myIn January 2022, the Federal Reserve Bank of New York published for the first time an indicator of “pressure” on international value chains. Disruptions in international logistics then worried US monetary authorities, threatening to fuel already rampant inflation. Traffic jams at major Chinese ports have since eased, but rising protectionism and international geopolitical tensions are creating great uncertainty about the development of global trade.
While there are numerous calls for greater resilience in our supply chains, or even for a form of decoupling of certain regions of the world, the geography of global trade reflects the millions of individual decisions over which public authorities have little direct means of action. However, the current climate has an impact on the decisions of economic actors. How are companies coping with this new mistrust in the rules of the multilateral system?
In the 1990s and 2000s, large companies invested in increasingly fragmented international value chains, which made it possible to reduce costs by relocating certain stages of production to low-wage countries. They have also developed their customer base abroad. While Europe suffered from slow growth, it found welcome sources of growth in Asia and South America. The internationalisation of companies then offered benefits in terms of competitiveness and risk sharing.
Multiplication of difficulties
The events of recent years have led us to question these benefits. Disruptions in international logistics during the Covid-19 pandemic have highlighted the fragility of hyperglobalised value chains. Just-in-time supply management, combined with increasingly complex production structures, has led to increased production difficulties during the pandemic. We are thus reminded of the semiconductor shortage in 2021-2022, which led to slowdowns in many manufacturing sectors.
We have thus discovered that 60% of the world’s demand for semiconductors is supplied by a single supplier, Taiwan’s TSMC. While TSMC’s quasi-monopoly is spectacular, a detailed analysis of international trade data shows that such concentration of supply is not specific to this sector. 88% of the cobalt used to produce lithium batteries is currently mined in the Democratic Republic of Congo. China largely dominates the market for rare metals needed for a wide variety of electronic products. China and India also concentrate the production of numerous chemical components for pharmaceuticals, advanced chemicals and plastics processing.
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