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Global Value Chains in the Era of COVID-19

Differently from the previous natural disasters, COVID-19 is not specific to a country or an industry, but a pandemic that affects the global connectivity of goods and services. Furthermore, the so-called bullwhip effect aggravates the negative impacts from the demand shock, where an initial demand shock tends to be magnified as one moves upstream. There have been considerable debates over GVCs in the era of COVID-19. 


The future of GVCs will be different from the pre-COVID-19 era. The contraction of GVCs will be accelerated by reshoring and onshoring of the offshored production facilities by multinational enterprises. At the same time, GVCs will be also consolidated around the regional/local hubs closer to end markets as international trade will become more regional than global. The future configuration of GVCs will depend upon the dynamic factors including digital transformation and supply chain risk management to a larger extent than other factors in the long term

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