COVID-19 and the ‘Golden Arches’

The coronavirus pandemic has affected more than 150 countries so far and infected nearly two lakh people worldwide. The panic and anxiety that it has created among people is causing a run on goods like toilet paper and masks in many countries. SARS (Severe Acute Respiratory syndrome), which also originated in China, infected nearly 8,000 people in 20 countries, mainly in South East Asia, but had a higher mortality rate. What is the difference between 2003 and 2020? Is it that more countries have got integrated with the rest of the world in the last 17 years?

The coronavirus has become a glocal issue where global and local issues are interconnected. Critics are quick to blame the spread of the virus on globalization. There have been many waves of globalization in the past. The genesis of the recent wave of globalization can be traced to the fall of Communism, best symbolized by the fall of the Berlin Wall in 1989. While there is no denying the fact that globalization in the 21st century has contributed to the overall growth of the world economy and reduction in poverty, there have been negative aspects to it as witnessed in the huge disruptions that coronavirus has caused to stock markets and economies across the world.

In his 1999 book titled “The Lexus and the Olive Tree: Understanding Globalization,” Thomas L. Friedman proposed a capitalist theory, first published by him in the New York Times in December 1996, called the “Golden Arches Theory of Conflict Prevention”. The golden arches, which is the logo of McDonalds, the world’s largest fast food giant with outlets in 120-odd countries. McDonald’s has been expanding its business in new countries almost every day – it opens a new outlet every few hours. This invasion is a sign that countries are opening up and integrating with the global economy rapidly. In fact, there is the Big Mac index to measure the purchasing power parity between countries. Created in 1986, the index uses the price of a burger as the benchmark. As a metaphor, Friedman stated in the book “No two countries that both had McDonald’s outlets had fought a war against each other”. Friedman contended that if the middle class in the country is strong enough to support McDonald’s outlets, it would become a McDonald’s country and may not be interested in fighting wars.

Though this observation seems farfetched, it underlines the fact that the more integrated a nation is with the global ecosystem, the more likely is the possibility of McDonald’s opening an outlet in that country and less likely is the possibility of that country going to war with other countries. Friedman was trying to point out that due to globalization, countries that have strong economic ties have much to lose by declaring war on each other.

McDonald’s is just a metaphor in the book. Since the publication of that book, along with McDonald’s, other American MNCs such as Facebook, Apple, Amazon, Netflix and Google (called the FAANG), have also been operating in these countries as they make economic progress and so there is more incentive for these countries to be at peace rather than at war with each other. Countries, companies and consumers see the benefits of international trade and acknowledge the fact that globalization makes the world a better and safer place. While Halloween becomes a part of the culture in India, Yoga becomes a global phenomenon and the flagbearer of Indian culture.

Initially, when such global giants decide to enter a country, it produces a backlash from locals. Locals who feel that they do not benefit from globalization, those who feel that indigenous cultures are threatened and fear that they corrupt young minds vehemently oppose the opening of these outlets or online businesses. The sweatshops set up by these MNCs in new countries also exploit poor workers, pay low wages and have long working hours. Renowned fashion brands such as H&M, Nike and Adidas are accused of running such sweatshops.

In a subsequent book titled “The World Is Flat: A Brief History of the Twenty-first Century,” Friedman analysed globalization in the early 21st century, recounting a journey to Bengaluru (then still Bangalore). He contended that by providing human capital and infrastructure to the IT industry, India, along with China, had become an integral part of the global supply chain. The title is a metaphor for viewing the world as a level playing field in terms of trade and commerce, wherein countries, companies and individuals have to remain competitive to survive in a global market in which geographic divisions are becoming increasingly irrelevant.

As globalization became the dominant feature of the world, marked by free flow of goods, services, capital and culture, it was also characterized by large-scale migration across borders, whether it was of Indian software professionals to the US or of illegal immigrants crossing over to the US or Europe. While globalization is here to stay, festering issues like illegal immigration and pandemics like coronavirus present roadblocks on its path. How globalisation shapes up post-coronavirus remains to be seen.

(The writer is a CFA and a former banker and currently teaches at Manipal Academy of Banking, Bengaluru)