From How the World Really Works (Vaclav Siml, 2022) p132-3
Arguments for reshoring many kinds of manufacturing in order to gain greater resilience and reduce unexpected disruptions are not new. The progress of globalization and the actions of multinational companies have been questioned and criticized since the 1990s and, more recently, these sentiments became part of electoral discontent in some countries, most notably in the UK and the US.™ But as the COVID-19 pandemic unfolded, a remarkable lineup of institutions began to publish analyses and appeals for the reorganization of global supply chains. The OECD looked at the policy options to build more resilient production networks that would rely less on imports from distant places and that could better withstand global trade interruptions. The United Nations Conference on Trade and Development considered repatriating manufacturing from Asia to North America and Europe and a shift to shorter, less fragmented value chains extending from design through manufacturing to distribution within a single country or a single economic unit — that would produce a higher concentration of value added. Swiss Re produced a report about the de-risking of global supply chains (rebalancing them to strengthen resilience), And the Brookings Institution saw the reshoring of advanced manufacturing as the best way to create good jobs.”
Questioning and criticizing globalization has gone beyond narrowly ideological arguments, and the COVID-19 pandemic provided additional powerful arguments based on irrefutable concerns about the state’s fundamental role in protecting the lives of its citizens. That role is hard to play when 70 percent of the world’s rubber gloves are made in a single factory, and when similar or even higher shares of not just other pieces of personal protective equipment but also of principal drug components and common medications (antibiotics, antihypertensive drugs) come from a very small number of suppliers in China, and India.” Such dependence might fulfill an economist’s dream of mass output at the lowest possible unit cost, but it makes for extremely irresponsible – if not criminal – governance when doctors and nurses have to face a pandemic without adequate PPE, when states dependent on foreign production engage in dismaying competition for limited supplies, and when patients around the world cannot renew their prescriptions because of the slowdowns or closures in Asian factories.
And security concerns created by excessive globalization go far beyond the health-care sector. Rising US imports of large Chinese transformers create worries about the availability of spare parts and about the potential for future grid destabilization, and there is little need to repeat the arguments about the much-publicized ban on Huawei’s participation in the 5G networks of some Western nations. Not surprisingly, the reshoring of manufacturing could be the wave of the future, both in North America and in Europe: a 2020 survey showed that 64 percent of American manufacturers said that reshoring is likely following the pandemic.
Will this sentiment persist? As I never fail to stress, I do not forecast, and hence I am not offering any specific numbers concerning the retreat or continuation of the pre-COVID levels of globalization in general, or of the reshoring of manufacturing capacities in particular. I just try to appraise the range of the most likely outcomes, and while in recent years it has looked increasingly as if most aspects of globalization will not soar to new highs, in 2020 this notion became entirely unexceptional: we may have seen the peak of globalization, and its ebb may last not just for years but for decades to come.
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