IMF: Diversification, substitutability build resilient value chains

The IMF says that in the early days of the pandemic in 2020, the GVC-intensive trade collapsed but rebounded very quickly showing remarkable resilience.

Diversification of supply sources across countries and substitutability of components, rather than re-shoring i.e. bringing inputs or intermediates production facilities closer home, build resilient Global Value Chains (GVC), says the International Monetary Fund (IMF) in its latest Global Economic Outlook (GEO) report. The report, which devotes an entire chapter on global trade and value chains during the pandemic, draws on the data analysis models developed by the IMF researchers and various studies by economists and says that the proposals to reduce dependence on foreign suppliers in the GVCs are misguided.

The IMF says that in the early days of the pandemic