The Rise of Global Supply Chains, Networks, and the Rise of Interruptions: Looking Forward Past COVID-19

The COVID-19 pandemic and the associated shutdown of economic activity, first in China, then in parts of Europe and the United States, drew stark attention to the consequences of long supply chains that snake around the globe. In the health care sector, disruption in the production or shipment of protective masks from China and of pharmaceutical feedstocks from India underscored the way production networks can transmit shocks in one nation to firms and consumers in many others. Recent developments highlight a much more general point: as supply chains lengthen, the set of shocks — whether due to natural disasters, political forces, health conditions, or other sources — that can impact the production of final goods becomes much larger. Global supply chains can be a source of risk. The appropriate risk analysis and policy response requires understanding the nature of that risk and the role of policy levers in addressing it.

To understand the consequences of longer supply chains and the potential set of risk-reducing strategies, the Cross-Border Threat Screening and Supply Chain Defense (CBTS) — a Department of Homeland Security Center of Excellence led by Texas A&M University — and the National Bureau of Economic Research (NBER) collaborated to measure the extent to which global supply chains have lengthened. The NBER hosted three research meetings to promote economic research on supply chain issues. It also posted a call for proposals, reviewed the submissions and with input from DHS staff identified, a set of six potential projects for funding. Support for this initiative was terminated before these projects were launched.