The Covid-19 Pandemic Global Risks and Uncertainties
Challenges in Global Value Chains After Covid-19 Pandemic: a ReviewNurtaç Yıldırım
In the past decades, dynamics of the global economy has significantly shifted in parallel to the remarkable advances in the technological, political, and institutional environments. One of the most important global changes originated from a shift in global production settings. Production stages are now divided at the international level and each stage is carried out in different countries where they are connected to each other on global value chains (GVCs). However, these settings were hit by the COVID-19 pandemic which led governments and companies to take extraordinary measures to overcome this health crisis. As a result of the direct impacts of the pandemic and indirect effects of some of these measures, global value chains were harshly hit, increasing overall economic disruptions. In this study, the transformation created by GVCs in the international production and trade structure will be discussed along with the advantages of GVCs, and the increasing vulnerability posed by this structure. The impact of crisis processes on this volatile structure, the mechanisms of GVCs to spread the effects of the crisis to the international production and trade structure, and the effects of the COVID-19 pandemic on GVC activities will also be evaluated. It can be pointed out that increasing dependence of countries on a single input supplier is one of the leading factors contributing to the spread of any disruption in the chain to the other parts. Countries should differentiate their supplier base to diversify the risks, along with strengthening their technological infrastructures, governance issues, and bureaucratic structures to prevent risks and capture advantages of participating in GVCs.