The Effect of COVID-19 on Global Value Chains – A Prediction Based on Previous Crises

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This thesis sets out to make a prediction on the effect of COVID-19 on Global Value Chains (GVCs). Since GVCs are influenced by offshoring and reshoring decision making, this study used literature on the drivers of offshoring and reshoring to understand the reasoning behind GVC decision making. To see what the effect of the pandemic will be on GVCs, this study used data from comparable crises for quantitative analyses. The data used belong to the SARS and MERS epidemics and the 2008 financial crisis, which have similar characteristics to the COVID-19 crisis. For the effect of the epidemics, a difference-in-difference analysis was performed and for the financial crisis, the panel data methods Fixed Effects & Random Effects were used. The results of the quantitative analyses were not in line with the propositions made. While this study expected the crises to have a negative effect on GVCs, the epidemics were found to have no significant effect and the 2008 financial crisis was found to have a significant positive effect on GVCs. Based on the findings, this study predicts that the COVID-19 pandemic will have a small significant positive effect on GVCs.
Faculteit der Managementwetenschappen