Lessons from past disruptions to global value chains

The highly complex system of global value chains (GVCs) relies on the smooth functioning of global trade, which has been severely affected by COVID-19. In addition to the drop in demand and supply, containment measures are hampering the flow of goods between countries and increase trade costs. Previous research on disruptions in global trade reveals that policies that reduce time and uncertainties along GVCs are essential for rapid recovery. A multilateral approach to policy making and intergovernmental cooperation will lead to greater policy effectiveness in containing both the economic shock and the pandemic. At the same time, national policies and firm-specific initiatives can support a quick recovery and increase resilience to future shocks in supply chains.