The search for supply chain resilience

Abstract

Supply chain resilience is an emerging focus of public policy. This article unpacks the concept’s meaning against the backdrop of the COVD-19 pandemic and geopolitical rivalry. While fragmented and transnational global value chains (GVCs) are the defining feature of 21st century trade, their perceived fragility is increasingly perceived as a source of unacceptable vulnerability that must be mitigated by enhancing resilience. We frame the concept of resilience through the theoretical lens of insurance to explain two causes of under-provision in private markets: an information problem and a public goods problem. We outline three basic principles to anchor supply chain resilience policymaking: specificity, cost-consciousness and political sensitivity. We classify potential policies by their budgetary cost and level of government support, and argue above all for modesty and caution in public management of GVCs, which actually performed well during the pandemic and are a vital anchor of the rules-based international economic order.