No. 618 - COVID-19 and global value chains: the ongoing debate

The pandemic has fueled a debate on the role of global value chains, which are key elements of the international economic system. The question is whether they have made participating countries more vulnerable to global shocks, whether this could lead to a reshoring of productive activities and whether economic policies should intervene to encourage such a trend. The work presents a literature review on the main themes of this debate.

Economic mechanisms typical of global chains induce inertia in the plant location choices by multinational firms. In the case of Covid-19, this indication is confirmed by recent surveys. Nonetheless, firms could be induced to reshore if it were subsidized, but measures that influence the strategies of multinationals would be sub-optimal in order to foster greater resilience of value chains and protect the losers of globalization.

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