The Global Value Chain in Coronavirus Era: An Impact Approach

Victor Danciu
JEL codes: 
F2 - International Factor Movements and International Business, F6 - Globalization.
Global Value Chains (GVC) play a particular role in the mechanisms of world economy and any disruption of them has strong unwanted consequences on their operation. Our research aims to identify and characterize the negative impact of COVID-19 on GVCs and, in particular , the effects caused by their disruption. The research first analyse the determinants of growing importance and contribution of GVCs. This is subsumed by growing needs of ensuring a more accelerate and qualitative development process in developing countries, in the first place. The increasing use of GVCs has as a result outstanding contributions. General contributions are the result of specific ways in which they improve the economic development. The access to high-tech technologies and export through GVCs bring new elements that support development. The durable firm-to firm relationships along the GVC support the diffusion of technology and access to capital and inputs. Participation in GVC has positive social impacts such as job delivering, income per capita growth, and poverty reduction. GVCS facilitate the access to higher-value added tasks and this could negatively impact the sources of environment deterioration and resources waste. GVCs disruption as a result of COVID-19 action has direct effects of all sectors of any economy in terms of reduction of production, productivity, income, trade, and jobs. This leads to recession and declining GDP, hits the world trade and has a strong negative impact on jobs. At the same time, ccoronavirus pandemic is disrupting all economic sectors. Industries that depend on GVCs such as electronics, automotive, apparel, and textile that have a major contribution to GDP are among the most affected. COVID-19 weakens the GVCs, so for the future they need to be rethought in order to maintain their contribution to the world economy. The main milestones of the proposed GVCs rethinking are strategic approach, higher resilience, reshoring and regulation.
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