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Global Supply Chain Issues in the Developing World

developing world
More than half of the global population has received at least one dose of the COVID-19 vaccine. The world is slowly recovering from the devastating effects of the virus. However, a serious post-pandemic symptom has emerged: the global supply chain is struggling. While the supply chain affects the whole planet, there is ample evidence of how global supply chain issues are burdening the developing world.

COVID-19 Measures Slow Down the Supply Chain

COVID-19 prevention measures across the globe have shut down processing plants and restricted transportation. They have included export bans or tight quotas to control supplies and prevent the spread of the virus. These measures have all contributed to disruptions in the global supply chain, which have impacted the developing world in a number of ways. Here are a few examples:

  1. Price volatility puts certain countries in jeopardy. Export bans and other restrictions cause prices to spike and drop unpredictably. That is creating price instability in countries that depend heavily on imports. For example, small pacific islands, such as Kiribati, that rely on imports but had grounded all flights have seen the cost of rice increase by 50%.
  2. There is massive food insecurity in the developing world. As Time reported, the World Food Program (WFP) estimated that the number of people who will starve has effectively doubled due to the pandemic. However, evidence suggests that there is not really a food shortage. Instead, transportation restrictions and protectionist trade policies are disrupting the flow of foods such as wheat and rice. Therefore, there may not be a food shortage problem but rather a food access problem.
  3. Humanitarian agencies have also warned of how global supply chain issues are burdening the developing world. They have expressed concerns that disruptions in the global supply chain may affect their abilities to provide commercial aid to developing countries in need. These agencies and nonprofit groups have experienced trouble acquiring necessary inventory and transporting that inventory to target nations. However, such hardship has not gone unnoticed. The IMF recently issued $650 billion in emergency currency reserves. In addition, it urged developed nations to use this money toward developing nations.
  4. There is also a cyclical relationship between global supply chains and poverty. Global supply chain issues exacerbate poverty and deepen inequality. However, the same poverty begets more disorder in the supply chain. For instance, if unable to profit from crop production, younger generations are likely to abandon traditional farming methods, threatening the smooth flow of the supply chain altogether.

Potential Benefits

Supply chain issues have not entirely punished developing nations. Some developing countries are benefitting, as the prices of their exports continue to skyrocket. For example, major oil exporters in the Middle East have benefitted from rising oil prices, according to The New York Times.

Leaders Look to the Future

Post-pandemic growth can be slow. However, government and private sector world leaders are actively working to speed it up. On October 31, 2021, international leaders met to discuss ways that they could improve the supply chain and make it more resilient in the future.

U.S. President Joe Biden urged for fair labor conditions, the end of trade restrictions and communication.“Now that we have seen how vulnerable these lines of global commerce can be, we cannot go back to business as usual,” the President told Reuters.

– Richard J. Vieira
Photo: Flickr