Covid-19 and Deglobalization

The Reshoring of Manufacturing

One of the largest and most significant aftershocks of the Covid-19 pandemic of 2020 will be felt in the manufacturing sector globally. The pandemic is set to accelerate the global trend towards deglobalization. A range of factors had begun to change the pattern of global production and global supply-chains ahead of 2020, such as rising wages in globalized industrial centers such as China and rapidly declining costs of industrial robots.

The Covid-19 pandemic has laid bare the risks of the world’s reliance on complex, interdependent global supply-chains. In April, as the pandemic gathered pace massive shortages of personal protective equipment, medicine, and other essential equipment along with shutdowns of factories, borders and trade routes represented a nightmare scenario for the complex supply-chains that govern global commerce today. At its peak, the port of Los Angeles (the largest port in the United States) reported a 50% drop in inbound container volume.

Firing an Empty Gun: Shortages and Shut Borders

As nations shut their borders and turned their attention inward to deal with public health crisis, many of the most developed economies in the world found their response crippled by the inability of their hollowed out industrial…