Sébastien Miroudot, Senior Trade Policy Analyst, Trade and Agriculture Directorate, Organisation for Economic Cooperation and Development, Seoul
Thomas Wieser, EU Representative, Panel on Resilience, G7, Vienna
Michał Krupiński, Senior Advisor at Warburg Pincus LLC, Member of the Board of GLOBSEC
Gordon Bajnai, Partner and Chairman of the Global Advisory Board, Campbell Lutyens; Member of the Board of Directors, GLOBSEC
Led by: Soňa Muzikárová, Chief Economist, GLOBSEC Policy Institute, Bratislava
It is important to not link disruptions in global value chains strictly to Covid although the pandemic has accelerated pre-existing trends. One of these is an increase of scepticism of globalization due to both individual countries’ political reasons as well as the changing role of the international landscape such as the changing role of China which is resulting in less interdependence of the world. As a result, there is an increase in the role of states compared to the role of private markets where the power of regulations overrules the forces of the market, as expressed by Gordon Bajnai, Partner and Chairman of the Global Advisory Board at Campbell Lutyens.
The pandemic has caused a shift in demand for certain goods such as medical goods, face masks, ventilators and vaccines and lockdowns have increased demand for goods and services needed for working from home. However, the global value chains have adjusted. The challenge often was in increasing production and to do this, we need global value chains. For example, it would not have been possible to develop and distribute the Covid vaccines so quickly and on such a large scale without global value chains.
“We have to understand that resilience is not about avoiding disruption but it is about recovering quickly” - Sébastien Miroudot
Governments have a role in ensuring the continuity of supplies through specific regulations, strategic stockpiles, and contingency plans. The pandemic has increased the rationale for coordination within Europe. There is a gap in collective risk identification mechanisms, a lack of institutional capacity, and a lack of agile and quick reactions. Institutional reforms are needed to address these issues with the EU. On top of that, both resilience and robustness could be further improved by international cooperation.
Many countries are having a look at their national approaches but as highlighted by Thomas Wieser, the EU Representative of the Panel on Resilience of G7, the risk is that they will focus on solving the current crisis rather than the next one. The worry is that we have seen lots of protectionist measures and divergence rather than systemic convergence. These issues might be exacerbated when we start focusing on necessary policies such as carbon pricing as there is currently no global standard. We need better international mechanisms to identify risks, address the common vulnerability, share good practice and have a forum for policy coordination in times of crisis.