The Globalization of Trade Theory

The Globalization of Trade Theory
The issue of supply chain is relevant to all countries. In an increasingly global economy, each country is depending on another for some goods and services. All countries have symbiotic relationship with each other which is enabled by a global supply chain network. Even the most sanctioned countries in the world have trade partners and or have established covert ways of trading with others. In the 21st century, it is impossible for a country to be self-sufficient. The interconnectedness of the economy follows the Heckscher-Ohlin Model theory. Each country seems to focus on producing and exporting what it can efficiently and plentifully produce CITATION Sub03 \l 1033 (Subasat, 2003). Some countries have developed and absolute advantage of some products and continue to be connected to the other countries through complicated supply chain networks. Therefore, the issue of supply chain and trade is an issue for all countries. However, it is important to note that all countries did not experience the same supply chain challenges. The problem was unique for every country in different ways. A supply chain network to deliver perishable food is different from that delivering manufactured goods. Thus, depending on the reliance of the economy of the country, the supply chain strain would affect the country differently. The lockdown restrictions had an asymmetric effect on the imports and exports for different countries CITATION Soc21 \l 1033 (Socrates & Lashitew, 2021). The global supply chain is a well-oiled machine that has developed over centuries and it remains indispensable to the global economy. Though the pandemic exposed its weak areas, it remained resilient and delivered on its mandate.
Does Covid-19 experience strengthen the need for even more international connectedness of economies, perhaps with more Plan-b’s?
There is need for more international connectedness to avoid similar problems. The problem was not interconnectedness of countries, it was the fragility of the supply chain that had been maximumly tuned for efficiency. The supply chain had been developed to reduce unnecessary inventory and production on demand for many things. Each producer, manufacturer, retailer, distributor and consumer just took enough goods for a short period of time. Most manufacturers adopted a Just-in-time inventory management which was pioneered by Toyota CITATION Nic10 \l 1033 (Radziwill, 2010). Parts are ordered and received just in time for production and therefore the manufacturer does not hold any safety stock. Such systems are efficient and reduce overhead, storage costs and unnecessary stocking of parts. However, this type of inventory could not operate during the pandemic as there were fewer personnel in companies, some countries closed non-essential production of goods among other measures that affected producers that relied heavily on this model CITATION Bay19 \l 1033 (Bayoumi, Barkema, & Cerdeiro, 2019). On the other hand, some goods cannot have such lean production methods i.e perishable food stuffs. Most countries rely on others for some food items and the border closure affected flow of goods between countries. The issue was exacerbated by food hoarding. Some people stocked food anticip...