Deglobalization, Reconfiguration, or Business as Usual? COVID-19 and the limits of reshoring of globalized production

The COVID-19 pandemic has seemingly reinforced the need for geographic restructuring and a rehoring of production, as it has demonstrated the vulnerability of globalized production. This article provides an assessment of the impact of COVID-19 on the geographies of production, looking particularly at developments in the automotive, electronics, and clothing industries. Criticizing overly simplified prospects for deglobalization, we argue that the COVID-19 pandemic cannot be interpreted as a trigger for a general retreat from global manufacturing but rather as an event that is reinforcing long-standing shifts toward more multipolar production and consumption. While the issue of global production network resilience has attracted great attention in corporate strategies and industrial policies, re- or nearshoring of production networks is only one of several strategies and it has hardly been implemented so far. Ongoing disruptions and, above all, geoeconomically/-politically and environmentally motivated policies could well lead to a shift in investment and sourcing patterns. Political efforts in this direction are, however, limited by pre-existing global economic development paths and the balance of power associated with them

Assessing the adjustment implications of trade policy changes using TRIST (tariff reform impact simulation tool)

TRIST is a simple, easy to use tool to assess the adjustment implications of trade reform. It improves on existing tools. First, it is an improvement in terms of accuracy because projections are based on revenues actually collected at the tariff line level rather than simply applying statutory rates. Second, it is transparent and open; runs in Excel, with formulas and calculation steps visible to the user; and is open-source and users are free to change, extend, or improve according to their needs. Third, TRIST has greater policy relevance because it projects the impact of tariff reform on total fiscal revenue (including VAT and excise) and results are broken down to the product level so that sensitive products or sectors can be identified. And fourth, the tool is flexible and can incorporate tariff liberalization scenarios involving any group of trading partners and any schedules of products. This paper describes the TRIST tool and provides a range of examples that demonstrate the insights that the tool can provide to policy makers on the adjustment impacts of reducing tariffs.Trade Policy,Free Trade,Debt Markets,International Trade and Trade Rules,Economic Theory&Research

Financialization, price risks, and global commoditychains: Distributional implications on cotton sectorsin Sub-Saharan Africa

The functioning of commodity markets has changed related to processes of financialization that involve two major developments – the rise of financial interest on commodity derivative markets through the increasing presence of financial investors and the changing business models of international commodity trading houses and the increasing importance of these markets in price setting and risk management since the liberalization of national commodity sectors. A critical question is how these global financialization processes affect commodity producers in low income countries via the operational dynamics of global commodity chains and distinct national market structures. This paper investigates how global financialization processes influence how prices are set and transmitted and how risks are distributed and managed in the cotton sectors in Burkina Faso, Mozambique and Tanzania. It concludes that uneven exposure to price instability and access to price risk management have important distributional implications. Whilst international traders have the capacity to deal with price risks through hedging in addition to expanding their profit possibilities through financial activities on commodity derivative markets, local actors in producer countries face the challenge of price instability and increased short-termism – albeit to different extents deepening on local market structures – with limited access to risk management