May 25, 2023 – Globalization is under attack with calls for reshoring, nearshoring and friendshoring (aka allyshoring) as well as related calls for decoupling and derisking.
In “The Economics of Supply Chain Politics: Dual Circulation, Derisking and the Sullivan Doctrine,” Fellow-In-Residence Dan Ciuriak explores the economics of the various “shorings” and the new supply chain politics that has emerged in response to supply disruptions during the pandemic, which has led to the use of sanctions, export and import sourcing restrictions. In particular, Ciuriak examines three major doctrines: China’s Dual Circulation; the EU’s Desrisking Doctrine; and the US’s Sullivan Doctrine.
While the pandemic-related supply chain disruptions to production have moved into the background since the “made in the world” production system generally responded well to the shocks, the geopolitical contest over foundational technologies is keeping supply chain politics in the spotlight.
The major risk now is that politically motivated supply chain restructuring implies potentially significant costs to the public purse, both in terms of subsidizing restructuring of production at home and offsetting ongoing efficiency costs. Moreover, the weaponization of supply chains to extract likely transient advantages in developing critical technologies raises much larger risks in driving confrontation in the longer term.
For more information contact: Dan Ciuriak, Fellow-In-Residence, C.D. Howe Institute, and Director and Principal, Ciuriak Consulting Inc.; Lauren Malyk, Communications Officer, C.D. Howe Institute, 416-865-1904 Ext. 0247, lmalyk@cdhowe.org