The impact of Covid-19 on global value chains
Simola, Heli (15.01.2021)
Numero
2/2021Julkaisija
Bank of Finland
2021
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-202101141046Tiivistelmä
The Covid-19 pandemic has hit international trade hard, creating concerns of serious disruptions to global value chains (GVCs). This paper provides a preliminary analysis on the development of GVC trade during the current crisis with a focus on the internal and external trade of the EU. The potential consequences of the pandemic and other key factors for GVCs are discussed on the basis of a review of recent literature. We find that trade overall has been hit hard by the pandemic, but not GVC trade in particular. The sector of transport equipment makes a notable exception. Our analysis suggests that the Covid-19 crisis will not necessarily lead to a major restructuring of GVCs, but could fortify several trends shaping GVC development. While several factors limit future expansion of GVCs, the requisite complexity and high restructuring costs of existing GVCs make it unlikely that they will be dismantled anytime soon.
Sisällysluettelo
Abstract ..... 3
1. Introduction ..... 4
2. What is a GVC? ..... 4
2.1 Data and measurement of GVCs ..... 4
2.1.1 Analysis based on input-output data ..... 5
2.1.2 Analysis based on trade statistics ..... 6
2.2 Development and drivers of GVCs ..... 6
2.3 Characteristics of GVCs ..... 8
2.4 Economic effects of GVCs ..... 10
3. Long-term trends affecting GVCs and the impact of the Covid-19 pandemic ..... 11
3.1 Long-term trends ..... 11
3.1.1 Protectionism ..... 12
3.1.2 Technological development ..... 12
3.1.3 Climate change and environmental issues ..... 13
3.1.4 China and other emerging economies ..... 13
3.2 Covid-19 and GVCs ..... 14
3.2.1 Trade trends during the Covid-19 crisis ..... 14
3.2.2 Comparison to previous crises ..... 18
3.2.3 Longer-term effects of Covid-19 on GVCs .....20
4. Future development of GVCs ..... 20
5. Summary ..... 22
References ..... 24
Appendix ..... 31
1. Introduction ..... 4
2. What is a GVC? ..... 4
2.1 Data and measurement of GVCs ..... 4
2.1.1 Analysis based on input-output data ..... 5
2.1.2 Analysis based on trade statistics ..... 6
2.2 Development and drivers of GVCs ..... 6
2.3 Characteristics of GVCs ..... 8
2.4 Economic effects of GVCs ..... 10
3. Long-term trends affecting GVCs and the impact of the Covid-19 pandemic ..... 11
3.1 Long-term trends ..... 11
3.1.1 Protectionism ..... 12
3.1.2 Technological development ..... 12
3.1.3 Climate change and environmental issues ..... 13
3.1.4 China and other emerging economies ..... 13
3.2 Covid-19 and GVCs ..... 14
3.2.1 Trade trends during the Covid-19 crisis ..... 14
3.2.2 Comparison to previous crises ..... 18
3.2.3 Longer-term effects of Covid-19 on GVCs .....20
4. Future development of GVCs ..... 20
5. Summary ..... 22
References ..... 24
Appendix ..... 31