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What do the global supply chain disruptions tell us about the world economy?

By Intan Suwandi

Lockdowns and shutdowns due to the COVID-19 pandemic led to what is being referred to as the “first global supply chain crisis.” The supply chain disruption has made havoc since the beginning of the pandemic, with more than 90 percent of the 1000 Fortune multinational corporations having a tier-one or tier-two supplier affected by the virus in February 2020.  By mid-April 2020, 81 percent of global manufacturing firms were experiencing supply shortages. Also in the same year, hundreds of US companies reported that their suppliers only operated at an average of 50 percent capacity, which resulted in longer final product lead times and a negative impact between 5.6 to 15 percent on their revenues. Although recent reports indicate that the situation has become less severe, many analysts still think that the “supply chain nightmare” is far from over, and it is predicted that supply chain disruptions will continue until late 2022.

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Who to blame? The rough start for living income cocoa prices in Côte d’Ivoire and Ghana

By Felix Maile, Bernhard Tröster, Cornelia Staritz and Jan Grumiller

Commodity price instability is a major challenge for commodity-dependent countries. This is also true for the major cocoa producer countries Côte d’Ivoire and Ghana, which account for two thirds of world’s cocoa production. As we argue in a recent article in the EJDR , the two West African countries can challenge the price-setting power of highly concentrated international buyers through their state-governed price-stabilization measures. However, export and producer price stabilization is limited to one season and entails great risks for the state due to intra-seasonal price volatility. Moreover, inter-seasonal price instability is not addressed and largely born by smallholder farmers, and export and producer prices remain linked to world prices set on futures markets in London and New York.

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Industrial policy for lower-income countries in the age of global value chains

By Karin Fischer, Christian Reiner and Cornelia Staritz

Countries of the Global South and particularly lower-income countries could barely benefit from the integration into global value chains (GVCs) so far. Regional integration, ecological leapfrogging, development-oriented macroeconomic policies and certain global framework conditions are necessary to distribute the benefits from (and costs of) GVCs more broadly. Continue reading “Industrial policy for lower-income countries in the age of global value chains”