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The Globalization Conundrum Post Covid-19: Internalizing The Risks Of The Supply Chain

Author

Listed:
  • JOSEPH PELZMAN

    (Department of Economics, George Washington University, Washington, DC, USA)

  • OFRA BAZEL-SHOHAM

    (Department of Finance, Temple University, Broad Street, Philadelphia, PA, USA)

Abstract

In 2020, US and European firms undertook financial risk that they can ill-afford to carry, stemming from their supply chain networks. Many have gradually deluded themselves into thinking their risk was reasonable, while other firms have made production sourcing decisions with little idea of the true magnitude of their risks. However, the rising risk was an inevitable consequence of the economy’s multinational firms, spreading the supply chain further away from their home base. For the purposes of this paper, we consider risk associated with a transaction to be excessive when the domestic multinational is likely to incur a loss that will seriously compromise its production and sales, and possibly force the firm into bankruptcy.

Suggested Citation

  • Joseph Pelzman & Ofra Bazel-Shoham, 2021. "The Globalization Conundrum Post Covid-19: Internalizing The Risks Of The Supply Chain," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-16, December.
    • Handle: RePEc:wsi:gejxxx:v:21:y:2021:i:04:n:s2194565922500075
    DOI: 10.1142/S2194565922500075
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    More about this item

    Keywords

    COVID-19; supply chain disruptions; international trade; globalization;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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