Trade and Global Value Chains at the Time of Covid-19

The pandemic we are experiencing is, despite its temporary nature, likely to leave a permanent sign on the global trade system. Measures to contain contagion have revealed the greater vulnerability of firms operating in global value chains (GVCs) and especially those located in first-hit countries. The risk is that production reshuffling made possible by automation will increase, and that nations will see incentives for changing the distribution of manufacturing around the globe. Furthermore, Covid-led trade restrictions may trigger a new wave of protectionism, impacting disproportionately on those countries without the manufacturing capacity to provide their populations with medical products.