October 21, 2021
Introduction
Organised by the Academy of International Business (AIB) this session examined the impacts of the pandemic on Global Value Chains (GVCs). It discussed the effects of the pandemic on sustainability, resilience and changes in the landscape of such value chains.
In particular, the session explored questions such as the role of GVCs for sustainable recovery, and strategies to make GVCs more resilient to future shocks. Panellists also discussed the conditions that facilitate or impede the global diffusion of sustainable practices by multinational corporations. The session compared GVCs before the pandemic with the trends emerging in the post pandemic scenario.
Session Highlights
The session began with a discussion on the economic pressures unleashed by the pandemic and how they had altered the structures of GVCs. Panellists observed how the pandemic had renewed attention to the importance of speedy delivery of goods. It was noted that there was such a significant reliance on GVCs before the pandemic that firms had greatly reduced the inventories they held. Discussions examined the extent to which the pandemic had altered the thinking regarding dependency on GVCs.
The Panellists observed that mitigating factors to reduce GVC risks included a greater role for emerging technology based solutions such as blockchain based contracts, and Artificial Intelligence and predictive analysis.
The discussions proceeded to address issues of social and environmental responsibility in the context of GVCs. Panellists observed that there was greater pressure on firms to be more socially responsible. This had increased with the greater regulatory role being played by governments, and examples such as regulations dealing with conflict minerals were cited in the discussions.
A most discussed issue was the sustainability of GVCs. The Panellists noted that reshoring does not lead to resilience and sustainability of GVCs. Producing all goods in all countries leads to greater environmental costs. The diversification under GVCs promotes greater economic and environmental efficiencies. Greater trade, investment and globalisation were recognised as parts of the solution, not the problem. It was observed that interconnected economies have a greater capacity to absorb abrupt economic shocks.
The Panellists noted several strategies towards ensuring more resilient and sustainable GVCs. These included:
- A closer relationship with primary suppliers,
- Greater international cooperation,
- Increasing the number of suppliers, and
- Diversification of supply sources.
Opening
- Ari Van Assche, Full Professor, HEC Montréal
On the panel were:
- Farok J. Contractor, Distinguished Professor, Management and Global Business Department at Rutgers Business School, and President of the Academy for International Business
- Luke Fiske, Doctoral Student, Queen’s University
- Lilac Nachum, Professor, Baruch College
- Sebastien Miroudot, Senior Trade Policy Analyst, Organisation for Economic Cooperation and Development (OECD)
- Scott Paul, Director, Natural Resource Sustainability, Taylor Guitars
Moderator
- Ari Van Assche, Full Professor, HEC Montréal