Reshaping the policy debate on the implications of COVID-19 for global supply chains
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COMMENTARY
Reshaping the policy debate on the implications of COVID-19 for global supply chains Se´bastien Miroudot Organisation for Economic Co-operation and Development, 2 rue Andre´-Pascal, 75775 Paris Cedex 16, France Correspondence: S Miroudot, Organisation for Economic Cooperation and Development, 2 rue Andre´Pascal, 75775 Paris Cedex 16, France e-mail: [email protected]
Abstract Disruptions in global supply chains in the context of the COVID-19 pandemic have re-opened the debate on the vulnerabilities associated with production in complex international production networks. To build resilience in supply chains, several authors suggest making them shorter, more domestic, and more diversified. This paper argues that before redesigning global supply chains, one needs to identify the concrete issues faced by firms during the crisis and the policies that can solve them. It highlights that the solutions that have been proposed tend to be disconnected from the conclusions of the supply chain literature, where reshoring does not lead to resilience, and could further benefit from the insights of international business and global value chain scholars. Lastly, the paper discusses the policies that can build resilience at the firm and global levels and the narrative that could replace the current one to reshape the debate on the policy implications of COVID-19 for global supply chains. Journal of International Business Policy (2020). https://doi.org/10.1057/s42214-020-00074-6 Keywords: COVID-19; international business; global value chains; risk management; resilience
Received: 26 August 2020 Accepted: 17 September 2020
With COVID-19, the debate has re-emerged on the vulnerabilities of an interconnected world where goods are produced in complex value chains that span across borders. International production and supply chains were criticized because of the economic disruptions they allegedly created when a pandemic interrupted trade and the movement of people across countries, adding to existing fears and concerns about globalization (Kobrin, 2020). Reshaping global supply chains, and possibly making them shorter, more domestic, or more diversified, were therefore proposed to bring some resilience into production networks (Coveri, Cozza, Nascia, & Zanfei, 2020; Javorcik, 2020; Lin & Lanng, 2020; O’Leary, 2020; O’Neil, 2020; Shih, 2020). This debate builds on several concepts used in supply chain risk management, starting with ‘resilience’1. However, some of the solutions proposed, such as reshoring or diversifying production away from China, may be motivated by a different policy agenda than risk mitigation (Evenett, 2020).
Reshaping the policy debate on the implications of COVID-19
Figure 1 Import intensity of production (2015) and projected fall in GDP in 2020 for G20 economies. Source: OECD Economic Outlook and TiVA database.
In this paper, I argue that before reshaping global supply chains, the debate itself needs to be reframed and more solidly grounded in business reality and in lessons from the lite
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