In recent years, global industrial and supply chains have faced unprecedented challenges, disrupting the flow of goods and services worldwide. From pandemic-induced interruptions to geopolitical tensions, the stability of these essential networks is under threat. Now more than ever, there is an urgent need for international cooperation to ensure the resilience and efficiency of global supply chains.
Pandemic Shifts Focus from Efficiency to Stability
During the COVID-19 pandemic, production and supply chains across the globe experienced significant disruptions. These interruptions shifted the focus from solely maximizing economic efficiency to prioritizing security and stability. Many multinational corporations have adapted by diversifying their suppliers and sourcing locations, aiming to balance profitability with risk mitigation. A 2023 KPMG survey revealed that while many companies maintained substantial production capacities in the Chinese mainland, they also expanded operations in other markets.
Geopolitical Conflicts Disrupt Logistics and Prices
Geopolitical conflicts further exacerbate supply chain vulnerabilities. The Russia-Ukraine conflict, for instance, led to surging commodity prices for crude oil, natural gas, steel, fertilizers, and grain. European nations faced energy crises, and global logistics were hampered by obstruction and delays. Additionally, recent tensions in the Red Sea region have raised concerns over maritime security, impacting shipping capacities worldwide.
Trade Protectionism Disrupts Global Order
Trade protectionism adds another layer of complexity. The rise in discriminatory trade interventions since 2019 has disrupted the global economic order. Some nations have implemented excessive protective measures, prioritizing national security over economic principles. This over-securitization of industrial and supply chains hampers global development by impeding technological cooperation and slowing the adoption of new technologies.
Economic Fragmentation Threatens Growth
Economic fragmentation poses a significant threat to global growth. Strategies like friend-shoring—trading mainly with countries sharing similar values—can hinder the efficient allocation of resources and underutilize comparative advantages. The International Monetary Fund warns that such fragmentation could reduce global GDP by up to 2.3%, with low-income countries potentially facing losses exceeding 4%.
Challenges to Global Climate Governance
Furthermore, over-securitization challenges global efforts in climate governance. Achieving climate targets necessitates international collaboration in industrial and supply chains to support the green transition. Access to advanced green technologies, such as photovoltaic modules and wind power innovations, is crucial. However, restrictive measures may increase costs and delay progress toward these environmental goals.
Urgent Need for International Cooperation
In light of these challenges, fostering open and cooperative global industrial and supply chains is imperative. International collaboration can enhance resilience, promote shared development, and contribute to a more stable and prosperous global economy.
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Why a cooperative global industrial & supply chains is urgently needed
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