Global Pandemics and the Economics of Value Chains: COVID-19 and the Production of Medical Devices

Abstract

Pandemics change the dynamics of value chains in fundamental ways, and particularly of those producing the medical devices needed to fight them. This paper shows that the rationale for organization of the production of these devices differs from that of most other products. Varying trade-offs between the benefits of global integration and the imperatives of secured and speedy supply favor different production modes. Value chains of different geographic scales – local, regional and global – are suitable for different medical devices. A model developed based on these variations could assist policymakers in designing differentiated policies towards different medical devices. As well, the model provides insights that could aid supply chain managers and academics rethinking the determinants of supply chain structures across industries.