Globalization at the crossroads: contemporary risks of inclusion in global value chains

Kotlica, Slobodan and Stanojević, Nataša (2021) Globalization at the crossroads: contemporary risks of inclusion in global value chains. In: Economic and Social Development (Book of Proceedings), 75th International Scientific Conference on Economic and Social Development. Varazdin Development and Entrepreneurship Agency, Varazdin, Croatia; University North, Koprivnica, Croatia; University, pp. 96-104. ISBN 1849-7535

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Abstract

The second decade of the 21st century has posed numerous existential challenges to the world economy and the globalization process itself. International economic relations, that is international trade, international production and foreign investment, already disrupted by recurring financial crises, experienced the greatest disruption in post-war history during the Covid-19 pandemic. Globally networked production, as the most important determinant of modern globalization, is the focus of this research. This article analyses disturbances in the functioning of global value chains (GVC), caused by the current challenges of the pandemic crisis. The current declining trends in EU value chains are analysed, and their effects on the economy of Serbia are explored. This interdependence was determined by correlation between the Serbia's GDP and the share of foreign value added (FVA) in EU exports. The assumption is that disturbances in GVCs are not only the result of financial crises and pandemic challenges, but in same time, they are the main means of transmitting the crisis to the countries involved. Through value chains, the various types of external shocks have affected even the countries where production has not been interrupted due to the internal impediments. This paper investigates the main mechanisms of the impact of the pandemic crisis on the disturbances of the global production network such as: disruption in international transport due to pandemic closure, disruption of demand, mainly in the direction of its rapid reduction, growing trade restrictions and protectionism. The results showed a remarkably high degree of dependence of the Serbian economy from changes in EU GVCs. The paper points out to the importance of increasing independence in the production of basic goods, as a way to overcome a number of existing and potential causes of disturbances within European GVCs.

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