Critical Analysis of the Relocation Strategy of Production Between National Protectionist Policies, Global Supply, and Value Chains

Critical Analysis of the Relocation Strategy of Production Between National Protectionist Policies, Global Supply, and Value Chains

José G. Vargas-Hernández
Copyright: © 2022 |Pages: 18
DOI: 10.4018/978-1-7998-9140-6.ch002
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This chapter aims to critically analyze the implications that the national protectionist policies have on the global supply and value chains and the relocation of production. The analysis is based on the assumptions that the global economy is facing the possibility of decoupling of many trade connections, and this trend favors deglobalization processes that have long been promoted by populism, nationalism, and economic protectionism. It is concluded that global supply, production, and value chains although being economically efficient are no longer any more secure under national protectionist policies, and therefore, the relocation of production processes is mainly due to the increase in the level of income and wages of the developing countries that are the destination and which reduce the advantages to relocate.
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National Protectionism Policy

Protectionism has returned, and it will be having to think about it if it is wanted to reap all the benefits and implement this reasoned “deglobalization” that it called for and that now seems inevitable (Sapir, 2016). The term deglobalization was coined by Sapir (2011) to refer to the protectionism of countries that have a similar level of development and economic growth limited by the commercial and financial dimensions of globalization than through outsourcing and relocation processes of large companies. groups of production centers. Deglobalization processes are characterized by the recovery of the sovereignty of nations, reduction of their interdependence, implementation of automatic and protectionist policies to reduce economic and commercial relations.

In a protectionist policy, countries increase restrictions on the free flow of trade, finance and people, reinforcing their national borders and are oriented towards deglobalization processes that threaten the internationalization of higher education, for example, which remains confined, although It is already advised to deepen the advancement of online education through platforms that reach all places, including the most remote places in the world. The concern about these changes is the depth in which they must occur to save and overcome the advances of globalization, so it can be considered that the advances will be different and different as it had been advancing before, although it is necessary that competition be promoted at the same time that cooperative and collaborative relationships are fostered.

Deglobalization is an inverse process to globalization that is manifested by the protectionist and regulatory economic and trade policies of the nation states as well as the trade wars that are carried out between the great economic and commercial powers. To protect national production, domestic markets increase tariff barriers with the intensification of trade wars between western and eastern markets. What the health crisis has done is accelerate the process.

The international competition on economic systems in the world economy is reduced to economic structures and enterprises mechanisms of macroeconomic players supported by the strengthen functions of the state to stabilize macroeconomics, protect intellectual property rights, to ensure legality and enforcement of contracts, infrastructure provision, and other micro economic policies to stablish incentives and mechanisms for corporate governance, stimulating research and development, investments in human development. Protectionist, nationalist and populist policies can be functional or dysfunctional depending on their correct design and implementation.

Key Terms in this Chapter

Value Chains: It is a theoretical model that graphs and allows to describe the activities of an organization to generate value to the end customer and to it.

Deglobalization: The slow-down or reverse of globalization. A political project opposed to neoliberal globalization. In the first definition, the term describes how global flows of trade, investment, and migration can decline.

Global Supply Chain: It is the set of activities, facilities and means of distribution throughout the world necessary to carry out the entire sales process of a product. This is, from the search for raw materials, their subsequent transformation and even the manufacture, transport, and delivery to the final consumer anywhere in the world.

Relocation of Production: The international displacement of a productive structure.

Production Chain: It is a system made up of people and companies related to each other, by a succession of production operations.

Protectionism: Is a commercial policy established by a government that aims to protect the national industry against foreign competition with the application of tariffs or any other type of import restriction.

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