Pandemic, War, and Global Value Chains (Abdelaaziz Ait Ali, Otaviano Canuto, Mahmoud Arbouch)

Abstract: “The Covid-19 pandemic and the war in Ukraine have exposed the vulnerabilities of global value chains (GVCs) to localized shocks, leading to calls for re-shoring and near-shoring of production activities. Detractors of globalization have long criticized GVCs for compromising the resilience of supply chains in pursuit of cost optimization. However, the trade-off between efficiency and resilience may be viewed differently by GVC managers and industrial policy makers. This paper explores the impact of relying on fragmented GVC on vulnerability to adverse shocks and presents some empirical evidence regarding the recovery of the manufacturing sector after the Covid-19 shock. The findings suggest that the optimum point in the efficiency-resilience trade-off may not necessarily be achieved through reshoring or nearshoring, and that limited, and sector-specific strategies may be more effective in enhancing global value chains resilience.”

Keywords: GVC, re-shoring, near-shoring, manufacturing.

Pandemic, War, and Global Value Chains

About the authors
Abdelaaziz Ait Ali is principal Economist and head of the Research Department at the Policy Center for the New South (PCNS) | a.aitali@policycenter.ma

Otaviano Canuto is Senior Fellow at the Policy Center for the New South (PCNS) and Nonresident Senior Fellow at The Brookings Institution | canuto.otaviano@gmail.com

Mahmoud Arbouch is Economist at Policy Center for the New South (PCNS) | m.arbouch@policycenter.ma

See also:

“Matchmaking Private Finance and Green Infrastructure“, opinion piece by Otaviano Canuto about the future of investments in sustainable infrastructures, which is based on his notes and contributions to our second webinar, the Jean Monnet Atlantic Network 2 – Dialogues. In his words, “The world faces a huge shortfall of infrastructure investment relative to its needs. With a few exceptions, such as China, this shortfall is greatest in emerging and developing countries.”