“The Covid-19 pandemic has left in its wake a global economy damaged beyond what was thought possible a decade ago. The globalised nature of the 21st century global economy is a key component in terms of the dynamics, and effects, of the virus. This column presents an analysis of the importance of global value chains, both during the pandemic and throughout the recovery process. The results of the study suggest that increased localisation could do more harm than good, and that the international network of interconnected supply chains remains key to producing essential goods and services.“
A recent article on VOX EU by Christine Arriola, Przemyslaw Kowalski, and Frank van Tongeren responds to the proposition of some policymakers and analysts that value chains should be made less global and more local, in order to provide greater security against disruption, such as that experienced during the COVID-19 pandemic. It argues that the research from OECD supports the conclusion that localization may fail to achieve efficiency or security and that such challenges as this global health crisis demonstrate the importance of meeting challenges together, not separately.
The full article is available online here: https://voxeu.org/article/localising-value-chains-after-covid-would-add-economic-losses-and-make-domestic-economies-more-vulnerable
More content from VOX EU and CEPR on COVID-19 can be found in their topic dossier here: https://voxeu.org/pages/covid-19-page