Skip to main content

Global tensions will spur value chains rethink

Firms are rethinking their strategies on global value chains, which may change markedly in years to come

Global value chains (GVCs) will shorten; changes to the concentration of value-added and geography will vary by sector

Source: World Investment Report, UNCTAD, June 2020, Oxford Analytica


Environmental concerns, tech advances, US-China tensions and COVID-19 disruptions and protectionism are inspiring firms to reassess their global value chains (GVCs).

Reshoring shortens GVCs and raises geographic concentration; higher-tech GVC-intensive firms are likely to consider this. Regionalisation will shorten GVC length but not lessen geographic fragmentation. Raw materials, and sectors processing goods regionally (food and chemicals), will benefit.

Tech advances including automation and 3D printing will promote multiplication, shortening GVCs and concentrating the value added. Textiles and higher-value services will see more diversification, especially entrants, although services trade is less regulated than manufacturing.

Shorter GVCs may imply less FDI. If competition rises among countries, political stability, institutions, infrastructure and skills will increase in importance.


  • Reordering GVCs is not trivial for firms, nor is it readily susceptible to policy prescription.
  • Tech advances will speed up the transformation of manufacturing and services, benefiting firms able to respond fast to changes in demand.
  • Boosting redundancy to increase resilience will be cost-prohibitive for many firms; supply vulnerability will persist.
  • Entry barriers to trading services will fall for developing nations, but regulatory divergence will persist, or could widen


Popular posts from this blog

Menon meets Karzai, discusses security of Indians

Kabul/New Delhi/Washington, March 5 (IANS) India Friday said that the Feb 26 terror attack in Kabul will not deter it from helping rebuild Afghanistan as National Security Adviser Shivshankar Menon met Afghan President Hamid Karzai in Kabul to review the security of around 4,000 Indians working in that country. Menon, who arrived here Friday morning on a two-day visit, discussed with Karzai some proposals to bolster security of Indians engaged in a wide array of reconstruction activities, ranging from building roads, bridges and power stations to social sector projects. The Indian government is contemplating a slew of steps to secure Indians in Afghanistan, including setting up protected venues where the Indians working on various reconstruction projects will be based. Deploying dedicated security personnel at places where Indians work is also being considered. Menon also met his Afghan counterpart Rangin Dadfar Spanta and enquired about the progress in the probe into the Kabul atta

Iran is losing the game to regional actors in its strategic depth

Rethink before It’s Too Late Iran is losing the game to regional actors in its strategic depth –Afghanistan. By Houman Dolati It is no more a surprise to see Iran absent in Afghanistan affairs. Nowadays, the Bonn Conference and Iran’s contributions to Afghanistan look more like a fading memory. Iran, which had promised of loans and credit worth five-hundred million dollars for Afghanistan, and tried to serve a key role, more than many other countries, for reconstruction and stabilization of Afghanistan, is now trying to efface that memory, saying it is a wrong path, even for the international community. Iran’s empty seat in the Rome Conference was another step backward for Afghanistan’s influential neighbor. Many other countries were surprised with Iran’s absence. Finding out the vanity of its efforts to justify absence in Rome, Iran tried to start its

Pakistani firm whose chemicals were used to kill US troops seeks subsidy for Indiana plant

By Jennifer Griffin, Justin Fishel Published March 22, 2013   A Pakistani fertilizer maker whose chemicals have been used in 80 percent of the roadside bombs that have killed and maimed American troops in Afghanistan is now seeking U.S. taxpayer subsidies in order to open a factory in Indiana.  The request appears to be on hold pending further review, but the situation has stirred outrage in Congress, where some accuse the Pakistani government of halting efforts to clamp down on the bomb-making.  For the past seven years, the U.S. government has known that the raw material calcium ammonium nitrate, or CAN, is making its way across the border into Afghanistan where the Taliban use it to fuel their most deadly weapons, namely the improvised explosive device. IEDs have long been the number one killer of U.S. and coalition troops.  The material largely comes from Pakistani fertilizer maker the Fatima Group. But the Pakistani government has stymied attempts by the Pentagon to stop the