The COVID-19 crisis has amplified profound fault lines in the functioning of global value chains (GVCs), and in the global economy more in general, starkly exposing the fragility of the current porduction model and the divisions and inequalities of the world we live in. Global annual growth this year might fall by 4.3 percentage points according to the UNCTAD’s latest projections and economies in all regions of the world will shrink. All at a time when timely production of critical products is more important than ever, amid a pandemic that has locked down vast parts of the planet and limited economic activities in an unprecedented way.
To face Covid-19 and prepare for the post Covid-19 world, it is now key to define the rules that will limit the damage to the existing supply chains and, more importantly, using this opportunity to rebuild them better and in a fairer way, increasing what developing countries stand to gain. In order to do so, governments need firms to internalize the various externalities and spillovers that their investment and innovation decisions produce for the communities and societies where they operate, by introducing explicit regulatory and governance frameworks.
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