Question

“Over the Years, Markets have become global. But now the Protectionist policies of the USA and the COVID -19 Pandemic threatens the global value chains.

Elaborate your answer with a relevant examples.

Answer 1

It shall be noted that the COVID-19 pandemic has called for the lockdown where people are contained within their homes. All economic activities restricting the economic activities that relate to the supply of essential commodities have been brought to a standstill.

There is no work. People are living on their savings which are on the decline due to the stopping of day-to-day work. There is no income flow.

With the opening of the economy, but slowly, the government has urged the low & high-income group to boost economic sales and provide comfort to small scale sellers in the market who is on the verse to be pushed to below the poverty rate. The citizens are being urged to buy local products and revive the local economy.

The people being driven by nationalist outlook are considering it a call of duty to lubricate the economic growth of the country and create demand for local goods & services. Even the government has imposed the policy to restrict the inflow of foreign goods & services that offer a threat to the down-stricken domestic industries.

Thus, with the focus on reviving the local economy and providing a boost to the domestic industrial production, the government has actually adopted the protectionist policy in the very interest of the domestic sellers, manufacturers, and suppliers. And there is no sign that the government would relax protectionist policy in the near future.

That means the foreign products are made available at high taxes or in a limited amount. This offers a threat to the global value chain. There is a threat that the supply of global products would get a severe hit for the next 2-3 years that is enough to break the entire global value chain world-wide.