Globalisation during the pandemic
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ISBN 978-83-66698-35-2 WARSAW AUGUST 2021
Globalisation
during the pandemic
In memoriam
Janusz Chojna † 17 March 2021 r.
Citations:
Ambroziak, Ł., Gniadek, J., Strzelecki, J., Wąsiński, M. (2021), Globalisation during the pandemic,
Polish Economic Institute, Warsaw.
Warsaw, August 2021 r.
Authors: Łukasz Ambroziak, Joanna Gniadek, Jan Strzelecki, Marek Wąsiński
Cooperation: Katarzyna Sierocińska
Editors: Annabelle Chapmann
Graphic design: Anna Olczak
Graphic cooperation: Liliana Gałązka, Tomasz Gałązka, Sebastian Grzybowski
Polish Economic Institute
Al. Jerozolimskie 87
02-001 Warszawa
© Copyright by Polish Economic Institute
ISBN 978-83-66698-35-23
Table of contents
Key numbers �����������������������������������������������������������������������������������������������������������������������������������������������4
Key findings��������������������������������������������������������������������������������������������������������������������������������������������������� 5
Introduction������������������������������������������������������������������������������������������������������������������������������������������������� 7
1. Verifying scenarios for changes in globalisation from
spring 2020���������������������������������������������������������������������������������������������������������������������������������������������������8
2. The main winners and losers of the pandemic���������������������������������������������11
2.1. Changes in countries’ share in exports in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2. Changes in individual goods’ share in exports in 2020 . . . . . . . . . . . . . . . . . . . . 14
3. Changes in Poland’s foreign trade in 2020 through the prism
of changes in the global economy����������������������������������������������������������������������������������� 16
3.1. Changes in the geographic structure of exports and imports . . . . . . . . . . . . 16
3.2. Changes in the product structure of exports and imports . . . . . . . . . . . . . . . . 18
4. The pandemic’s impact on globalisation ���������������������������������������������������������� 21
4.1. The disruption of world trade during the pandemic . . . . . . . . . . . . . . . . . . . . . . . 21
4.2. Markets’ and governments’ reactions to the disruptions
on the global market linked to the pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5. What is next for globalisation? �������������������������������������������������������������������������������������� 37
5.1. The global perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2. The Polish perspective – results of a survey on Polish
companies’ intention to transfer production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Bibliography��������������������������������������������������������������������������������������������������������������������������������������������� 40
List of charts, maps and boxes������������������������������������������������������������������������������������������� 434
Key numbers
5.5 % decrease in volume of global trade
in goods in 2020 compared to 2019.
1.6 pp increase in China’s share in global
exports in 2020 compared to 2019.
0.14 pp increase in Poland’s share in global
exports in 2020 compared to 2019.
6 % of responders say they are already taking part in
moving supply chains from China.
increase in sea freight prices
309 % between February 2020 and
February 2021.
13.1 % increase in computer
supplies in 2020.
drop in air cargo and passenger
33 % transport in 2020, according to
the International Civil Aviation
Organization (ICAO).
USD 17
price of a barrel of crude oil (WTI)
in April 2020, the least since 1999.
foreseen by the Japanese govern-
USD 2.1 billion ment for companies that relocate
production from China to Japan.5
Key findings
→ China is the biggest beneficiary of the and the rapid adaptation of production
COVID-19 pandemic in terms of trade to the growing global demand for cer-
in goods. Its share in global exports tain products, such as those related to
increased to 14.7% in 2020 (by 1.6 pp fighting the pandemic, or electronic and
compared to 2019). This was made pos- electrical devices.
sible by taking control of the pandemic
↘ Map 1. Trade in goods during the COVID-19 pandemic
Change (pp, y/y)
No data
-0.5 0 1.59
Source: prepared by PEI based on: WITS.
→ Vietnam and Taiwan also increased made possible by the relatively small
their position in global exports last decrease in the value of exports from
year – Their share in trade increased by Poland, by 0.3%. The country was saved
around 0.2 pp. from a greater decline by the relative-
→ To a lesser extent, Poland also benefit- ly high diversification of exports; for ex-
ed from the pandemic: its share in glob- ample, automotive products account for
al exports in 2020 was 0.14 pp high- a smaller share than in other countries in
er than in 2019, the biggest increase in the Visegrad Group. Other factors were
share in global exports in the EU and the the large share of agricultural and food
sixth-best result worldwide. This was products and Poland’s specialisation6 Key findings
in the production of durable consumer in the automotive sector, which was
goods (such as household appliances, based on a just-in-time production sys-
audio-visual equipment and furniture), tem and was not prepared for the com-
for which demand clearly increased at ponent shortages during the first phase
the end of 2020. Poland’s incorporation of the pandemic or the delays in micro-
into supply chains related to electromo- processor deliveries at the end of 2020.
bility (electric buses, lithium-ion batter- At the same time, it revealed the low di-
ies) turned out to be significant, too. versification of suppliers of many com-
→ It is not yet possible to unequivocal- ponents to European factories and how
ly confirm or rule out the thesis about strongly the production of certain prod-
the decline in China’s share in world ucts is concentrated.
trade, which we put forward in the → Not so much the transfer of component
PEI report Szlaki handlowe po pan- production from China but, rather, its
demii COVID-19 published last year. diversification –increasing the number
Most things suggest that the scenar- of suppliers of a given component – is
io involving the relocation of a small key.The approach to managing supply
part of production from China to other chains also needs to change. Increasing
Southeast and East Asian countries (in- inventories (for instance, of components)
cluding Vietnam and Taiwan), as well as would allow production to continue dur-
to India and Mexico, will materialise, at ing supply disruptions.
least gradually. The partial relocation → Changes in the global economy will be
of companies to their home countries influenced not only by economic factors
is also likely. caused by the pandemic, but also – and
→ Contrary to numerous announcements perhaps most importantly – by system-
by companies in the spring of 2020 that ic and political competition. The conse-
they would relocate production from quences of the pandemic may change
China, few have actually done so. Moving companies’ calculations when it comes
a production site is a complicated and to risks and costs within supply chains.
time-consuming operation. It requires In the short term, higher transport costs
not only investment in production plants, will still be noticeable and a short-
but also creating an entire network, from age of certain components will be felt.
the suppliers of components to the re- However, more significant and long-term
cipients of manufactured products. A PEI pressure to transfer production from
study from the autumn of 2020 showed China results from the US and the EU’s
that just 6% of Polish companies are efforts to reduce dependence on it. Even
already beneficiaries of the transfer of before the pandemic, companies decid-
production from China and that near- ed to partially move production away
ly 8% would potentially be interested in from China to avoid political risk and the
this kind of relocation. associated costs – duties or sanctions. If
→ Global value chains proved to be inflex- Washington, and possibly Brussels, too,
ible in the face of disruptions in demand continues this policy it will influence the
and supply and increasing shipping extent to which the scenarios consid-
problems. This was particularly evident ered in this report materialise.7
Introduction
The COVID-19 pandemic has disrupted located. One year is definitely not enough to un-
global value chains. The onset of the pandemic equivocally establish whether a given scenario is
and the freezing of the Chinese economy led to materialising. However, it is possible to indicate to
difficulties in the supply of products and com- what extent a scenario’s individual assumptions
ponents from China, and lockdowns in Western materialised over the course of the year and which
countries caused a slowdown in demand. The scenarios therefore seems the most probable.
consequences of these fluctuations will be felt The assessment can be carried out at two levels:
for months to come, especially in the form of high declarations and actions. Some companies have
transport prices or shortages of components, announced that they will relocate, but only some
such as microprocessors. These disruptions in have done so.
world trade have fuelled discussions about Chi- In the next parts of the report, we check the
na's future role in global supply chains. In light of degree to which individual scenarios have mate-
this debate, in the spring of 2020, we published rialised so far and the likelihood of this happening
the report Trade Routes after the COVID-19 Pandemic in the future. We analyse the short-term benefits
(Ambroziak et al., 2020). We attempted to identify of the pandemic, identifying the largest benefi-
how world trade will change in the coming years. ciaries – the countries and product groups that
At that time, we formulated four possible sce- gained the most in terms of trade during the pan-
narios for changes in global supply chains. All of demic – and showing where Poland stands. Fur-
them assume that China's share in world trade ther on, we present the context of these chang-
is declining. As we noted then, the relocation of es, analysing the underlying disruptions in global
production from China to other countries will be trade in terms of supply and demand, and in re-
a long-term process and will not take place over- lation to the transport of goods. We also identify
night. It requires an increase in production capac- companies’ and states’ efforts to relocate produc-
ity and therefore investment by companies in the tion. The report ends with an attempt to show how
countries where various production stages will be the global economy will develop in coming years.8
1. Verifying scenarios for changes
in globalisation from spring 2020
S1: Southeast Asia and India
as the “factory of Asia”
All countries in the world reduce imports of semi-
finished and finished products from China by 5%.
Instead, they import them from countries in South-
east Asia and India (in proportion to their share in
individual countries’ imports).
S2: National patriotism
All countries in the world reduce imports of semi-
finished and finished products from China by 10%.
Instead, they are supplied by domestic producers.
S3: Central Europe as the “factory of Europe”
for EU countries
EU countries reduce imports of semi-finished and
finished products from China by 10%. Instead, they
import them from the EU’s Central European mem-
ber states: the Czech Republic, Poland, Slovakia,
Hungary, Romania and Bulgaria (in proportion to
their share in EU countries’ imports).
S4: Mix: national patriotism + Central Europe
as the “factory of Europe”
EU countries reduce imports of semi-finished and
finished products from China by 20%:
▸ 10% is replaced with domestic production,
▸ 10% comes from Central Europe, Bulgaria and
Romania (in proportion to their share in EU
countries’ imports).
It is still too early to unequivocally state that prepared by the PEI in spring 2020. Most things
the changes taking place in the global economy suggest that some production in China may be
point to the materialisation of one of the scenarios relocated to other countries in Southeast and1. Verifying scenarios for changes in globalisation from spring 2020
9
East Asia (including Vietnam and Taiwan), as well states’ imports increased, especially in the Czech
as to India and Mexico (scenario S1). Some com- Republic and Poland (by 2.3 pp and 2.2 pp respec-
panies’ plans indicate that the scenario of reloca- tively). This was due to the supply of protective
tion to their home countries (scenario S2) may be medical clothing and masks, as well as the in-
partially materialising. Research showed that the creased demand for consumer durables and
scenario of relocating some of EU countries’ pro- semi-finished products. The pandemic therefore
duction from China to Central Europe is the least strengthened China’s position as the largest pro-
likely, but not out of the question. ducer of many goods. Most company announce-
The process of relocating production ments about relocating production have not gone
from China on a large scale has not yet begun. ahead. We are not sure whether this because
On the contrary, China has benefited from in- these plans are being prepared or because they
creased global demand for products related are being abandoned. We only found a few exam-
to the prevention, detection and treatment of ples of companies that have actually left China
SARS-CoV-2 infection, as well as consumer du- (described in detail in part 4). It should be empha-
rables such as laptops, phones, monitors, micro- sised that the relocation process began earlier,
phones and cameras (more on this in section 4). during the US-China trade war.
There are also no indications that the mass The data on foreign direct investment (FDI)
transfer of production to the EU’s Central Eu- do not point to mass relocation from China either.
ropean member states, including Poland, has In 2020, FDI in China amounted to USD 163 billion,
begun. We could not identify a single company which put it in first place globally (UNCTAD, 2021a).
that made this relocation in connection with the It was also one of the few countries where FDI
COVID-19 pandemic. Potential relocation plans increased, by 4% compared to 2019. For com-
were announced in May by Bosch (Zygmunt, 2021). parison, the US attracted 49% less FDI and Ger-
China’s share in the Central European member many 61% less. The influx in Britain and Italy was
↘ Chart 1. Change in influx of FDI in 2020 (% y/y)
China 13
India 4
Mexico -8
Indonesia -24
Canada -34
France -39
Australia -46
US -49
Brazil -50
Germany -61
-70 -60 -50 -40 -30 -20 -10 0 10 20
Source: prepared by PEI based on: UNCTAD (2021a).10 1. Verifying scenarios for changes in globalisation from spring 2020
negative. The EU concluded investment agree- of the number of declared investment projects
ment negotiations with China in December 2020, (378 projects) and third in terms of their value
but seems unlikely to be ratified due to social and (EUR 20.1 billion) (The fDi Report ..., 2021 ). Poland’s
political doubts (Siebold, Blenkinsop, 2021). share in world exports of goods also increased (by
Desk research analysis allowed us to iden- 0.14 pp – more on this in part 3). These phenom-
tify several declarations on transferring produc- ena cannot be linked to the relocation of produc-
tion from China to other countries and only in- tion from China, though they point to Poland’s in-
dividual examples of company that has done so creasing importance in European supply chains.
(more in part 4). The Southeast Asian countries’ The lack relocation of production from
increased integration with the world trade sys- China to other countries does not necessarily
tem by increasing their share in global exports mean that companies have abandoned these
and imports primarily resulted from increased plans. Companies might be taking these steps
production at plants that already existed before in secret so as not to expose themselves to
the pandemic. potential retaliation from China. In addition,
However, the verification of the scenarios changing where a product is made is a compli-
above concerns the assumption that produc- cated and lengthy process due to the nature
tion will move from China to other countries. of supply chains (Antras, 2020). Each activity
However, over the past year we noticed that an- in these chains has backward (with suppliers
other scenario is possible: there will be no sig- of parts) and forward linkages (with the recipi-
nificant relocation of production from China, but ents of the manufactured products). Relocating
it will lose its importance in global exports as these activities requires the creation of a new
new investments are located near target mar- network of suppliers and customers, which
kets, especially in companies’ home countries. takes time. Moreover, the pandemic and the
This will primarily be associated with political numerous limitations of socio-economic activi-
concerns, but also with growing social pres- ties were not conducive to the quick and radical
sure or the green transformation. The growing remodelling of existing ways of operating.
possibility of automating production will make In the next parts of the report, we discuss
it easier. these issues in detail, starting with an analysis of
Central Europe will be able to benefit from the profits and losses of individual countries dur-
these changes. Despite the pandemic, Poland ing the pandemic. We then move on to changes
attracted new foreign investments. According to in globalisation caused by disruptions in global
fDi Markets, in 2020 it was fifth in Europe in terms value chains and support or relocation plans.11
2. The main winners and losers
of the pandemic
2.1. Changes in countries’ share
in exports in 2020
In 2020, the volume of world trade in goods types of services (including travel, air transport,
decreased by just 5.3%. This is clearly less than hotel and catering services) to the purchase of
in the World Trade Organization’s forecast in its goods, in particular durable consumer goods
optimistic scenario in April (12.9%). The restric- (including electronics, household applian-
tions on people’s movement introduced on ces and furniture). Services suffered the most
a massive scale in the second quarter contrib- during the pandemic. In the second quarter, the
uted to the collapse of world trade in goods (the value (seasonally adjusted) of global exports of
volume fell by 16.2% y/y). In the third quarter, services was 28% lower than a year earlier. In
there was a clear rebound: the volume was just the next two quarters, the declines were only
3.5% lower than a year earlier. In the fourth slightly smaller (24% and 19% y/y respectively)
quarter, it basically returned to the pre-pan- (UNCTADStats, 2021).
demic level (UNCTADStats, 2021). The impact of the pandemic on the vol-
Several factors contributed to the faster ume of trade in goods regions varied between
improvement in world trade in goods in the sec- regions (Figure 1). However, most regions re-
ond half of 2020. Firstly, the scale of the fiscal corded big drops in both exports and imports.
stimulus packages was much greater than dur- The only exception were Asian countries,
ing the financial crisis of 2008/2009. This made where the volume of exports increased by
it possible to compensate for households’ loss 0.3% and the volume of imports decreased by
of income and support consumption. Second, just 1.3% (WTO, 2021). The largest declines in
the containment of the SARS-CoV-2 virus in imports were recorded in regions rich in natu-
China and other Asian countries and the rap- ral resources; that is, the Middle East (11.3%),
id return to pre-pandemic economic activity South America (9.3%) and Africa (8.8%). This
prevented the demand for goods imported by was mainly due to the decline in export receipts
these countries from collapsing. Third, news of due to the drop in oil prices, which fell by over
the COVID-19 vaccines at the end of the year 30%. Deliveries to North America decreased by
helped improve consumer and business sen- relatively little (by 6.1%). Exports – with the ex-
timent. Above all, though, restrictions on pe- ception of the CIS countries, South America and
ople’s movement shifted expenses from certain China – decreased by about 8%.12 2. The main winners and losers of the pandemic
↘ Chart 2. Change in volume of global trade in goods in 2020 by region (% y/y)
2
0
-2
-4
-6
-8
-10
-12
a
a
e
IS
a
st
ia
er h
er h
ic
ic
ric
p
Am ort
Amout
As
Ea
C
ro
Af
N
Eu
S
e
dl
id
M
Exports Imports
Źródło: prepared by PEI based on: WTO (2021).
If we look at the changes in countries’ share protective clothing and masks). China also gained
in world trade, China is the largest winner of the from increased exports of computer hardware (an
COVID-19 pandemic (Chart 3). Its share in global increase in the share of global exports of 0.2 pp),
exports increased to 14.7% in 2020, by 1.6 per- mobile phones (0.1 pp), integrated circuits and
centage points compared to the previous year. semiconductors (0.15 pp), as well as monitors
Nearly one-third of this increase stemmed from and TV sets, cameras, lithium-ion batteries and
increased Chinese deliveries of medical devices game consoles.
related to combating the pandemic (including
13,1 % to 14,7 %
In 2020 the China’s
share of global trade
increased
by 1.6 pp.
The biggest winners were mainly countries consumer goods (telephones, computers). On
in East and Southeast Asia (including Hong Kong, the other hand, their role as suppliers of parts
Taiwan, Vietnam, Malaysia and South Korea). The used in the production of electronics, electri-
increase in their importance resulted from the- cal devices and cars (including semiconductors
ir greater involvement in global supply chains. and integrated circuits, memory cards, printed
On the one hand, they exported more durable circuits, electrical transformers, and lithium-ion2. The main winners and losers of the pandemic
13
batteries) increased. The EU-27 also benefited, Arab Emirates, Kuwait and Nigeria). The share of the
including Poland, Ireland, the Netherlands, the US and Canada (in part due to the drop in the sale
Czech Republic, Hungary and Switzerland (Chart 3). of crude oil and automotive industry products), as
The countries whose importance in world exports well as India, also decreased. Among the EU coun-
of goods decreased mainly include oil-exporting tries, the importance of France clearly decreased
countries (including Russia, Saudi Arabia, the United (by 0.23 pp) (Chart 4).
↘ Chart 3. Changes in selected countries’ share in global exports and imports in 2019-2020 (pp)
Exports Imports
China China
EU-27 US
Hong Kong Hong Kong
Taiwan Switzerland
Vietnam Vietnam
Switzerland Turkey
Malaysia Taiwan
South Korea EU
Indonesia Nigeria
Qatar Saudi Arabia
Canada Thailand
Nigeria Canada
Kuwait South Africa
India Indonesia
Iraq Philippines
UAE UAE
Russia Japan
Saudi Arabia Mexico
US India
-0.6 -0.3 0 0.3 0.6 0.9 1.2 1.5 1.8 -0.6 -0.3 0 0.3 0.6 0.9
Source: prepared by PEI based on: UNCTADStats (2021).
In terms of global imports, China also ga- supply chains increased their importance in glob-
ined the most importance (its share increased al imports. The EU-27’s share increased by 0.11 pp
by 0.76 pp). By taking control of the epidemic qu- (in part thanks to Germany, Poland, the Nether-
ickly, it rebuilt the demand for imported goods. lands and Denmark). India’s role in global imports
The US’s share also increased, mainly due to the declined the most (its share dropped by 0.43 pp),
fiscal packages stimulating demand (by 0.2 pp), followed by Mexico and Japan (around 0.2 pp
as did that of Hong Kong, Switzerland and Turkey. each) and, among the EU countries, France, Spain
Taiwan and Vietnam’s high involvement in global and Italy (Chart 4).14 2. The main winners and losers of the pandemic
↘ Chart 4. Changes in selected EU-27 countries’ share in global exports and imports
in 2019-2020 (pp)
Exports Imports
Poland Germany
Ireland Poland
Netherlands Netherlands
Czech Republic Denmark
Sweden Ireland
Belgium Czech Republic
Hungary Hungary
Finland Italy
Spain Spain
France France
-0.3 -0.2 -0.1 0 0.1 0.2 -0.2 -0.1 0 0.1 0.2
Source: prepared by PEI based on: UNCTADStats (2021).
2.2. Changes in individual goods’ share
in exports in 2020
Our analysis enabled us to identify the parts and components used by manufacturers
groups of products that gained or lost during the of these devices. The collapse of car sales led to
pandemic. The increased demand in the EU1 and a decline in the trade of cars and car parts. The
many other countries (such as the US and Cana- exception was electric cars, along with parts and
da) for products related to fighting the pandemic components related to their production. The
increased exports of these products, mainly from importance of raw materials and fuels also de-
China. The increased scale of remote work and creased, which the decrease in the demand for fu-
remote contributed to the increase in exports els – and, as a result, in the price of crude oil – as
of computers, laptops and computer equip- well as for transport equipment other than cars,
ment (cameras, speakers, headphones, routers) contributed to.
(Chart 5). This stimulated additional demand for
1
In the EU, imports of products related to fighting the COVID-19 pandemic from outside the bloc increased by
10% in 2020 (y/y), according to Eurostat data.2. The main winners and losers of the pandemic
15
↘ Chart 5. Changes in global exports in 2020 by group of goods (% y/y)
Textiles
Office devices
Medicines
Agricultural
and food products
Telecommunications
equipment
Other machines
Metals
Chemicals
Precision apparatus
Mineral resources
Clothes
Cars
Other transport
equipment
Energy resources and
fuels
-40 -30 -20 -10 0 10 20 30 40
Source: prepared by PEI based on: UNCTAD (2021b).16
3. Changes in Poland’s foreign
trade in 2020 through the prism
of changes in the global economy
3.1. Changes in the geographic structure of
exports and imports
Since the start of the pandemic, Poland has EU, only Ireland and Latvia managed to do so). In
done relatively well in the export of goods com- 2020 as a whole, the value of Polish exports (ex-
pared to other countries. The collapse in sales pressed in euros) was lower than a year earlier,
abroad in March-May 2020 was shallower than in but only by 0.3%. This was the third-best result
other countries and an improvement was visible in the EU. Losses in imports were made up for
sooner, as early as June (Chart 6). However, a clear more slowly than in exports; as a result, the value
recovery did not begin until September. Despite of imports fell by nearly 5% in 2020. As a result,
this, Polish exporters did not manage to make the surplus in Poland’s trade in goods reached
up for the losses caused by the pandemic (in the a record high – EUR 12 billion (Chart 7).
from EUR 1,2 billion to EUR 12 billion
The value of Polish trade 10 times
surplus in goods sector
increased 10 times y/y3. Changes in Poland’s foreign trade in 2020 through the prism of changes in the global economy
17
↘ Chart 6. Changes in Polish exports and im ↘ Chart 7. Balance in Polish trade in goods
ports in goods (% y/y) (billions of EUR)
15 15
10 10
5 5
0 0
-0.3
-5 -4.8
-5
-10 -10
-15 -15
-20 -20
-25 -25
-30 -30
01 02 03 04 05 06 07 08 09 10 11 12
2
20 4
20 5
20 6
20 07
20 8
20 9
20 0
20 11
20 2
20 3
20 4
20 5
20 6
20 17
20 8
20 19
20
-1
1
1
1
0
1
0
0
1
1
0
0
1
20
01
Exports Imports
Annual exports Annual imports
Source: prepared by PEI based on: Statistics Poland (2021).
The main factor that determined Polish products increased. The increase therefore ap-
exports’ relatively good results was the greater plied to almost 18% of Polish deliveries abroad.
diversification of goods compared to most EU Third, Polish exporters benefited from the
countries, such as the other countries in the Vi- increased global demand for durable consumer
segrad Group (Chojna, Gniadek, Strzelecki, 2020). goods, which made up a relatively large share of
First of all, automotive products make up a small- Polish exports. This was particularly evident in
er share in Polish exports than in many EU coun- the autumn of 2020. The reintroduction of restric-
tries. This industry suffered the most during the tions on services shifted demand from unavail-
spring lockdown. In March-May 2020, exports of able or limited services to consumer goods. This
automotive products were as much as 52% lower further increased the demand for durable goods
than a year earlier. This was not limited to a drop (including household appliances, electronics
in car sales abroad; sales of automotive parts and and furniture).
components – Poland’s specialty – decreased too. Fourthly, by participating in global supply
Secondly, the relatively high importance of chains in the automotive industry, Polish export-
products for which foreign demand decreased ers of automotive parts also benefited from the
less than for cars, or even increased, helped off- increase in demand in China for cars from Germa-
set the decline in Polish exports during the spring ny, which recovered in the second half of 2020.
lockdown. In March-May 2020, Polish exports Poland is a major supplier of parts to German car
of electrical equipment decreased by nearly factories. Nearly three-quarters of these cars are
14% year-on-year. This was 7% for comput- exported. The US and Britain are major recipients,
ers, electronic and optical products and 5% for in addition to China.
chemical industry products. Exports of medicines In addition, Poland got actively involved in
and pharmaceutical products (23%), tobacco global supply chains linked to electromobility,
products (14%) and clothes, beverages and food which gained importance during the pandemic.18 3. Changes in Poland’s foreign trade in 2020 through the prism of changes in the global economy
It strengthened its position not only as a producer percentage of passenger cars produced in the
and exporter of electric buses, but also became country that were electric (including plug-in) or hy-
the largest exporter of lithium-ion batteries. The brid increased from 6% to nearly 19% (VDA, 2021).
largest recipient of both is Germany. In 2020, the
from EUR 2 billion to EUR 4 billion
The value of Polish
lithium-ion battery export
in 2020 was 4 bln EUR.
It was over 2 times higher
than year before.
3.2. Changes in the product structure of
exports and imports
In terms of Polish exports, the following pro- The automotive industry has not been able
ducts did best in 2020: medicines (an increase of to make up for the losses caused by the pande-
18% y/y), clothing (17%), tobacco products (15%), mic. In 2020, foreign sales of products in this in-
computers, electronic and optical products, dustry were 13% lower than the previous year.
electrical appliances and beverages (around Exports of other transport equipment, metals,
9% each). They proved resilient to the pandemic metal products, furniture, machinery and equip-
crisis (Chart 8). Producers of chemical products, ment declined too. Fuel sales decreased the
food products, textiles and wood products also most (by 38% y/y).
did relatively well during the pandemic; in January-
September 2020, their sales abroad increased by
several percent.3. Changes in Poland’s foreign trade in 2020 through the prism of changes in the global economy
19
↘ Chart 8. Changes in Polish exports in 2020 by product category (% y/y)
30 21
20 12
10
Change in March-May 2020
10 11 14
32
30 17
0 26 The most hit
16
-10 24 25 22 20 by pandemic
15
13 was automotive
-20 23
27 industry
28
-30
31
-40 19 29
-50
-60
-40 -30 -20 -10 0 10 20
Change in 2020, y/y
Note: PKD categories: 10 - Food products, 11 - Beverages, 12 - Tobacco products, 13 - Textiles, 14 - Clothing,
15 - Leather products, 16 - Wooden products, 17 - Paper products, 19 - Energy fuels, 20 - Chemicals, 21 - Medicines,
22 - Plastics, 23 - Glass and ceramic products, 24 - Metals, 25 - Metal products, 26 - Computers, electronic and optical
equipment, 27 - Electrical appliances, 28 - Machines and devices, 29 - Vehicles and vehicle parts, 30 - Other means of
transport, 31 - Furniture.
The circles’ size reflects a given category’s share in exports in 2020.
Source: prepared by PEI based on: Statistics Poland (2021).
The growing importance of Germany in Po- and Britain. China’s advance in Polish exports is
lish exports is partly the result of increased de- mainly the result of increased sales of wood and
liveries of consumer durables (electronics and paper, aeroplane engines and dairy products. The
household appliances), game consoles, clothing decrease in most countries’ share in Polish ex-
and cigarettes (Chart 9). Electronics, household ports was caused by the fall in global demand for
appliances and game consoles gained impor- cars and automotive parts and components and,
tance in Polish sales in many foreign countries in the case of Canada and the US, for aeroplane
(including Sweden and Turkey), computer equip- parts, too. However, exports of electric batteries
ment in the US, furniture in Switzerland and Sau- increased, including to Germany, France, Sweden
di Arabia, buses in Turkey and Ukraine, cosmet- and Italy.
ics in Kazakhstan, and cigarettes in Saudi Arabia
by 2.2 pp
In 2020 the China’s share in
Polish import was higher than in 201920 3. Changes in Poland’s foreign trade in 2020 through the prism of changes in the global economy
↘ Chart 9. Change in selected countries’ share in Polish trade in 2019-2020 (pp)
Exports Imports
Germany China
China South Korea
Switzerland Malaysia
Kazakhstan Switzerland
Ukraine Netherlands
Sweden Bangladesh
Turkey Vietnam
Saudi Arabia Turkey
Australia Taiwan
Russia Spain
US Australia
Austria US
Slovakia Kazakhstan
Netherlands Sweden
Canada Czech Republic
Italy Lithuania
France Britain
Hungary France
Britain Saudi Arabia
Czech Republic Russia
-0.3 0 0.3 0.6 0.9 1.2 -1.8 -1.2 -0.6 0 0.6 1.2 1.8 2.4
Source: prepared by PEI based on Statistics Poland data.
During the pandemic, China’s share in Taiwan) in Polish imports. Poland also increased
Polish imports increased the most, by 2.2 pp imports of semiconductors, integrated circuits
(Chart 9). About one-fifth of this increase was and computer parts from Malaysia, Taiwan and
due to increased deliveries of products related Vietnam, imports of batteries and their parts
to combating the pandemic (including medical from South Korea, and imports of medical pro-
protective clothing and masks).2 Durable goods tective measures from Taiwan and Turkey.
(including telephones, video cameras, monitors, The decrease in Russia, Saudi Arabia, Ka-
routers and modems, laptops, speakers and zakhstan and Lithuania’s share in Polish imports
headphones, and household appliances) and resulted from lower deliveries of crude oil and re-
parts and components for production (includ- fined products. In Australia’s case, it stems from
ing semiconductors and integrated circuits, and lower imports of coal. The decline in the share of
electric car batteries and their parts) also gained France, Britain and the Czech Republic was primar-
in importance. Deliveries of electronics also ily caused by the collapse in the automotive mar-
helped increase the share of other countries in ket during the pandemic.
East and South-East Asia (including Malaysia and
2
Overall, Poland’s imports of products related to combating the COVID-19 pandemic added to the increase in
imports in 2020, by 0.85 pp.21
4. The pandemic’s impact on
globalisation
4.1. The disruption of world trade during
the pandemic
4.1.1. Disruption on the demand side
Globally, the biggest turmoil occurred dur- 2020, demand for two product groups increased
ing the first wave of the pandemic in March and significantly: consumer electronics, in connection
April 2020. The lockdown halted production at with remote work and school closures (ILO 2020;
certain factories, but also led to a collapse in de- WEF 2020), and medical devices, in connection
mand as consumers refrained from buying during with the detection, treatment and prevention of
a period of crisis and uncertainty. This did not ap- COVID-19 (Chart 10).
ply to all goods, though. In the second quarter of
The world’s import
by 13 %
of computers
increased
in 2020
Despite the recession, computer imports in- equipment and gloves (18%). The value of these
creased by 11.2% y/y in the second quarter of 2020 peaked in June at USD 80 billion3. The top importer
(IDC, 2020), and by over 13% in 2020 as a whole, for of these products was the US, followed by Germa-
the first time in ten years. In the case of the second ny, Japan and China. The value of imports of these
group, there were shortages of masks and disin- products to the EU increased by 10% in 2020, with
fectants almost all over the world. The first wave in the largest increase recorded for protective cloth-
March caused the highest monthly increase in im- ing and oxygen-related devices (Eurostat, 2021a).
ports of medical supplies such as needles, medical
3
Calculations by PEI based on Intracen data (ITC, 2021). The data concerns the 105 countries included
in the database for which data for 2020 was available. Medical products related to the detection, preven-
tion or treatment of COVID-19 refers to 72 products, according to the six-digit HS classification, listed in
the Intracen database. They are: disinfectants (14 products), diagnostic tests and laboratory equipment
(6 products), and other medical supplies, such as protective clothing and medical equipment (52 products).22 4. The pandemic’s impact on globalisation
↘ Chart 10. Global imports of medical products related to detecting, preventing or treating
COVID-19 (January 2020 = 100, %)
1.40
1.35
1.30 1.30
1.26
1.20
1.10
1.00
0.90
0.80
20
20
20
0
20
20
0
0
20
0
0
20
02
02
02
02
02
20
20
20
20
20
20
20
.2
.2
.2
.2
.2
.
.
.
.
.
.
.
07
01
02
03
04
05
06
08
09
10
11
12
Diagnostic tests and laboratory equipment Disinfectants Medical supplies
Source: prepared by PEI based on data from Intracen (ITC, 2021), trademap.org; General Administration of Customs
of the People's Republic of China (GACC, 2021).
In terms of exports of these products, Chi- May-June period, to USD 22 billion in May 2020,
na had the greatest ability to respond to this in- whereas the other major exporters only recorded
creased demand, both in terms of production clear growth in March and exports in December
potential and the containment of the pandemic were between 9% and 15% higher than in January;
within the country (Chart 11). Chinese exports of in the case of Switzerland, they even fell by 19%.
medical supplies increased almost fivefold in the
↘ Chart 11. The top five exporters of medical supplies related to the detection, prevention
or treatment of COVID-19 (billions of USD)
25
20
15
10 10.07
8.65
7.85
6.15
5 5.73
0
20
0
0
0
0
0
0
0
0
0
0
0
02
02
02
02
02
02
02
02
02
02
02
20
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.
07
01
02
03
04
05
06
08
09
10
11
12
Germany China US Switzerland Netherlands
Source: prepared by PEI based on data from Intracen (ITC, 2021), trademap.org; General Administration of Customs
of the People's Republic of China (GACC).4. The pandemic’s impact on globalisation
23
The timing of this spike in demand for con- restrictions on social and economic life in the
sumer electronics used for remote work and for autumn and winter led to an increase in demand
medical devices stands out: it occurred in the for durable consumer goods from the end of the
first and second quarter of 2020, when most in- second quarter. Alongside consumer electronics
ternational trade was limited. Savings resulting such as laptops or televisions, sales and imports
from remote work and limited opportunities to of household appliances started making up the
consume (services in particular) in the first part of losses of the second quarter and growing visibly.
the year and the expected introduction of further
4.1.2. Disruption on the supply side
Fluctuations in production
Changes in demand were accompanied considerable strength; it contracted by 6.8% in
by fluctuations in supply, which resulted, on the the first quarter (Wnukowski, Przychodniak, 2020).
one hand, from business closures or the lack of The value of Chinese production fell by 8.5% and
available workers and, on the other hand, from exports by 11.4%. This collapse limited deliver-
producers adjusting to the expected decline in ies of products, raw materials and parts abroad
demand. From the second half of 2020, there while Western economies were still operating at
were also problems with sea transport, with the full speed. This was the first time during the pan-
arrival of products and semi-finished products demic that global supply chains were exposed to
delayed due to the lack of containers and poor delays, as the lack of components made produc-
ship placement. tion more difficult (Ambroziak et al., 2020).
At the beginning of 2020, when the epidem- Yet this imbalance proved to be temporary:
ic had not yet reached a significant scale in Eu- as the pandemic spread, manufacturing col-
rope and the US, it hit the Chinese economy with lapsed around the world. In the US, the industrial
↘ Chart 12. Industrial production indices in the EU and the US
Industrial production index in the US Industrial production index in the EU-27
(2012 = 100) (2015 = 100)
120 110
110 100
90
100
80
90
70
80 60
.2 8
03 009
03 010
.2 1
03 012
.2 3
03 014
03 015
03 016
.2 7
03 018
.2 9
03 020
1
.2 8
01 009
01 010
.2 1
01 012
01 013
01 014
01 015
01 016
.2 7
01 018
.2 9
01 020
1
03 01
01 01
03 01
02
01 01
02
03 01
03 01
01 01
03 00
01 00
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
03
01
Source: prepared by PEI based on: FRED (2021). Source: prepared by PEI based on: Eurostat (2021b).24 4. The pandemic’s impact on globalisation
production index fell to its lowest level since of the pandemic enabled the Chinese economy
2009, from 109 in February 2020 to 91 in April 2020 start rebuilding production rapidly. The rest of the
(2012 = 100) (FRED, 2021). The index in Europe fell world began emerging from the recession in the
even more sharply (from 106 in February to 75 in third quarter. This led to an increase in demand for
April; 2015 = 100), to a level not recorded since many goods, in particular consumer durables and
1994 (Eurostat, 2021b). However, that same year, cars. The speed of the return to the growth path
industrial production in Europe returned to its pre- surprised manufacturers, who had problems with
pandemic level; in the US, it was 4 points below its delays in the delivery of components. At the end
January 2020 level. of 2020, there was a shortage of microprocessors
Global supply chains were disrupted but not for the automotive industry. These shortages in-
permanently broken. The effective containment tensified in early 2021.
Disruptions in the supply of microprocessors and semiconductors
↘ Box 1. Microprocessor supply chains
Electronics, electric devices and cars do not work without microprocessors. These
components are produced in the framework of highly fragmented supply chains, in which
enterprises from many countries participate according to their comparative advantages.
Microprocessors are mainly designed in the US. This is primarily done by major companies
in the IT industry (such as Apple), which then outsource production directly to factories that
produce components or buy them from companies that produce them (including Brandcom,
Qualcom, Nvidia and AMD). In practice, however, companies do not produce them themselves;
they outsource production, too.
is located in Asia
Over 90 % in practice mostly
of world microchip on Taiwan and
production in South Korea
Over 90% of the world’s microprocessors are produced created in Asia – in fact, in two
countries: Taiwan (Taiwan Semiconductor Manufacturing Company, TSMC) and South Korea
(Samsung). The Taiwanese company was responsible for over half of the microprocessors
sold globally (King, Wu, Pogkas, 2021).4. The pandemic’s impact on globalisation
25
Manufacturing these components requires specialised equipment. The monopolist is Dutch
company ASML, which specialises in developing and producing the photolithographic systems
used in machines to produce integrated circuits. These machines are manufactured to
order, with orders submitted in advance by microprocessor manufacturers. This means that
the production of equipment for factories is the bottleneck in the entire process, which is
currently making it difficult to increase production capacity.
The current situation on microprocessor modems and routers). This prompted micropro-
market results from many factors. The changes cessor manufacturers to change their production
began during the US-China trade war, when Chi- profile. Demand for these components further
na increased deliveries from Taiwan and South stimulated the development of infrastructure
Korea. The pandemic caused further disrup- for the 5G network and increased interest in
tions in this market. First, the lockdown in many game consoles. In the second half of 2020, the
countries in the spring of 2020 led to a collapse automotive market recovered – sooner than ex-
in many consumer goods markets, in particular pected – and the demand for microprocessors
the automotive industry (in 2019 it accounted for for car production increased. The lockdowns in
around 12% of microprocessor orders), which led the autumn, with widespread fiscal packages to
to a reduction in orders (SIA, 2021). Secondly, the counteract the fall in consumer income, fuelled
increased scale of remote work and learning in- the sale of electronics and other electrical appli-
creased demand for computer equipment (includ- ances. All this meant that, around the end of 2020,
ing laptops, cameras, headphones, microphones, there was a shortage of microprocessors for the
↘ Chart 13. Global trade in microprocessors and semiconductors (CN8541+CN8542)
Main exporters and importers in 2019 Changes in trade in selected countries in 2020
(share as a percentage) (% y/y)
35 25
30 20
25 15
10
20
5
15
0
10 -5
5 -10
0 -15
C g
So Ta ina
h an
ap a
EU e
al 7
a
Ph Ja S
pp n
et s
Th nam
M nd
o
g
na
an
M ea
a
US
n
7
nd
M -2
-2
Vi ine
ng re
si
si
n
n
or
ili pa
pa
ic
U
r
ut iw
So aiw
hi
Ko
Ko
la
la
ay
ay
h
EU
ex
Si Ko
Ko
Ja
C
ai
Po
al
ng
ng
T
h
ut
Ho
Ho
Exports Imports
Note: for EU-27, internal and external trade was taken into account.
Source: prepared by PEI based on data from WITS-Comtrade (2021); Intracen (2021); Eurostat (2021c) and individual
countries’ offices for national statistics.26 4. The pandemic’s impact on globalisation
automotive industry. The situation exacerbated between ordering a component and receiving it
by random events. The onset of winter in Febru- increased from around 12-15 weeks to 26 weeks.
ary 2021 temporarily disabled three micropro- According to various estimates, the shortages of
cessor factories in Texas; those of Samsung, NXP microprocessors could lower car production in
Semiconductors and Infineon Semiconductors. the first half of 2021 by as much as 1-1.5 million
In March 2021, a fire caused production stoppag- units (Święcicki, Ambroziak, 2021). Problems with
es at the plant of the Japanese microprocessor the shortage of integrated circuits were also ex-
manufacturer Renesas Electronics, which con- perienced by electronics manufacturers; there
trols around 30% of the global market for micro- were delays in deliveries, and above all, pric-
circuits in the control units used in cars. The time es increased.
4.1.3. The increase in the price of commodities
In the spring of 2020, commodity prices col- The situation is different for other raw materials,
lapsed as economies were frozen and demand especially metals. After a slight slump in the spring of
fell. Oil prices fell to historically low levels, but 2020, prices started to rise, a trend that continues to
as the restrictions were eased and manufactur- this day. From January 2020 to March 2021, metal pric-
ing resumed, demand increased again, with pric- es increased by as much as 42% and exceeded their
es returning to pre-pandemic levels. The energy 2010 level by 10% (Chart 13). Over the past 15 months,
commodity price index (World Bank, 2021) shows the prices of iron ore (76%), tin (58%) and copper (49%)
that energy commodity prices are returning to have risen. The agricultural price index also increased
pre-pandemic levels. by 17% over the same period, mainly due to an in-
crease in the price of different types of oils and meal
(an increase of 38%), as well as cereals (by 24%).
↘ Chart 14. Commodity price indices (2010 = 100)
120
110.2
100 103.0
80 80.0
60
40
20
0
02 019
03 019
04 019
05 019
06 019
07 019
08 019
09 019
10 019
11 19
12 019
01 019
02 020
03 020
04 020
05 020
06 020
07 020
08 020
09 020
10 020
11 20
12 020
01 20
02 021
03 021
1
02
0
0
0
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
01
Metals Agriculture Energy
Source: prepared by PEI based on: World Bank (2021).4. The pandemic’s impact on globalisation
27
4.1.4. Changes in transport
Problems with maritime transport have the Baltic Index, which shows the price of transport-
strongest impact on the global economy, be- ing containers, was 209% higher than before the
cause around 80% of global trade in terms of pandemic. The model of supply chains based on
quantity and around 70% in terms of value hap- just-in-time container deliveries (without extra
pens by sea (according to UNCTAD). The restric- stocks in warehouses) revealed its weakness.
tions to halt the spread of the pandemic, which The RWI/ISL index4 concerning the work of ma-
resulted in a reduction in the number of port work- jor world ports showed that global trade disrup-
ers, among other things, led to a problem with the tions hit Chinese ports first when the pandemic
unloading of container ships arriving from China broke out and then spread to others. However,
after production there resumed. As a result, the the Chinese ports quickly started operating
lack of available containers in China and their ex- again, returning to pre-pandemic levels as early
cess in European ports, among others, became as March 2020. Globally, the index did not return
a significant problem, causing freight prices to to its pre-pandemic level until July 2020.
more than triple. In February 2021, the Freightos
↘ Chart 15. The RWI/ISL index in 2008-2021
130
120
110
100
90
80
70
60
50
08
09
10
11
12
3
4
5
6
7
8
9
0
1
01
02
01
01
01
01
01
01
02
20
20
20
20
0
.2
.2
.2
.2
.2
.2
.2
.2
.2
.2
.
.
.
01
.
01
01
01
01
01
01
01
01
01
01
01
01
01
Source: prepared by PEI based on: ISL (2021).
4
Calculated by the Institute of Shipping Economics and Logistics (ISL) and the Leibniz-Institut für Wirtschaftsfor-
schung (RWI) (ISL, 2021), the index shows changes in container handling in the most important ports around the
world. The database is currently composed of 82 international ports, which cover more than 60% of container
handling in the world.28 4. The pandemic’s impact on globalisation
Disruptions to supply chains caused by cargo reached the destination ports with a delay,
the COVID-19 pandemic will affect world trade causing delays in many subsequent connections
long after it is over. After natural disasters end, (Ambroziak, Strzelecki, Sierocińska, 2021).
their effects reduce sales for as much as over Increased shipping and air transport costs
1.5 years after they end (Barrot, Sauvagnat, 2016). have strengthened the role of road transport in in-
The disruption of the delivery system was also ternational trade. The value of deliveries of goods
demonstrated by the blockage of the Suez Ca- to the EU from third countries by sea decreased
nal by the container ship Ever Given at the end by 23% in 2020 compared to 2019; for air freight,
of March 2021. This event, which was not related it fell by 24%. Despite disruptions at borders, the
to the COVID-19 pandemic, led to an increase in role of road transport in trade increase – both in
container shipping costs, significantly hindered imports and exports. EU imports of goods by road
normalisation in maritime transport and delayed increased by 25% in 2020 (y/y) and exports to out-
price stabilisation. The blocking of the Suez Ca- side the EU by 38% (y/y). The share of this type of
nal for six days resulted in a queue of more than transport in total trade increased by 7 pp, to 25%.
400 ships forming on both sides. As a result, the
↘ Chart 16. Changes in EU imports and exports ↘ Chart 17. Share of individual means of trans
in 2020 by main means of transport port in exports outside the EU
(% y/y) in 2020 (%)
40 38 Sea
41
36
30 25
20 17 Air
26
10
0 Road
-10
26
-14
-20 Rail
-30
-24
-22
-24 2
Air Sea Rail Road
Other
Exports Imports 5
Source: prepared by PEI based on the Eurostat-Comext database.
The changes linked to the pandemic could China enters the EU at the Brest-Terespol bor-
be an impulse for the development of land trans- der crossing. This is around 5% of the value of all
port in Poland. In particular, using the potential of trade between the EU and China.
the Eurasian rail corridor would be advantageous The growth in the volume of rail transport
from an economic and climate point of view. It is between the EU and China in 2020 increased
estimated that around 90% of rail transport from the waiting time for customs clearance and4. The pandemic’s impact on globalisation
29
transhipment from the broad-gauge railway track container transport via the Eurasian corridor,
to the European one at the Polish-Belarusian other terminals in Poland – such as the ports in
border. The ongoing expansion of the tranship- Gdańsk and Gdynia or the terminal in Sławków, on
ment terminal in Małaszewicze aims to coun- the PKP Broad Gauge Metallurgical Railway Line
ter this problem and increase Poland’s role as – may need to be expanded, too.
a transport hub. In the face of the increase in
4.2. Markets’ and governments’ reactions to
the disruptions on the global market linked to
the pandemic
4.2.1. The increase in protectionism
The supply chain disruptions caused by the The overall number of restrictions on trade in
COVID-19 pandemic prompted several countries 2020 was higher than in previous years. However,
around the world to interfere with international the upward trend had started earlier, in 2019, dur-
trade. The most common form of interference ing the China-US trade war. According to Global
was export subsidies. However, export restric- Trade Alert, 382 new trade restrictions harmful to
tions (export bans, permits, and so on) have trading partners were introduced in 2019; in 2020,
a much greater negative impact on world trade this number was 456 (Global Trade Alert, 2021).
because they disrupt supply chains. They also A large share of them were restrictions with a det-
carry a high risk of escalation, as other states rimental impact on Chinese exports; in total, in-
impose these kinds of restrictions. Although the cluding restrictions from previous years, there
WTO rules do not allow countries to introduce were 646 of them in 2020, according to Global
quantitative restrictions on exports, the exception Trade Alert. Despite that China’s importance in
is restrictions needed to protect public health. the international trade even increased.
↘ Chart 18. Number of new trade restrictions with harmful effects for trading partners
in 2010-2020
500
400
300
200
100
0
10
11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
20
20
20
Source: prepared by PEI based on: Global Trade Alert (2021).30 4. The pandemic’s impact on globalisation
Many of the tensions concerned the trade in licensing mechanism for vaccines,. as a pressure
medical equipment, medicines and vaccines. Ini- mechanism on the producers. These types of ac-
tially, the main challenge was to ensure protective tions may be particularly dangerous in the global
measures to halt the spread of the virus. Although fight against the pandemic because the production
global production of protective clothing was adapt- of the vaccines and their ingredients is highly con-
ed to meet demand, the risk of restrictions on the centrated (Evenett et al., 2021). The unavailability of
export of the medicines and vaccines needed to the vaccine in developing countries, such as Bra-
combat COVID-19 still exists. These kinds of restric- zil or India, will pose a risk amid efforts to contain
tions were temporarily introduced by the US and the pandemic.
India, among others. The EU introduced an export
4.2.2. Independence from supplies from China
Experts predicted that companies from result in the workforce not being the primary cri-
rich countries would reduce their dependence terion when selecting new production locations
on global supply chains and increase invest- (Faber, 2020).
ment in the automation of production onsite The pandemic has highlighted societies’ sen-
(Kilic, Marin, 2020). However, the processes sitivity to matters of strategic security and those
linked to technological and production innova- linked to health and climate change. It has also
tion may be long-lasting (Comunale, Dainauskas, strengthened governments’ legitimacy when it
Lastauskas, 2021) and apply to other more ad- comes to intervening in economic life and weak-
vanced industries, too. They will not always lead ened public support for globalisation.
to an increase in local employment, which may
87 %
of the EU residents on suppliers
say that EU should be of strategic
less depend resources
A vast majority of EU residents (87%) sur- situation, trade policy is being tied more closely to
veyed in July (Eurobarometer, 2020) believed the EU’s foreign policy goals.
that the EU should be less dependent on coun- One of the initiatives aimed at reducing the
tries that provide strategic raw materials (such EU’s dependence in key areas is the pharmaceu-
as medicines). Over the past year, the EU has tical strategy adopted in November 2020 (Euro-
launched a number of initiatives to strengthen its pean Commission, 2020), which envisages new
“open strategic autonomy” and thereby reduce its regulations and improved coordination between
dependence on external supplies in key areas. To member states’ and EU institutions to strength-
respond to the increasingly complex international en the pharmaceutical sector and increase theYou can also read
