Research
In a world subject to increasing geopolitical competition, global value chains have become significantly vulnerable. Geopolitical threats related to great power competition, political rivalry, and maritime disputes pose serious risks to supply chains worldwide.
Other disruptions such as global pandemics, economic shocks, and monopolised supply chains are also tangible risk factors that could have serious impacts on the smooth functioning of the global economy. The Indo-Pacific represents the heart of several global value chains, among which those of critical raw materials, semiconductors, and various machinery. This region is also the theatre of mounting Sino-American competition, that causes a great geopolitical risk to global value chains, largely because while bilateral relations are at their lowest, the economic interdependence between them remains higher than ever.
To avoid disastrous consequences for global trade and supply chains, it is vital that like-minded partners in the Indo-Pacific and beyond work together to anticipate risk, minimise exposure, and help each other resist and adapt to sudden shocks brought along by geopolitical threats. For both industry leaders and governmental bodies, the key challenge lies in utilising predictive models and analytics to grasp potential risks and mitigate vulnerabilities. This effort should not be isolated but rather adopt a holistic approach, encompassing suppliers, processes, and markets.
Author: Dr. Jagannath Panda
This paper is part of the Europe in the Indo-Pacific Hub (EIPH) Guest Author Series: Access or Absence in an era of geopolitical competition: insights on critical resources, global value chains, and maritime security. Edited by Paul van Hooft, Benedetta Girardi and Alisa Hoenig.
The research for and production of this report was made possible by a financial contribution from the Taipei Representative Office in the Netherlands to the Hague Centre for Strategic Studies. The conclusions and recommendations presented in this report are the result of independent research. Responsibility for the content rests with the authors and the authors alone.
