The EU's COVID‐19 policy response and the restructuring of global value chains

Abstract

The COVID pandemic highlighted the interdependence which the expansion of global value chains (GVCs) has fostered across the world economy. Perceived fragilities in the supply of key products led to a growing global debate about the wisdom of high levels of reliance on overseas sources, with several commentators suggesting that the pandemic will foster ‘de‐globalisation’. Russia's invasion of Ukraine and the economic disruption which accompanied it, have only served to strengthen concerns about interdependence, especially in Europe. In this paper, we draw on analysis of EU policy responses and GVC governance theory to inform the question of whether it is likely that there will be a major reduction in the geographical reach of GVCs due to the COVID‐19 pandemic. We argue that, although changes in certain GVCs are likely to be fostered (and reinforced) by the response to the pandemic, it does not make widespread ‘de‐globalisation’ inevitable. Some GVCs will likely reduce in geographic scope, becoming more regional or national, especially in industries which are considered ‘strategic’. However, pressures to de‐globalise and their practical impacts will vary significantly across countries and industrial sectors, depending not only on public policy responses, but on variations in the governance of GVCs themselves.

Mapping potentially risky import products in Africa

“…Over half of Africa's international trade is embodied in GVCs (Montfaucon, Nigatu and Majune, 2022). At the same time, GVCs have continued to expand, fostering interdependence on a small number of key players, making the transmission of negative shocks of crises on trade inevitable (Curran and Eckhardt, 2023). This suggests that there is a need to understand the mitigation mechanism of the GVC trade to protect the supply of potentially risky products.…”