Penn on the World after COVID-19 The Post-COVID-19 World Will be Less Global and Less Urban

Penn on the World after COVID-19 is a joint project of Penn Global and Perry World House. We've asked some of Penn's leading faculty, fellows, and scholars to imagine what the global pandemic will leave in its wake.

Geoffrey Garrett is Dean, Reliance Professor of Management and Private Enterprise, and Professor of Management at the Wharton School. Follow Garrett on Twitter.

For the past four decades, globalization and urbanization have been two of the world’s most powerful drivers. Global trade increased from under 40% of the world’s GDP in 1980 to over 60% today. Over the same period, the number of people living in cities more than doubled to over 4 billion people today—more than half the world’s population.

COVID-19 will reverse both of these trends, increasing the distance both between countries and among people. Some will laud these changes for increasing safety and resilience. But a world that is less global and less urban would also be less prosperous, less stable and less fulfilling.

Here are two core predictions about the world after COVID-19:

Less global, more isolated. Even before COVID-19, the decades-long trend toward ever-more globalization of trade, investment, supply chains and people flows was beginning to grind to a halt. We began to look closer to home in terms of the products we produce and consume, the people with whom we interact, and where we get our energy and our money.

In retrospect, we will come to view the years right before the 2008 financial crisis as “peak globalization.” Since then, the combination of recession, inequality and populism has created a growing anti-globalization and anti-immigration consensus in western countries, exemplified by the US trade war with China.

The reaction of developed economies to the coronavirus will only strengthen this consensus, as all things international will be viewed as incurring unnecessary and dangerous risks. What was a growing “anti-globalization” consensus is poised to crystalize into a “de-globalization” reality.

We are being told this de-globalization will make us all more resilient. But it will also make us less prosperous—with less choice and higher prices. It may also make us less secure, as international cooperation will decrease and the potential for international conflict will increase.

Less density, more distance. Urbanization is likely to be the other major casualty of the coronavirus. Unlike globalization, the trend of ever greater-urbanization was unaffected by the global financial crisis. Even America—the land of all things suburban—joined the global march into cities. People were attracted to cities not only for economic opportunity but also for the urban lifestyle.

After coronavirus, people will be more fearful of crowded trains and buses, cafes and restaurants, theaters and stadiums, supermarkets and offices. Crowded spaces are the lifeblood of cities. But now crowds are seen as major health risks. People who have the ability to exit the city will increasingly be tempted to do so. People who cannot leave will feel at increased risk, hunker down, and reduce their movements and contacts. It is hard to think about Manhattan without the subway and 10-deep pedestrians on Fifth Avenue. But that may be the increasing post-COVID reality.

De-urbanization would harm economic growth because cities generate enormous scale economies and have proved to be remarkably effective incubators of creativity and innovation. This could be particularly true in developing economies where the movement of people from rural areas to rapidly expanding cities has been perhaps the key driver of poverty reduction. But the shrinking of cities will have other adverse effects too, from reducing cultural vibrancy and cosmopolitanism to exacerbating climate change. In addition to being more productive, cities also tend to be more environmentally sustainable.

A world that is less global and less urban would be far less appealing to me, personally. But it is also a world that would hurt economic prosperity, reduce shared understanding among disparate people, and increase the prospect of conflict among them.

Our immediate reactions to COVID-19 will lead us to want both to de-globalize and to de-urbanize. But we must take fully into account the profound longer-term costs of doing so. Globalization and urbanization generate challenges we must confront, all the more so in a post-coronavirus world. The solution is to manage them, not to reverse them.

The views expressed in Penn on the World after COVID-19 posts are solely the author’s and not those of Penn, Penn Global or Perry World House.