Abstract
Since the outbreak of COVID-19 and the American decoupling policy, the global value chains (GVCs) have been switched to regional GVCs, and, in the worst case, are subject to a potential alteration of reversing the GVCs, ultimately entailing a severe impact on international trade and the global energy market. This paper applies a quantitative approach using a computational general equilibrium (CGE) model to estimate the effects of the reverse GVC factors on the global economy, trade, and energy market. These reverse GVC factors will decrease the global GDP, and such effect will bring a greater influence on both China as well as the United States, which is pursuing decoupling. The increased trade costs due to these factors will reduce the GVC indices, mostly in ASEAN by 0.2~1.15%, followed by Korea, Japan and China. Surprisingly, the GVC index in the United States is expected to be strengthened due to the enhanced GVC with its allies such as Canada and Mexico. In China, the use of oil, gas and petroleum is expected to decrease by around 10%, and similar effects are expected in Korea and the EU. Among the world’s major energy producers, it is estimated that the US will reduce energy exports by 16–62% depending on the energy source, and the Middle East and Russia will significantly reduce their gas exports. The global energy market is shrinking, but in particular, the international gas market is expected to decrease by 27.3~38.6%.
Highlights
IntroductionPublisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations
In the last 30 years, the global economy has experienced the Goldilocks growth twice: in the mid-1990s due to the launch of the World Trade Organization (WTO), and in 2003~2007 after the dotcom bubble burst in the early 2000s to the 2008 global financial crisis (GFC)
We examine the level of reverse-global value chains (GVCs) in terms of the changes in the GVC indices under each scenario by using the GTAP-VA model
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. In the last 30 years, the global economy has experienced the Goldilocks growth twice: in the mid-1990s due to the launch of the World Trade Organization (WTO), and in 2003~2007 after the dotcom bubble burst in the early 2000s to the 2008 global financial crisis (GFC). There has not been any Goldilocks era and the global economy in the 2010s is relatively weaker than that before. During the Goldilocks era, the global value chain (GVC) expanded fast, and the demand for imports and international trade subsequently increased due to income growth in resource-rich countries. Due to the increase in energy demands followed by the high growth of the global economy, the global energy market boomed
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