Paper Example: Global Chain Value

I am writing to inform you of the greatest challenge that COVID-19 poses on global chain value and possible solutions to address the same. The global value chain is an international platform that organizes and supports international trade, investments, and production (OECD, 2020). Over time, globalization has encouraged firms to restructure their operations globally by outsourcing and offshoring activities. The spread of the global pandemic of COVID-19 has posed a significant threat to this business procedure. National governments around the world, like the United States, have imposed countrywide lockdowns and banned international travel to flatten the spread of COVID-19.

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The Coronavirus pandemic has significantly challenged the global value chain in medical supplies and equipment. As the crisis spreads across the globe, there has been critical demand for medical gear like face masks, gowns, gloves, and other personal protective equipment. The primarily large dependency on the international supply of medical gear and devices has surged their demand globally (Gonzale, 2020). Such strain has imposed frustrations on global value chains during the pandemic, and the supply shortage has fuelled high trade interdependency concerns in the chain. For instance, before the pandemic, face masks were produced in China, and when COVID-19 hit the nation, the risks of outsourcing these gear from China increased. According to the OECD, 2020, it was observed that the global shortage of face masks resulted from an unpredicted demand strain.

However, to reduce the impact of COVID-19 on the global value chain, the following solutions could be applied. Manufacturers of medical gear should improve their production amenities to increase the global supply. These firms also need to diversify on their suppliers of resources by having various alternative suppliers for each input (OECD, 2020). Next, international travel and transportation should prioritize the movement of medical equipment related to COVID-19 (Gonzale, 2020). The transportation sector should commit to prioritizing on delivery of COVID-19-related products where resources will reach manufacturers and end products hit hospitals and patients on time. Global value chains could also decrease the time required for production by meeting requests of companies that require time-sensitive supplies and maintaining an open trade environment (OECD, 2020). Additionally, firms and national governments should internalize tasks that international suppliers had been undertaking by replacing foreign suppliers with domestic ones (Qiang et al., 2020). Finally, the World Bank could offer development funding to assist investments, provide financial aid, and help strengthen developing countries' public health response.

References

Gonzale, A. (2020). Yes, medical gear depends on global supply chains. Here’s how to keep them moving. Trade and Investment Policy Watch, 27. https://www.piie.com/blogs/trade-and-investment-policy-watch/yes-medical-gear-depends-global-supply-chains-heres-how-keep.

OECD. (2020). COVID-19 and global value chains: Policy options to build more resilient production networks. OECD Policy Responses to Coronavirus (COVID-19), 3. http://www.oecd.org/coronavirus/policy-responses/covid-19-and-global-value-chains-policy-options-to-build-more-resilient-production-networks-04934ef4/.

Qiang, C.Z., Li, Y., Liu. Y., Paganini, M., & Steenbergen, V. (2020). Foreign direct investment and global value chains in the wake of COVID-19: Lead firms of GVCs. World Bank Blogs. 21. https://blogs.worldbank.org/psd/foreign-direct-investment-and-global-value-chains-wake-covid-19-lead-firms-gvc.