Three strategic ways to grant supply chains resilience

 Three strategic ways to grant supply chains resilience

Automobile and electronics makers worldwide have had to reduce output because a severe drought in Taiwan hit the island’s production of semiconductors. This and other global supply-chain disruptions—many of them caused by the covid pandemic—have prompted advanced economies to take steps to mitigate the potential impact. But what types of government action make economic sense?

Supply-chain bottlenecks can have a significant economic effect. Germany, for example, imports 8% of its intermediate products from low-wage countries, while the US relies on these economies for just 4.6% of its inputs. Problems with input deliveries recently led Germany’s Ifo Institute to lower its forecast for German gross domestic product (GDP) growth this year by almost half a percentage point to 3.3%. This vulnerability helps explain why the EU has earmarked part of its €750 billion Next Generation EU recovery fund to…

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