The role of global value chains in the impact of the Covid-19 pandemic on the world economy (original) (raw)
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Economic and Social Effects of the COVID-19 Pandemic and the Future of Global Value Chains
Economic and Social Upgrading in Global Value Chains, 2022
The COVID-19 crisis is unique in many respects and, as the IMF (2021, p. 43) puts it: "a crisis like no other". A global economic contraction occurred that was unprecedented in its speed and depth. Support packages were put together in some parts of the world that also dwarfed anything seen up to that point. Also, the massive differences in how countries, sectors and people were affected by the crisis is unusual in many respects. What is already visible is that national government policies are playing a significant role during the pandemic and its impact on social groups. In this comment, we will briefly assess the impacts of the COVID-19 pandemic up to now (July 2021) and discuss possible future trends for the reorganization of global value chains (GVCs). First, we will give an overview of the pandemic's economic and social effects as well as various policy responses by governments and international organizations. Second, we will discuss the effects of the pandemic on GVCs as well as different scenarios of further restructuring dynamics in GVCs. To conclude, we will argue that although the COVID-19 pandemic might not fundamentally alter the current globalization model, it could serve as a catalyst for already ongoing changes.
Global Value Chains After the COVID-19 Crisis
2021
Global Trade and Innovation Policy Alliance 1 Authors Hubertus Bardt, German Economic Institute (IW), Germany, bardt@iwkoeln.de Stephen Ezell, Information Technology and Innovation Foundation, USA, sezell@itif.org Tomas Flores, Libertad y Desarrollo, Chile, tflores@lyd.org Natalia González, Libertad y Dessarollo, Chile, ngonzalez@lyd.org Chris Hattingh, Free Market Foundation, South Africa, chrishattingh@fmfsa.org Sean Randolph, Bay Area Council Economic Institute, USA, sean@bayareacouncil.org Giacomo Bandini, Competere, Italy, gbandini@competere.eu
COVID-19 and Global Value Chains: Trigger for a Sound Economic Order?
Coronavirus and its Societal Impact - Highlights from WZB Research, 2020
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Changes in Global Value Chains and the Covid-19 Pandemic
Teorija in Praksa, 2020
The consequences of the Covid-19 pandemic might restrict the future development of global value chains (GVCs), especially impacting small and export-oriented economies The article discusses factors of the resilience and stability of GVCs and identifies the most important structural changes that may deepen following the global pandemic and digitalisation We apply a new measure of value chain participation that allows for the simultaneous examination of global and domestic integration of economies/industries into GVCs Analysing the changes in value chain structure during the past recession may indicate the consequences of the current crisis The past global recession shows a short-term increase in the domestic value chain share that mirrors the reduction in the GVC share, as well as the relatively high stability of simple value chains in the EU and in Slovenia However, several manufacturing sectors in Slovenia saw a high and permanent increase in the share of complex value chain in the...
COVID-19 AND GLOBAL VALUE CHAINS: A REVIEW OF EMERGING LITERATURE
The Covid-19 pandemic has had an unprecedented impact on the world by accounting for more than 100 million cases and over two million lost lives, while also hitting the economies very hard by leading disruptions in production chains and international trade, rising unemployment rates and substantial contractions in GDPs. A review of recent literatures reveals that global value chains has played a central role on transmitting and amplifying the devastating global economic impacts of the Covid-19 pandemic. Considering the shocking experience of the Covid-19 pandemic that manifests the necessity of achieving robustness and resilience of supply chains, together with the ongoing trade tensions; it is likely that global value chains in a post-pandemic world will be subject to a reconfiguration in terms of renationalization, regionalization and supplier diversification.
Double-hit scenario of Covid-19 and global value chains
Environment, Development and Sustainability, 2020
Due to the Covid-19 pandemic, labor force is greatly confined by quarantine (social distancing), and limited units of labor and capital are available at the workplace. Millions of employees have lost their jobs and are facing financial hardships. Likewise, capital owners have become illiquid and possibly insolvent within months. This cycle seems to continue for other factors of production as well. Even after lifting quarantines, the global trade might take months (years) to return to its actual potential. Using the GTAP-VA model, the present study simulates the impact of the double-hit scenario of Covid-19 on the global value chains and identifies production losses in different sectors of the world economy.
Disruptions in global value chains due to COVID-19: stylized facts and policy lessons
The Philippine Review of Economics, 2021
This paper provides an early assessment of global value chains (GVCs) amid the disruptive effects of COVID-19 on world trade. Using the Asian Development Bank’s updated Multiregional Input-Output Table, key indicators were estimated to identify important stylized facts about the contraction of GVC activities in 2020. Econometric models were also estimated to analyze the disruptive effect of COVID-19 outbreaks and stringent containment measures on GVC trade. The input-output analysis confirms that all major economic sectors suffered large losses, especially services. However, the bulk of the decline in overall GVC trade can still be traced to lower backward transactions in manufacturing. On the aggregate level, stronger backward GVC participation was associated with relatively milder contraction while the opposite was observed for forward participation. The regressions showed that positive growth of GVC trade was less likely in sectors with relatively larger exposure to foreign downs...
COVID-19 Outbreak and Its Global Economic Effects
COVID-19 Outbreak and Its Global Economic Effects, 2020
COVID-19 Outbreak, which threatens world health with its global effect, draws attention to its uncertainty on economies. As the biggest one since World War II, this situation is both a health crisis and an economic crisis, which has occurred simultaneously while affecting many countries. For this reason, it is predicted by many international institutions that the epidemic may cause serious contractions on some variables such as foreign trade, investment decisions, income, and employment. In this basic framework, the possible economic effects of the epidemic on economies are tried to be analyzed. First of all, the negative effects that may be experienced in macroeconomic balances are addressed, and thereafter some predictions are made for possible structural changes in the future. Within the scope of the study, based on the fact that the reflections of the contraction process can take two years, state interventions and protectionist policies may increase worldwide. Accordingly, it can be judged that economies may get closed inward compared to former periods, and therefore the globalization process can be questioned as well. In other words; as the most meaningful and effective model of the future, the economic structure takes place, where the public share gets increased rather than the market and capital-oriented structure. In that model, the protection and continuation of life is the main driving force; the income is distributed fairly and equally among economic actors. On the other hand, the digitalization process, minimizing the amount of labor in the production process, would be deeper in the world. Therefore, governments should improve their investments and policies in accordance with these technological and structural changes.
2020
This electronic monograph is divided into ten chapters. The objective of this electronic monograph is to show the lessons and challenges of a pandemic contagious diseases on the economic performance of any country and the world economy. This first chapter explains each chapter of this electronic monograph. The second chapter intends to establish conceptual foundations of analyzing the economic dimensions of regional or global emerging and endemic infectious disease events. The Integral Massive Infections and Contagious Diseases Economic Simulator (IMICDE-Simulator) attempts to capture all symmetrical and asymmetrical strategic graphical movements in real space and time. The model investigates the epidemic novel coronavirus COVID-19 identified in Wuhan City, Hubei Province, China. The third chapter analyses the impact of Globalization as one of the main reasons of the fast spread of COVID-19 worldwide. We divided globalization into three large pillars how Globalization works worldwide followed by: (a.) the institutional, legal, and political approach of Globalization; (b.) the massive transportations systems and the development of information communication technologies (ICT’s); (c.) the free trade liberalization and labour mobility. In the fourth chapter, we evaluate the impact of COVID-19 (Coronavirus Disease 2019) on four strategic sectors - i.e. tourism, air transportation, international trade, and electricity consumption of the Chinese economy. To do so, we develop and apply a new model - the economic crisis from massive contagious infection diseases simulator (ECMCID-Simulator). The simulator deploys a macro-dynamic analysis under different possible scenarios to evaluate the impact of a massive contagious infection disease on the short-run economic performance of a country. The chapter fifth formulates an analytical framework to understand the spatial temporal patters of of epidemic disease occurrence, its relevance and implications to economic activity, their impact on the vulnerability of different populations, and to develop public health policy decisions on disease prevention issues. The chapter suggests a paradigm shift: a new multidimensional geometric approach to capture all symmetrical and asymmetrical strategic graphical movements in real space and time. The sixth chapter graphically demonstrates the patterns of economic recession from any epidemic in the world, i.e. the COVID-19 contagious infectious disease. This can generate economic waves on different markets (countries or regions). This chapter evaluates the way in which an economic recession from the COVID-19 contagious infectious disease damage can simultaneously affect five different markets economic hotspots viz. East Asia (Japan, South Korea, Taiwan, and Hong Kong), China, ASEAN, United States and the European Union (EU). The chapter seventh intends to establish conceptual foundations of analysing the economic dimensions of regional or global emerging and endemic infectious disease events such as the case of COVID-19. The COVID-2019 Global Economic Impact Simulator (the COVID-2019 -GEI-Simulator) attempts to identify the COVID-19 transmission parameters and forecast its trajectories. According to chapter eighth the damage of COVID-19 from China to the rest of the world economy is costly and countless. The levels of COVID-19 contagious and death cases are increasing exponentially worldwide. Therefore, this document proposes a new form of compensation (or payoff) from China to all countries affected by COVID-19 around the world. This new form of compensation system can help to solve partially the deep damage of COVID-19 through the application of a tariff to all Chinese products and services. This new tariff is entitled "The Massive Infection Epidemic Diseases Economic Losses Tariff (MIEDEL-Tariff).” The chapter ninth proposes the national pandemics contingency plan for any country based on the application of the minimum food, water & medication storage for a massive pandemic quota (ψ-Quota). Consequently, the main objective of the ψ-Quota is to calculate the approximate amount of food, water, and medicines storage amount annually in case of a possible massive pandemic crisis. Finally, the chapter tenth shows the large damage of COVID-19 on the world economy that is forcing to a deep restructuration domestically and internationally of our economies from now. This chapter suggests a Post-COVID-19 reconstruction model is called “The National Domestic Economic Auto-Sustainability Model (NDEAS-Model).”