and this fact cannot be ignored or turned back. We are all affected by global problems and we all need to pitch in to find a common solution. What happens in one country affects others. The world is one and it time we strengthen our resolve to continue to make globalization work for the good of all. I hope that our membership in the Global Business School Network is a small but important step in this direction.
Soumitra Dutta is a Professor of Management at Cornell University and the Chair of the Board of Directors for GBSN. Previously he was the Founding Dean of the SC Johnson College of Business at Cornell and Chair of AACSB Intl. He also co-chaired the Global Future Council on innovation ecosystems for the World Economic Forum.