Globalization, digital transformation, and geopolitics are the three main forces that had profound influence on humankind this century. However, Covid-19 diverted the direction of these forces sharply. “The pandemic has limited globalization, boosted digitalization, and intensified the geopolitical tension between the US and China” says The Economist. In these initial days of the new year in lockdown many are curious about the potential effects of those forces in Mongolia and wonder how we should respond to them. The economies of many countries, like ours, are hit hard by the pandemic resulting in increased unemployment and poverty, and thereby widening the inequality. This upcoming year, life will be divided into two parts: pre-pandemic and post-pandemic.
Diminishing Globalization
Globalization is defined as the ever-increasing interdependence between the global economies, cultures, and peoples, which stems from the transnational flow of goods and services, technology, investments, populations, and information. RAND Corporation (R.S. Cohen) asserts that even a pandemic cannot stop this interdependence from expanding, which had reached an enormously high level before all of this unfolded. Indeed it is likely that globalization will not be reversed, but its speed will decrease instead. Countries will continue to depend on each other to provide natural resources, human labor, technology, and equipment. People will still be interested in traveling abroad, where their friends, family, and work resides. Following the wide-scale vaccinations, the customs and border control requirements and standards between countries will be augmented at first.
Many businesses in retail and hospitality will close in 2021. Companies will transition to remote work as much as possible, allowing many people to work from home. Air pollution will decrease thanks to the decline in public transport usage. The concentration of population in major cities will decline, leading to a decline in the prices of properties such as office spaces and housing units. Poverty will spread extensively. All these projected trends are inevitable in Mongolia, and our capital city, in particular, will experience them vividly.
Boost in Digital Transformation
The digital transformation will speed up. All social, political, and economic interactions are transitioning to an online format, not by months but on a daily basis. Brand new models for production, service, and marketing are emerging. New technologies will provide more opportunities for small to medium enterprises, making payments and ordering delivery entirely online. Digital money will rapidly replace paper money. The domination of the digital economy is imminent. The more digitalized a society becomes, the more opportunities there are for young people. Numerous young people will find themselves involved in the sectors of public governance, education, health, environment, business, and entertainment.
Mongolia will implement e-governance even faster. The recent adoption of QR code usage within two weeks in Ulaanbaatar is a prime example. The 2020 application “E-Mongolia” provides 180 of the 592 government services – services that an average citizen uses at least once in 5 years. The remaining services will be covered by the app in 2021. Starting from 2022, an AI-powered reminder function will be added for the services a citizen needs (for example, an extension of passport validity). The voice recognition app “Chimege,” known as Mongolian Siri, is already helping many disabled citizens. However, there is an urgent need to adjust governmental structures, combine data, and facilitate the compatibility between software in ministries, agencies, and authorities, and most importantly, to secure data privacy.
Considering the development of online issuance of special permits, the time has come for associated agencies to collaborate rather than to suppress data exchange between these agencies. Moreover, property locations, mailing addresses need to become uniform and clear. In the health sector, for example, the development of a universal data pool for individuals would save time and many lives, as it would allow doctors at any hospital to access the diagnosis and lab results of the patient. A pressing concern is that personal data belongs to the individuals themselves; thus, it must be protected in many ways. In Estonia, for instance, private information can only be used with the owner’s permission, while the owner can also track who accessed his or her data.
Intensified Geopolitical Tensions
It has become increasingly obvious that our world faces a division into two major spheres of influence: the US’s and China’s. The new president of the US said he would not stop the tariff war and that the US will partner with its allies to compete with Chinese tech companies. Protecting the human rights of Uighurs was also mentioned. The digital world is becoming divided as well. Similar to the household electric usage differing as 220 and 110 volts, the infrastructure for 5G technology in the US and China is being developed differently. Today, the technology of the Chinese tech company Huawei dominates the continents of Asia, Europe, and Africa. Governments of Europe, North America, and the government of India have announced their decisions to redefine their strategic sectors and implement structural changes to dramatically reduce their dependence on Chinese imports for all products: particularly medical equipment and tools.
Of all major economies, only the Chinese economy has shown an increase which is projected to reach 7% in 2021. This increase will be realized without budget deficit or debt like the US, EU, and many others. Russia has the biggest landmass in the world, but its economy ranks 11th, after Italy and before South Korea. Russia’s military might be impressive, but the main sectors of its economy revolve around raw materials such as oil and natural gas. As China’s ties with other major countries strain further and the imports from those countries are blocked, China is more prone to import natural resources from Russia. Thus, Russia will soon become their biggest supplier of natural gas, oil, coal, and copper. Therefore, our northern neighbor becomes our biggest competitor in exports of copper and coal, which is vital to Mongolia’s income. Moreover, Russia ranks 4th globally for copper reserves (61 million tonnes) and 2nd in the world for coal reserves (160 billion tonnes).
There are talks of G-7 recruiting Australia, South Korea, and India to become D-10 – a coalition of democratic countries allied against tyranny as the global geopolitics divide into two poles. Mongolia needs to formulate a carefully studied policy that provides the guidelines on adapting and reacting to the new circumstances, diversifying the economy smartly, and exporting the right products and services to the world.
2021.01.06
Trans. by Riya.T and Munkh-Erdene.D