The Global Manufacturing and Industrialisation (GMIS) Digital Series 2020 kicked-off with a high-level panel webinar addressing “glocalization: localizing production and capacity building for survival and success”. The focus was on the effect of COVID-19 and the Fourth Industrial Revolution (4IR) on integration within global value chains, the implications for micro, small and medium enterprises and the labour force, particularly in developing countries. The session featured UNIDO’s Cecilia Ugaz Estrada, Bright Simons, President, mPedigree, and Yi Xiaozhun, Deputy Director General of the World Trade Organization.
Yi stated that world merchandise trade may fall by 13 per cent due to the pandemic, and that the current disruption differs from that of the 2008 crisis. “I don’t believe that these changes are likely to stay with us forever,” he said. “Going forward, the structure of the supply chain will depend on whether the experience accelerates two trends that have been underway for several years. One trend is China moving up the value chain due to its industrial strategies or rising labour costs. Another important trend is increasing adoption of labour-saving technologies in modern manufacturing, such as industrial robots..
Ugaz Estrada stressed that closing borders would reduce the potential for trade integration and warned of the potential erosion of comparative advantage in many developing countries. “I think developing countries have a real opportunity to be able to expand their markets by exporting to and importing from their neighbours…there remains the possibility of expanding markets by using trends of regionalization,” she said.
Ugaz Estrada also pinpointed a number of factors which would be key to SMEs in developing countries being able to absorb advanced manufacturing technologies in the current challenging environment. These include upgrading digital infrastructure; creating preparedness strategies; digital upskilling and training; empowering women; and creating strong multi-stakeholder partnerships.
“It’s a moral imperative for international corporations to really provide a proper learning process for participation in the value chain; it’s a sine qua non condition. At UNIDO we are in the business of trying to help countries – the governments in particular -to be able to provide this learning infrastructure,” she said, citing UNIDO’s Centre for Mechatronics and Automation Technology in Uruguay as an example.
Simons stressed the dampening effects of COVID-19 on regional integration, connectivity and trade, as well as possible border closures.
“The barriers that COVID-19 has imposed affects regional trade, as much as it affects global trade,” he said. “So if you are following the discussion around the Continental Free Trade Agreement, which now has now been imperiled because of COVID-19, given that it is the avowed aim of all African governments to forward the continental integration agenda, it will be quite surprising if they will be able to achieve that by closing borders,” said Simons.
He mentioned that SMEs in Africa had often been constrained in exporting by stringent standards and certification requirements, but that technologies are emerging that are helping to streamline these processes.