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41. Securing Medical Supply Chains with Trusted Trade Partners

Author:
Meredith Broadbent
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
There is bipartisan consensus on Capitol Hill and in the Biden administration regarding excessive dependence on Chinese manufacturing and production. An extension of this is that diversification of supply chains for certain medical products will make U.S. citizens more secure in fighting future infectious diseases. The highly disrupted international economic environment, reeling from supply and demand dislocations unleashed by the pandemic, U.S.-China trade conflicts, and war in Eastern Europe, is prompting certain countries in the Western Hemisphere to seize the occasion to aggressively market themselves as attractive hosts for foreign direct investment looking to move closer to the U.S. market. It is an opportune time for the United States to shape some of the larger forces of global economic disruption, including the movement of investment and production capital. It is time to forge enhanced trade links and diversified supply chains with friends and allies to promote health security, stronger economic and diplomatic engagement, commitments to exchange of data on production, and best practices in fighting disease. This paper breaks down CSIS’s analyses on the capacity for nearshoring in Canada, Brazil, Colombia, and Mexico.
Topic:
International Trade and Finance, Manufacturing, Medicine, and Supply Chains
Political Geography:
North America and United States of America

42. Does aid to the productive sectors cause manufacturing sector growth in Africa?

Author:
Alain Ndikumana
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In recent decades, Africa has received a large share of official development assistance compared to other regions of the world. Using AidData for 2000–13, this paper examines the effects of aid to productive sectors on manufacturing growth in Africa. Econometric results show that increased assistance to these sectors is associated with an increase in growth of the manufacturing sector, with complementary effects from allocations to economic services and infrastructures. However, dynamic panel regression results show a positive long-term link between increased official development assistance to productive sectors and growth of the manufacturing sector. These findings make an important contribution to the economic literature where there is controversy over aid effectiveness at the macro level. The findings also have policy implications for allocation of aid between sectors by making rational trade-offs related to their amount and quality, with emphasis on productive sectors where investment has a major impact on growth of the manufacturing industry.
Topic:
Humanitarian Aid, Economic Growth, Manufacturing, and Development Assistance
Political Geography:
Africa

43. The Opportunities and Challenges of Industry 4.0 for Industrial Development: A Case Study of Morocco’s Automotive and Garment Sectors

Author:
Georgeta Vidican Auktor
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
The development and application of advanced manufacturing technologies (known as Industry 4.0) have been enabled by the fast-paced process of digital transformation. These transformations are expected to have major implications on the reorganisation of global value chains as well as on labour markets. For late-industrialising countries, Industry 4.0 brings both opportunities and challenges. On the one hand, it opens opportunities in terms of improving competitiveness, learning and export markets. On the other hand, however, it may devalue the traditional competitive advantage based on low labour costs, creating difficult-to-tackle challenges on labour markets related to unemployment and new demands for reskilling and upskilling. This paper explores these aspects through the lens of one country, Morocco, and two very different sectors: automotive and apparel. Morocco is a lower-middle-income country that has capitalised on its proximity to Europe and succeeded in developing a dynamic export-oriented automotive industry. The garment sector, which is critical for employment, has been generally neglected by the industrial development strategies. However, Industry 4.0 and its implications on global value chains are likely to affect both sectors, although in different ways. Our analysis clearly shows that interventions must be tailored to the different degrees of technological readiness. The automotive sector is driven more by the needs of major original equipment manufacturers. Therefore, industrial policy should focus on setting the framework conditions, enabling upgrading by investing in research and development, and shifting incentives towards facilitating local suppliers to better integrate with higher-tier suppliers. In the garment sector, policy interventions need to be more comprehensive, from developing a long-term vision to building awareness on technological upgrading and new business models enabled by digitalisation and automation. Moreover, there is extensive scope for industrial policy to contribute to building basic technological and knowledge capabilities all along the garment supply chain and to attracting investment.
Topic:
Development, Manufacturing, Industry, and Global Value Chains
Political Geography:
North Africa and Morocco

44. How to make I.T. in Greek Manufacturing: Evidence and Policy Recommendations

Author:
Sofia Anyfantaki
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Greece has so far failed to shift its production structure towards more complex, high value-added activities, incorporating knowledge-intensive practices. Given the country’s low performance in innovation and knowledge diffusion relative to EU peers, we focus on two specific problem areas of Greek industry: skills and management practices. First, we provide an in-depth look at skills indicators to identify the scope for action, particularly in addressing mismatch. Second, we use firm-level data from the World Management Survey to give an overview of management practices in Greek industry and explore the quality of these practices and their association with productivity. We have two novel findings: first, we document that Greece has the highest overskilling for professional occupations in the OECD; second, we show that Greek firms do best in areas requiring unitary decision making, and worst in areas requiring teamwork and synergies. We complement our analysis with data from a new survey and examine structural characteristics of innovation and technology adoption. The collection of our empirical findings provides valuable input into concrete policy proposals to increase productivity in Greek manufacturing.
Topic:
Science and Technology, Manufacturing, Innovation, Industry, and Information Technology
Political Geography:
Europe and Greece

45. South Korea as a Global Vaccine Hub

Author:
Thomas Byrne, Claire Callahan, Irene Kyoung, and Salome Da Silva Duarte Lepez
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
South Korea aspires to achieve the status of a global vaccine hub as a national strategic policy priority. South Korea’s biomanufacturing industry has ramped up the development and production of therapeutic treatments and vaccines to meet the public health demands of the pandemic. The government has responded by promoting public-private partnerships to expand vaccine production capacity to meet current and future needs domestically and abroad in LMICs. To bolster this strategy, the government has entered into partnerships with international organizations, namely the WHO, ADB, and IVI, by establishing training hub programs for a global biomanufacturing workforce in 2022. This paper examines South Korea’s mechanisms and strategy towards becoming a vaccine hub, the origins of which predate the Covid-19 pandemic but were again spurred by vaccine nationalism and challenges to access early in the pandemic.
Topic:
Development, Manufacturing, Vaccine, COVID-19, and Global Health
Political Geography:
Asia and South Korea

46. The Impact of COVID-19 on the U.S. Defense Industrial Base

Author:
Nayantara D. Hensel
Publication Date:
01-2022
Content Type:
Journal Article
Journal:
PRISM
Institution:
Institute for National Strategic Studies (INSS), National Defense University
Abstract:
The COVID-19 pandemic has imposed a number of challenges on countries and industries, some of which have been partially mitigated by government efforts, medical developments, and corporate strategies. Nevertheless, COVID-19, which, in March 2020, was identified as a pandemic by the World Health Organization and was declared by the U.S. government as a national emergency,1 will likely continue to have after-effects in the coming years. The defense sector, as has been the case with many other sectors, has faced challenges in declining production at manufacturing plants, difficulties with key inputs from sole source suppliers, concerns regarding the financial viability of small businesses within the supply chains, and the impact of different variants of COVID-19 within the global supply chains. Companies which had diversified between commercial and military clients often faced a greater negative impact on their financial strength than companies with largely defense-focused products. This was partially due to the decline in demand within the commercial aerospace sector as a result of COVID-19. The financial health of companies across industries suffered due to COVID-19; indeed, this was reflected in the almost 30 percent increase in commercial chapter 11 filings in 2020 compared to 2019, with bankruptcies reaching their highest levels since 2012.2 The sectors with the greatest number of bankruptcies in 2020 were real estate, oil and gas, restaurants, entertainment, and retail.3 While bankruptcies were lower among firms in the defense sector due to stability in multi-year contracts with the government, as well as support of smaller suppliers by larger suppliers and by the government, defense firms with a greater focus on commercial clients suffered more. Consequently, although funding from the federal government under the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as funding from the Department of Defense (DOD), provided support for companies within the defense sector and other sectors, defense firms continue to face challenges in the short-term and, potentially, in the longer-term. Moreover, the impact of COVID-19 relief funding could have long-term effects on government deficits and debt, which may reduce defense spending in future years. Indeed, the potential atrophy in the defense industrial base due to the impact of COVID-19 on the financial health of defense companies and on future government spending could lead to national security risks. Production of key defense products—aircraft, ships, tanks, cybersecurity technology, etc.—is vital in supporting national security strategies in various regions and through various types of warfare.
Topic:
Economy, Manufacturing, Pandemic, Industry, Defense Industry, and COVID-19
Political Geography:
North America and United States of America

47. Questioning Industrial Policy: Why Government Manufacturing Plans Are Ineffective and Unnecessary

Author:
Scott Lincicome and Huan Zhu
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
In the wake of the COVID-19 pandemic and rising U.S.-China tensions, American policymakers have again embraced “industrial policy.” Both President Biden and his predecessor, as well as legislators from both parties, have advocated a range of federal support for American manufacturers to fix perceived weaknesses in the U.S. economy and to counter China’s growing economic clout. These and other industrial policy advocates, however, routinely leave unanswered important questions about U.S. industrial policy’s efficacy and necessity: What is “Industrial Policy”? Advocates of “industrial policy” often fail to define the term, thus permitting them to ignore past failures and embrace false successes while preventing a legitimate assessment of industrial policies’ costs and benefits. Yet U.S. industrial policy’s history of debate and implementation establishes several requisite elements – elements that reveal most “industrial policy successes” not to be “industrial policy” at all. What are the common obstacles to effective U.S. industrial policy? Several obstacles have prevented U.S. industrial policies from generating better outcomes than the market. This includes legislators’ and bureaucrats’ inability to “pick winners” and efficiently allocate public resources (Hayek’s “Knowledge Problem”); factors inherent in the U.S. political system (Public Choice Theory); lack of discipline regarding scope, duration, and budgetary costs; interaction with other government policies that distort the market at issue; and substantial unseen costs. What “problem” will industrial policy solve? The most common problems purportedly solved by industrial policy proposals are less serious than advocates claim or unfixable via industrial policy. This includes allegations of widespread U.S. “deindustrialization” and a broader decline in American innovation; the disappearance of “good jobs”; the erosion of middle‐​class living standards; and the destruction of American communities. Do other countries’ industrial policies demand U.S. industrial policy? The experiences of other countries generally cannot justify U.S. industrial policy because countries have different economic and political systems. Regardless, industrial policy successes abroad – for example, in Japan, Korea and Taiwan – are exaggerated. Also, China’s economic growth and industrial policies do not justify similar U.S. policies, considering the market‐​based reasons for China’s rise, the Chinese policies’ immense costs, and the systemic challenges that could derail China’s future growth and geopolitical influence. These answers argue strongly against a new U.S. embrace of industrial policy. The United States undoubtedly faces economic and geopolitical challenges, including ones related to China, but the solution lies not in copying China’s top‐​down economic planning. Reality, in fact, argues much the opposite.
Topic:
Government, Industrial Policy, Manufacturing, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

48. No, China Does Not Make Everything!

Author:
David Henig and Anna Guildea
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
China is now the world’s leading manufacturer, with goods exports rising from $63 billion in 1990 to $2.5 trillion in 2018. The popular assumption is that everything is now made in China, and that falling manufacturing employment in the EU and US is due to this. The assumption is wrong. China is the world’s largest goods exporter, but other countries have also experienced increases. One reason is that China is also the world’s second largest importer of goods, at $2.1 trillion in 2018.
Topic:
International Political Economy, Exports, Manufacturing, and Trade
Political Geography:
China

49. Automotive Global Value Chains in Europe

Author:
Matteo Gaddi and Nadia Garbellini
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In this paper we examine the main transformations that are affecting European automotive industry and which challenges, in particular due to the transition to new forms of propulsion, the industry is going to face. The automotive industry is central to the European economy and the nature of the Global Value Chains are rapidly shifting. While individual countries have developed economic plans to address this, a broader EU wide plan is critically important to addressing the employment and environmental effects of these shifts.
Topic:
Economics, Industrial Policy, European Union, Manufacturing, and Global Value Chains
Political Geography:
Europe

50. Mexico’s Automotive Industry: A Success Story?

Author:
Jorge Carreto Sanginés, Margherita Russo, and Annamaria Simonazzi
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
In less than three decades Mexico’s automotive industry has gone from a minor role to the 7th largest world producer of automotive vehicles. The Mexican experience is part of the more general case of the “integrated peripheries.” The development of these cannot be accounted for separately from the developments occurring in its core country. Unlike the core-periphery literature, however, our analysis emphasizes that the various clusters of cores and integrated peripheries are not alike. In the case under study, the core has been systematically lagging behind the main transformations pioneered by its competitors. The paper traces the evolution of the Mexican automotive industry, emphasizing the difficulties faced by a late-comer country in developing an independent industry, and the importance of policy choices as well as the macroeconomic context in affecting its development. NAFTA represents the culmination of an integration process that has profoundly transformed the structure of the Mexican automotive industry, deepening its dependence on the US market. While there is no doubt that it has contributed to the spectacular growth of the Mexican auto industry, whether it also increased its resilience or, rather, its dependence is still an open question. This issue is particularly relevant in view of the transformations that are taking place in the automotive sector and in the geopolitical scenario. These include the end of NAFTA and the advent of USMCA, the entry of powerful competitors into the global market, and the transition to electric and autonomous vehicles, which all entail risks and opportunities. The lens of the centre-periphery relationship can help to understand the present integration of North America and its future direction.
Topic:
Networks, Manufacturing, Trade Policy, Production, and Automotive Industry
Political Geography:
North America and Mexico