Global Value Chains (GVCS) and COVID-19 Pandemic

Abstract

The article discusses the status of Global Value Chains (GVCs) amid the COVID 19 pandemic and their influence on world economic development. Key aspects of the world economy and GVCs transformation in the context of the COVID 19 are studied. A brief overview of the economic literature and development of theoretical frameworks and concepts of Global Value Chains as well as globalisation and “slowbalisation” is provided. The article focuses on estimates of key indicators published by international bodies, such as the United Nations, UNCTAD, UNIDO, OECD, WTO, IMF and others. Various think tanks and other institutions such as World Economic Forum, European Central Bank, McKinsey Global Institute, Deloitte, NBER have been analyzing GVCs’ contribution to the transmission of the COVID 19 macroeconomic shocks across countries. A quantitative assessment of participation in GVCs for countries and regions based on available data in the Trade in Value Added (TiVA) database are discussed. Specific attention is paid to the key GVCs indicators, including exports of intermediate goods and foreign value added share of gross exports. Special attention is paid to the economic downturn in the United States and characteristics of GVCs involving enterprises located in Wuhan (China), which is very important to many global supply chains. Various kinds of long-term trends and structural changes are analyzed. It is noted that gross domestic product (GDP) of the USA in constant 2012 prices (ignoring inflation) fell in the second quarter of 2020 compared to the previous quarter by 31.7% but only 9.1% compared to the first quarter of 2020. It is concluded that improving supply chains’ recovery ability will be an important factor for restoring global economic activity in post-coronavirus times.