Through the implementation of economic models or theories in favor of the liberalization of international trade, the exchange of goods between countries has increased steadily during the last four centuries, influencing the terms of trade between nations and attending to the growing consumption of humanity. In this way, the consensus prevailed according to which autarky was not viable for any economy, and commercial exchange with other nations was imminent.
Under the premise of promoting free trade, commercial dynamism was first supported by the specialization of work for the production of certain goods based on identifying and using the natural comparative advantages of each country and, then, in the following stage, on the creating their competitive advantages, inspired by the new market opportunities that the wider world could offer, both for finished goods and raw materials.
In this dynamic panorama, with the strong development of the electronics and information industries, supply chains became leading players in world trade and more sophisticated and global production models, especially from the second half of the last century to the present. The relocation of production and the participation of various suppliers based in countless countries that provided raw materials, parts, or inputs for the manufacture of certain goods, increasingly technology-intensive, became normal industrial practices, even transoceanic and transcontinental that, despite the geographical distances, provided efficient and attractive production costs.
It became industrially very complex for a single production center to produce a complete product. For this reason, companies must rely on different specialized suppliers, located anywhere in the world, to obtain the components that would allow the complete manufacturing of a product. This scenario was articulated on a harmonious and synchronized logistics supply chain that resulted in global supply chains that also offer goods with a global profile.
However, at the end of 2019, the covid-19 pandemic broke out, generating massive confinement of the population (understood as consumers) in almost the entire planet. Immediately, the production processes were interrupted and even paralyzed as a result of the drop in demand. Bewilderment and uncertainty replaced calm production forecasts and relatively predictable sales. Supply chains, until recently harmonious and agile, were suddenly static, and confused: their normal functioning was broken because demand first slowed down, and then this disrupted the supply of goods and services.
In a general way, delays began to appear in international transport and logistics operations or, simply, the cancellation of orders or shipments of finished goods, in process or raw materials, with the consequent shortages in industrial warehouses and later in supermarkets and all kinds of shops. The companies, seeing themselves paralyzed due to the lack of supply, began to look for solutions to face this new reality. It was clear that they needed to have more autonomy in their production operations and not continue to depend on distant suppliers that could not respond as well now as they did during the past decades. And when wondering how to better control their supply chains, to make them more their own and safer, the option was to hire local or, at least, closer suppliers.
For the first time, the supply chain model was questioned, which, based on its synchronism and efficient logistics, has provided many benefits to world trade for a long time. For this reason, a possible solution, or Plan B for companies for the present and the future, regardless of whether they invoice in international markets, is to assume autarky models, since the trauma derived from the scarcity of chips, containers, vehicles, or concentrates for animals, to cite just a few examples, must be corrected and avoid their repetition. And probably a local supplier, closer and more reliable, can be the solution.
Added to this confusing and complex scenario, the conflict between Russia and Ukraine and the tense commercial relationship between the United States and China, which includes outbreaks of “productive nationalism” has aggravated the situation helping to record the highest inflation levels in recent years fifty years worldwide, especially with the food. The general increase in prices that are affecting the planet is a consequence of the disarticulation in the supply chains.
In conclusion, given this new panorama, when countries and their companies begin to understand and measure the economic and commercial consequences of covid 19, reflection arises as to whether global value chains have lost their strategic importance and should be reconsidered or redesigned to have a better response capacity to phenomena such as the pandemic or if, on the contrary, the economic environment is beginning an era influenced by autarky.
