Looking forward, the growth of digital flows will slow down again as the pandemic-induced spike fades. But the 2020 digital flows boom will have accelerated two longer-run shifts in the business environment. First, it expands possibilities for services trade. The Covid-19 crash course in remote work is teaching companies ways of working that can enable them to tap more into foreign talent pools. Second, the expansion of cross-border e-commerce can help smaller companies go global, but it also means that companies of all sizes need to be on the lookout for new competitors riding this wave into their markets.

4. People Flows

While trade, capital, and information flows all had positive roles to play in the pandemic response, personal mobility had to be restricted to curb transmission of the virus, prompting this year’s unprecedented decline in people flows. The number of people traveling to foreign countries fell 74% in 2020. International travel is not expected to return to its pre-pandemic level before 2023.

Business trips were just 13% of international travel before the pandemic, but they play key roles in facilitating trade, investment, and the management of global corporations. Travel supporting companies’ external sales and business development agendas is expected to recover before travel for internal company meetings and participation in conferences and trade shows. This implies that managers in multinational corporations should pay special attention over the medium-term to effects of travel restrictions on internal team functioning and learning and innovation. Remember that global teams are more vulnerable than domestic teams to misunderstandings and breakdowns of trust, especially after long periods without in-person contact.

So, the pandemic has not halted most types of international flows. Nor has it clearly turned the tide toward deglobalization moving forward. The DHL Global Connectedness Index 2020 report also looks for evidence of the global economy fracturing into rival blocs. U.S.-China decoupling has advanced somewhat since the onset of the trade war in 2018, but these economies remain highly intertwined. China’s share of U.S. trade spiked during the pandemic, and American multinationals such as Walmart, Tesla, Disney, and Starbucks continue to invest there. Moreover, the average distance across which countries trade has been on a modest rising trend since 2016. This casts doubt on the contention that we are seeing a big shift from globalization to regionalization.

Many governments have also taken major steps to open markets over the past year. The Regional Comprehensive Economic Partnership (RCEP) was signed in November, promising to simplify trade across a swath of the Asia-Pacific region that encompasses almost one-third of the global economy. The US-Mexico-Canada agreement (USMCA) entered into force in July, replacing the North American Free Trade Agreement (NAFTA). And trading under the African Continental Free Trade Agreement (AfCFTA) began on January 1, 2021.

These moves are supported by public opinion data. Majorities across several countries want more international cooperation, and polling in the U.S. shows record-high support for globalization in general and for immigration specifically.

The bottom line for business is that Covid-19 has not knocked globalization down to anywhere close to what would be required for strategists to narrow their focus to their home countries or regions. Corporate globalization was never easy, but if international opportunities and competitive threats mattered for a company before the pandemic, they will surely continue to matter in 2021 and beyond. And since countries that connect more to global flows tend to grow faster, we need more rather than less globalization to accelerate the recovery from Covid-19.