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GLOBAL SUPPLY CHAINS AFTER COVID-19: THE END OF THE ROAD FOR
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 GLOBAL SUPPLY CHAINS AFTER COVID-19:
THE END OF THE ROAD FOR NEOLIBERAL GLOBALISATION?

CLINTON FREE, University of Sydney Business School, University of Sydney **

ANGELA HECIMOVIC, University of Sydney Business School, University of Sydney

Contact details:

CLINTON FREE, University of Sydney Business School, University of Sydney,

Camperdown NSW 2006
Tel: +61 2 8627 8764, E-mail: clinton.free@sydney.edu.au

ANGELA HECIMOVIC, University of Sydney Business School, University of

Sydney, Camperdown NSW 2006
Tel: +61 2 9351 8614, E-mail: angela.hecimovic@sydney.edu.au

** Corresponding author
 Global Supply Chains After COVID-19:
The End of the Road for Neoliberal Globalisation?

Abstract

Purpose – Through its impact on both demand and supply, the outbreak of novel coronavirus (COVID-
19) has profoundly disrupted supply chains throughout the world. This paper explores the underlying
drivers of the supply chain vulnerability exposed by COVID-19 and considers potential future
directions for global supply.

Design/methodology/approach – This paper adopts a case study approach, reviewing the automotive
manufacturing sector in Australia to illustrate how neoliberal globalisation policy settings have shifted
large tracts of manufacturing from the global north to the global south.

Findings – We demonstrate the way that neoliberal globalisation policies, facilitated by certain
accounting rhetorics and technologies, have consolidated manufacturing in China and South-East Asia
in ways that embed vulnerabilities in global supply chains. We present three scenarios for post-COVID-
19 supply chains and the accounting techniques likely to garner stronger attention as a result of the
pandemic.

Research limitations/implications – The paper illustrates how certain accounting rhetorics and
technologies facilitate neoliberal globalisation, embedding supply chain vulnerability that has been
exposed by COVID-19. It also suggests how supply chain accounting may develop more robust supply
chains in a post-COVID-19 world and sets out an agenda for future research in this area.

Practical implications – A number of practical supply chain accounting and planning technologies are
suggested to facilitate more robust supply chains.

Originality/value – This paper draws attention to the neoliberal globalisation policies that have shaped
global supply chains as well as how COVID-19, in concert with other geopolitical trajectories, may
represent a watershed moment for global supply chains.

Keywords – Neoliberal globalisation; COVID-19; Global supply chains; Supply chain accounting;
Australian automotive sector

Paper type – Research paper

1
 Global Supply Chains After COVID-19:
The End of the Road for Neoliberal Globalisation?

1 Introduction
The coronavirus pandemic could be the straw that breaks the camel’s back of economic
globalization. China’s growing economic and military power had already provoked a bipartisan
determination in the United States to decouple China from U.S.-sourced high technology and
intellectual property and try to force allies to follow suit. Increasing public and political pressure
to meet carbon emissions reduction targets had already called into question many companies’
reliance on long-distance supply chains. Now, COVID-19 is forcing governments, companies, and
societies to strengthen their capacity to cope with extended periods of economic self-isolation.

- Niblett (2020)

The recent outbreak of novel coronavirus (COVID-19) has generated enormous social and economic
change. Government responses around the world have been extraordinary, ranging from financial
stimulus packages to unprecedented social distancing restrictions and bans on international travel.
Border closures and mobility restrictions have been widely credited with restricting the spread of the
virus. While restrictions on movement will likely be relaxed over time, the COVID-19 crisis is likely
to have an enduring impact, especially given that it reinforces a number of trends already in play. The
crisis has prompted questions about the need for business travel, provided political fodder for nativists
favouring greater protectionism and tighter border control, and disrupted fragmented international
supply chains. This article focuses on the latter, examining the impact of the pandemic on global supply
chains and its implications for the future of supply chain arrangements.

The rise of neoliberalism since the 1970s has dramatically transformed the industrial practices of
countries across the globe. Harvey (2005, p. 2) defines neoliberalism as “a theory of political economic
practices that proposes that human well-being can best be advanced by liberating individual
entrepreneurial freedoms and skills within an institutional framework characterised by strong private
property rights, free markets, and free trade”. According to this view, the state is assigned a limited
economic role: determining property rights, enforcing contracts, and regulating the money supply. A
compound of two overused and conceptually stretched ciphers, 1 the term neoliberal globalisation refers
to the complex of ideas and policies that ideologically underpin international free trade and privatisation
initiatives. Key tenets of neoliberal globalisation include privatising state-owned enterprises and
services, reducing public spending, orienting economies towards export, liberalising investment and
trade, and slashing protectionist subsidies (Bakre et al., 2017; Lehman et al., 2016; Ellwood and
Newberry, 2007). Fostering free trade on an international scale has given rise to a range of supra-
national governing bodies, including the World Trade Organization (WTO), as well as free trade
agreements, such as the North American Free Trade Agreement (NAFTA). These bodies advocate for
minimal controls on business, unrestricted foreign investment, privatisation of state assets, competitive
(i.e., low cost, deunionised) and flexible (temporary, part-time and contract-based) labour markets, and
the implementation of international standards, such as the IFRS (Zhang et al., 2012).

Especially since 1980, the world’s manufacturing production has been increasingly structured in what
has become known as global supply chains (or global value chains). Raw materials and intermediate
goods are now frequently shipped across the globe several times before final products are exported to
final consumers around the world, coordinated by accounting technologies predicated on global labour
arbitrage, cost minimisation, lean inventory management and tax avoidance (Hopper et al., 2017, Froud
et al., 2014; Anderson and Dekker, 2009). These design, measurement and analysis tools have
consolidated global value chains and a new geography of value creation and capture. China has become
the most important link in many global supply chains – as a large customer of global commodities,
primary manufacturer and assembler, and a major consumer marketplace. Foxconn exemplifies
mainland China’s standing as ‘the world’s factory’ producing goods for many of the world’s best-
known electronics companies, including Apple, Sony and Intel. 2

2
The outbreak of COVID-19 has emphatically highlighted the vulnerabilities of global supply chains
and led to widespread questioning of their future. The precipitous drop in industrial production in China
‒ a fall of 13.5% in the first two months of 2020 (see Figure 1) ‒ has ricocheted throughout the globe
(Forbes, 2020). While it is still too early to properly quantify the effects of supply chain disruptions
caused by the pandemic, the initial decline in production in China has had a large impact on producers
and consumers in countries up and down supply chains and hastened the decline in Sino-American
trade, already underway as a result of ongoing trade disputes between China and the US.

[Insert Figure 1 about here]

This paper has two primary aims. The first is to consider how COVID-19 has exposed vulnerabilities
in global supply chains. To this end, the paper traces the key drivers of major developments in global
supply chains and how these are underpinned by the rise and impacts of neoliberal globalism. Using the
Australian automotive sector as a case study, it demonstrates the way that policy settings in Australia
have successively deprioritised domestic manufacturing, reflecting trajectories elsewhere in the global
north. The second is to consider likely trajectories for global supply chains as well as their implications
for supply chain accounting (Gold and Heikkurinen, 2018; Free, 2008; Free, 2007; Seal et al., 2004).
We present three broad scenarios for the future of supply chains post COVID-19. In so doing, we
document a series of supply chain accounting and planning techniques and practices likely to attract
increasing future research interest as firms seek to build resilience in their supply chains. These include
risk management, new supply measures, strategic supply chain mapping and functional redundancy.

The paper is structured as follows. Section 2 considers the way that neoliberal globalisation has acted
to consolidate manufacturing, particularly unskilled manufacturing, in the global south. Section 3
presents the Australian car manufacturing sector as a case study, documenting a series of neoliberal
policies that have acted to deprioritise manufacturing in Australia. This is followed by Section 5, a
discussion of the impact of COVID-19 on the future of neoliberal globalisation and global supply
chains. Three different scenarios for the future are presented in Section 6. Whichever way these
scenarios play out, we suggest a series of supply chain accounting techniques that are likely to garner
increasing attention as organisations prepare for a broader range of disruptive risks. The final section
summarises the major arguments of this paper and presents a series of future research opportunities.

2 How Neoliberal Globalisation has Shaped the Globe

The term ‘globalisation’ has become a widely accepted shorthand for the mélange of social, cultural,
economic and political ideas that have gained significant traction in recent decades: the increased
international exchange of ideas, information, people and money; and especially the international
amalgamation of production, investment and trade. Having a familiar catchcry to describe the world’s
increasing interconnectedness is useful, however it does not help to illuminate why, how, or at whose
behest these changes are taking place. Accordingly, this paper is focused on what has been termed
neoliberal globalization, a specific form of globalization in which the benefits of market integration
become unequivocal truth (Sheppard, 2015; Harvey, 2005).

Neoliberalism has become a significant political and economic discourse in western nation states since
the 1980s (Hopper et al., 2009; Olssen and Peters, 2005). Originating in the work of economists like
Friedrich Hayek and Milton Friedman, neoliberalisation conceives of markets as society’s primary
organising force. Rational economic market logic becomes the raison d’etre for universalising
competition and fostering market-identified processes for individuals, groups and institutions (Burchell,
1993). Neoliberal globalisation predicates increased international flows of trade, labour, capital and
technology.

Since the 1980s, governments around the world have favoured – and have in some cases been pressured
(Stiglitz, 2003) – to reduce tariff protection and subsidies, to roll back social security, to privatise public
assets, and to promote large-scale foreign direct investment. Key actors in this process have been the

3
Bretton Woods institutions – primarily, the World Bank (WB), the International Monetary Fund (IMF)
and the World Trade Organization (WTO). Although each has a different mission, the demarcation
between their activities is blurred in practice (Friedrichs and Friedrichs, 2002) and each relies on
financial incentives to pursue their interests. Financial interventions and loans to developing countries
from these institutions are characteristically conditional on adopting policies incorporating privatisation
(Lupu and Sandu, 2017; Parker and Kirkpatrick, 2005; Everett, 2003), deregulation (Lehman et al.,
2016; Lehman, 2009), open markets, free trade, limited government intervention, attracting private
capital, and public sector reforms (Hopper et al., 2017; Lapsley et al., 2010). The liberalisation of trade
and investment since the 1980s has effectively added billions of people to the world labour supply,
principally in China, Eastern Europe, Russia, Argentina and Brazil. According to its advocates,
neoliberal globalisation promised to supply consumers in the global north with ever-cheaper imported
goods, while promising economic security for southern workers through inclusion into the world
market. 3

This is where global supply chains enter the picture. The way in which neoliberal policy measures and
regional investment agreements have reduced the costs of segmented production across state borders is
reflected in Table 1. Global supply chains have facilitated a significant shift in manufacturing from the
global north to the global south with workers in developing countries producing almost half of the value
of global manufacturing exports by 2015, a steady increase from the mid-1980s to the present
(Australian Industry Group, 2019). These workers are producing manufacturing goods primarily as part
of global supply chains, the lead firms of which are based in northern countries. Transnational firms
rely on two methods for accessing global supply chains. The first is foreign direct investment through
subsidiaries. The second is arm’s-length contracts with suppliers in the global south. Much of the high
value-added pre-production (research and development, and design) and postproduction (marketing,
logistics and distribution) segments are retained in developed countries with developing countries
specialising in the lower value-added mass production segment (Jones et al., 2013; Hopper et al., 2009).

In this way, neoliberal globalisation has promoted transnationalisation of production. Empirical

indicators of the increasing organisation of production across borders includes “the phenomenal
increase in cross-border mergers and acquisitions; the increasing transnational interlocking of boards
of directorates; the increasingly transnational ownership of capital shares; the spread of cross-border
strategic alliances of all sorts; and the increasing salience of transnational peak business associations”
(Robinson, 2008, p. 30). As a consequence, workers in different countries have been brought into
unprecedented competition with each other often coordinated through coercive supply chain accounting
practices (Free, 2007). Yet, while northern countries advocate free trade, they can still restrict it; for
example, technological advances foster the global transmission of knowledge and spawn new producers
of technology, but many developing countries do not reap the benefits because rich countries’ patent
and copyright systems restrict developing countries’ access. Moreover, as Murphy and Willmott (2020)
point out, neoliberalism is predicated on the notion of free market capitalism and the myth that
contractual relationships are always between equals. However, by disaggregating value chain processes
into units that can be performed anywhere in the world without costly regulation, those controlling the
strategic configuration of value chains are able to maximise their share of profit; costs are incurred in
low-wage economies, revenues are realised in high priced markets with profits captured
disproportionately by elites in the global north, in turn leading to growing inequality. It also produces
increased instability and what has been termed “barge economics” (Palley, 2019) as multinational
corporations coordinate their production to exploit the lowest possible wage rates.4 For the most part,
large scale outsourcing of production has resulted in low wage growth in high-wage economies.

Table 1 reflects broad patterns of changes in the composition of economies throughout the globe. From
1985 to 2014, manufacturing’s share of exports for the world as a whole was stable; however, it rose
precipitously for developing countries, particularly China (rising by 45.5%) and land-scarce developing
nations in Asia with limited primary sector resource endowments (with a rise of 22.3%). In contrast,
manufacturing sectors in OECD countries registered sharp declines in their global share of
manufacturing employment. This structural shift in manufacturing has been conditioned by education
levels, access to primary resources, literacy and government policy. Overall, this has led to a global

4
pattern of structural change in growing economies whereby the primary sector’s share of GDP and
employment tends to diminish as manufacturing expands, which subsequently gives way to a larger
service sector (Syrquin and Chenery, 1989; Syrquin, 1988).

[Insert Table 1 about here]

Accordingly, in terms of manufacturing output, China has been the major beneficiary of global
neoliberalism. In 2003, 8% of the global export of manufacturing came from China; by 2018 it was a
staggering 19% (García-Herrero et al., 2020). China currently produces nearly 30% of manufactured
goods, 50% of stainless steel and 80% of printed circuit boards in smartphones and laptops (Rustici,
2020). Figure 2 shows China’s current amalgamation in global supply chains across sectors as measured
by the Grubel-Lloyd Index (GLI) of intra-industry trade. 5 Chinese manufacturing is now vital to global
supply chains producing precision instruments, and automotive, communication and equipment
machinery.

[Insert Figure 2 about here]

Manufacturing is organised in global supply chains (also known as global value chains), controlled by
multinationals, wherein production is separated into distinct parts, each representing the transmission
of commercial value. The annual sales of multinationals now represent half of global GDP, and the
majority of international trade now occurs within multinationals (that is, firms trading with themselves).
These supply chains are instrumental in connecting world production, located mainly in the global
South, to final consumption in the global North, with the financial coffers often channelled through tax
havens (Sikka, 2010) by exploiting transfer pricing arrangements (Sikka and Willmott, 2010). General
Motors’ supply chain alone comprises over 20,000 businesses worldwide, predominantly in the form
of parts suppliers, located right across the globe. Companies such as Nike and Apple, headquartered in
the US, offshore their production to subcontractors, with production carried out according to their
precise digital specifications under arm’s length contracting, or so-called non-equity modes of
production (Gold and Heikkurinen, 2018; Clarke and Boersma, 2017). Global offshoring of jobs by
multinationals has resulted in a substantial employment shift from the global north to the global south
over the last three decades.

2.1 The facilitative role of accounting in neoliberal globalisation

Accounting has been described as the ‘technical lifeblood’ of neoliberalism (Steccolini et al.,
forthcoming; Miller and Power, 2013), with scholars arguing that the discursive practices of accounting
lie at the heart of the process of neoliberalisation (Wickramasinghe, 2015; Zhang et al., 2012; Lapsley
et al., 2010; Merino et al., 2010; Ellwood and Newberry, 2007) and neoliberal globalisation specifically
(Bewley et al., 2018; Bakre et al., 2017; Lehmann et al., 2016; Zhang et al., 2012). Operating as both
“a calculative mechanism and as a symbolic carrier of meanings, values and practices”, accounting has
enabled multinationals to structure cross-border flows of capital, products, information, practices and
people (Graham and Neu, 2003, p. 452). Critical accounting researchers have highlighted the capacity
of financialised metrics (Chiapello, 2015; Broadbent and Laughlin, 2013) to depoliticise normative
concerns with neoliberalism by making them appear calculable (Fourcade and Healy, 2013) and mask
the privileges accounting information tends to afford capital (Zhang et al., 2012).

Neu and Graham (2003) document the way that international bodies such as the OECD draw upon
accounting metrics to encourage compliance with OECD goals. The development and publication of
‘performance indicators’ covering a range of domains, including employment, growth, ageing,
pensions, corruption, taxation and transportation, makes visible selective activities of member-state
governments. These surveillance activities provide a strong incentive for states to improve their
‘performance’ in these areas, particularly when tied to the receipt of international funding. For example,
IMF funding to Indonesia following the 1997 Asian financial crisis was tied to a series of conditions in
a formal Memorandum of Economic and Financial Policies (MEFP) (Neu and Graham, 2003) that
included the adoption of a revised financial regulatory regime, import tariff reduction, openness to

5
foreign investment and the foreign ownership of banks, restructuring of state enterprises and new
guidelines for government procurement (IMF, 1997). Similar structural adjustment programs elsewhere
in the developing world have been resulted on conditionalities attached to IMF and World Bank funding
(cf. Rahaman and Lawrence, 2001; Neu et al., 2002). As Neu and Graham (2003) conclude, “accounting
technologies make visible certain problems, suggest certain solutions, operationalize these solutions,
and encourage certain consequences” (pp. 463-463).

Critical studies have examined the role of accounting in promoting neoliberalism. Lehman (2009)
suggests that neoliberal globalisation neglects the values that bind societies together. Similarly, Lehman
et al. (2016, p. 68) argue that the use of accounting (in the form of accounting techniques and audits)
“does not allow the complexities of immigration to enter policy debates” and suggest that while
accounting plays a role in creating visibility, it operates with uneven impacts across the global north
and south (Hopper et al., 2017, p.125). Several researchers highlight the way that accounting can be
drawn upon to promote the interests of powerful elites and multinational corporations (Lapsley et al.,
2019; Andrew and Cahill, 2017; Bakre et al., 2017; Mir and Rahaman, 2005), requiring developing
countries to adopt Western accounting reforms in order to participate in global neoliberal “free” markets
(Graham and Annisette, 2012; Arnold, 2005).

At an organisational level, researchers in the area of supply chain accounting have documented a range
of practices that focus attention on the cost of labour, materials and inventory, including inter-
organisational cost management and price-quality trade-offs (Cooper, 2017; Froud et al., 2014; Lapsley
et al., 2010; Cooper and Slagmulder 2004; Cooper et al., 2003), target and Kaizen costing (Cooper,
2017; Coimbra, 2013; Carr and Ng 1995), open book accounting (Reusen and Stouthuysen, 2017; Free
2008; Tomkins, 2001) whereby buyers may use cost data to extract price from suppliers (e.g., Jack et
al., 2018; Lapsley et al., 2010; Dekker, 2004; Frances and Garnsey, 1996) and coercive supply chain
accounting, characterised by adversarial attempts to appropriate value from suppliers (Free, 2007).

3 Case Study: Car Manufacturing in Australia

The closure of Australia’s last functioning car manufacturing plant in Elizabeth, South Australia by
General Motors Holden (GM Holden) in October 2019 represents a watershed in the history of
Australian industry and can be seen as a microcosm of the overall decline of manufacturing in Australia.
GM Holden was a key player in the growth of Australia’s manufacturing base after World War II,
offering substantial employment opportunities for the growing urban population. The widespread use
of tariffs resulted in a “Fortress Australia” approach that ensured manufacturers had to establish
domestic factories to be competitive. It was supported by a range of import tariffs and quotas through
the 1950s, 1960s and 1970s that received mostly bipartisan political support until 1973 when the
Whitlam Government announced an across the board 25% tariff reduction. By 1990, a 15% tariff
protection was placed on passenger motor vehicles.

This shift away from protectionism accelerated with the Hawke Labor Government’s (1983–1991)
introduction of the Passenger Motor Vehicle (PMV) Plan, which expressly sought to diminish the tariff
protection and quotas for the automobile industry in Australia (as well as the number of passenger
vehicle producers), whilst restraining wage and price inflation. The Hawke government gained support
for these initiatives from employers and unions and was temporarily successful in invigorating the
automotive industry, with the provision of government grants to promote R&D and greater export
capacity (Sohal et al., 2001). This policy continued under Keating’s Labor Government (1991–1996),
and this “market driven” tactic to boost the competitiveness of the automotive industry (Browne‐Yung
et al., 2020; Clibborn et al., 2016) exposed it to international pressures, with a mixed response from car
manufacturers. For instance, a new plant in Altona, Melbourne was established by Toyota incorporating
“lean production” techniques, whilst Nissan claimed the decline in tariff protection was the key
determinant in closing its Australian operations in 1992. Coinciding with the increased sales of imported
vehicles between 1992 to 2012, in December 2013 the Australian government made the switch from
GM Holden to BMW for their fleet vehicles–adding to the “truth that almost nobody was buying
Australian cars except Australians” (Lowy Institute, 2020, p.1).

6
The Automotive Competitiveness and Investment Scheme 6 introduced by the Howard Government
(1996–2007) provided $7 billion in assistance to the industry, with the Government simultaneously
focusing on “weakening the bargaining power of unions” (Clibborn et al., 2016, p. 6). The Rudd–Gillard
government (2007–2013), while providing new streams of financial support via the Green Car
Innovation Fund (established in 2009) also facilitated the lowest tariffs on imported vehicles. The fund
included $3.4 billion for the ‘Automotive Transformation Scheme’ (ATS) supporting investment in
R&D and in long-term sustainable vehicle production (Browne‐Yung et al., 2020). While the Global
Financial Crisis halted the scheme, there was some traction with the production of Toyota’s Hybrid
Camry and production of Holden’s small car, ‘Cruze’. Concomitant with this targeted government
support, tariff rates declined to their lowest levels in Australian automotive industry history (Browne‐
Yung et al., 2020; Beer et al., 2019; Clibborn et al., 2016). With Mitsubishi ceasing operations in 2008,
and a continued shrinking of the domestic market as imported vehicles continued to grab market share,
government policies were criticised as too little, too late. By 2012 only 19% of cars were produced
locally as compared to 64% in 1992 (Browne‐Yung et al., 2020).

In 2012, the Gillard Government launched a $25 million ‘New Car Plan’ policy to assist supply chain
firms expand operations in partnership with the South Australian and Victorian Governments, offering
grants to an industry in steep decline. Attempts to improve the long-term sustainability of the local
automotive industry were dealt a significant blow in 2013 when the Abbott Government reduced
support for the automobile industry by $500 million, with no further tariff protection nor direct
assistance. Unsurprisingly, 8 months later GM Holden, Ford and Toyota announced their plans to close
production plants over a 3-year period (Browne‐Yung et al., 2020).

The automotive sector in the four years from 2013 to 2017 received over AU$1.29 billion in government
support, with ATS assistance making up $1.044 billion of this total, of which Ford, Toyota and GM
Holden received $703 million. When combined with tariff assistance, the financial support to the
industry from 2013 to 2017 exceeded $2.5 billion. This contrasts with industry value added for ‘motor
vehicle and motor vehicle part manufacturing’ of $15 billion for the four years from 2013‒2014 to
2016‒2017 (Department of Industry Innovation and Science, 2020). In 2018, support was provided
through the remaining programs such as ATS and AMGF, to supply chain companies, with 388
automotive manufacturing companies generating $4.1 billion in revenues in 2019, employing over
7,550 (Department of Industry Innovation and Science, 2020).

The end of 2019 witnessed the last 43 Australian made Holden car sales, signifying the end of mass
market local production. Critics argue that “just about every other government subsidises automakers
in every other car-producing country on the planet, and Australia's assistance numbers, in some respects,
were actually quite modest by comparison” (Lowy Institute, 2020, p. 1).

3.1 The emergence of the Asian automotive industry

As Australia’s car manufacturing industry was being liberalised, policies in Asia were providing a
hospitable environment for major automotive manufacturers. At a time when the Thai Government was
no stranger to implementing protectionist policies (with an 80% import tariff on cars as well as an
infamous ‘non-tariff duty’ on the import of Australia’s ‘Ford Territory’ vehicle 7), in 2015 Thailand’s
Board of Investment (BOI) launched a 7-year strategy to attract foreign investment, affording foreigners
a package of tax and non-tax benefits. Thailand’s BOI scheme has been instrumental in supporting the
automotive industry, placing Thailand as the fifth largest automotive manufacturer in Asia (CNN,
2018). Initiatives include tax incentives to foreign companies relocating to Thailand, 30 year residential
lease terms 8, and import duty exemptions for machinery and raw materials utilised in exports (Tajai et
al., 2017). 9 While Thai labour costs are cheaper than those in the west and China, it does not have a
labour advantage over Indonesia and Vietnam, who have also sought to open up automotive industries.

Since the late 1970s, when the domestic automotive industry was heavily regulated with extensive
tariffs and government assistance, Indonesia has embarked on a suite of government policies designed

7
to foster international investment (Nizamuddin, 2008). In particular, the 1990s witnessed substantial
liberalisation of the industry with removal of equity regulations on foreign investments, bans lifted on
commercial vehicle imports, elimination of 20% luxury taxes and a reduced import tax, and relaxing of
new investment license processes, thereby encouraging new auto manufacturers to enter, such as
Volkswagen, Hyundai and Kia (Nizamuddin, 2008). More recently, Indonesia’s success in the domestic
market with a low-cost green car has provided impetus for the government to develop an electric vehicle
policy offering incentives to foreign car manufacturers from Japan, China and South Korea with up to
300% tax deductions available for R&D activities into battery powered cars.

In this ASEAN region, Thailand and Indonesia are not just competing against each other in automotive
manufacturing, but also in enticing foreign investment predominantly from Japan and China (ASEAN
Briefing, 2019). Although the growth of Vietnam’s automobile industry has been slower than Indonesia
and Thailand, it has also relaxed restrictions on foreign investment. 10 In June 2019, the Vietnamese
government signed the European Union Vietnam Free Trade Agreement (EVFTA), eliminating 71% of
duties exports on automobiles and automobile components. Adding to Vietnam’s low production costs,
the EVFTA could attract some auto and parts producers from Thailand. Malaysia, the third largest auto
industry in South-East Asia, has recently signalled its intention to invest heavily into energy efficient
vehicles, offering large “grants, tax exemptions and manufacturing licenses” (ASEAN Briefing, 2019).

3.2 Manufacturing in Australia

Against this backdrop of increasingly hospitable government policies in low-cost labour jurisdictions
in South-East Asia, successive falls in the effective rates of assistance to automotive manufacturing
reflect increasingly anti-protectionist policies in Australia since the 1970s. Figure 3 traces the long-term
trajectory of protectionism from 1970 to the present for manufacturing and agriculture in Australia.
These aggregate figures mask differences between sectors, but it is clear that car manufacturing felt
significant pressure. These policies have been part of a broader regime of neoliberal policies focused
on the pursuit of lower tax, smaller government and cost minimisation.

[Insert Figure 3 about here]

Concomitant with the decline of the automotive industry has been an overall decline in manufacturing
in Australia. Manufacturing’s share of Australia’s GDP peaked in the 1960s at 25%, halving to 13% by
2001–2002 and 10.5% by 2005–2006. Over this period, the state has intervened to imbue greater market
freedoms. High domestic wages are frequently presented as the reason for the demise of the automotive
sector in Australia (Clibborn et al., 2016; Browne‐Yung et al., 2020), but, in fact, Government policy
changes were the major driver of the collapse of the Australian automotive industry (Clibborn et al.
2016, pp. 3, 12‒13) pointing to the decline in industry protection, the weakness of industry policy
intervention, and the commodity boom-induced appreciation of the Australian dollar which placed
pressure on profit margins as key factors. This coincided with policy settings in Asia seen to be
hospitable to international car manufacturers.

[Insert Figure 4 about here]

In sum, as the past four decades of the automotive sector in Australia reflect, neoliberal globalisation
has reshaped lives and economies as it has travelled, transferring thousands of manufacturing jobs from
the global north to the global south and concentrating new centres of production. Accounting
calculations and rhetorics have played a pivotal role in the uptake in the ideas associated with neoliberal
globalisation – providing analyses and projections that galvanise policy positions, inculcating
performance measures and loan covenants employed by the major transnational regulatory bodies and
supply chain accounting techniques that have prioritised low-cost supply and channelled surpluses to
the global north. Since the 1970s, neoliberal ideals of deregulation, privatisation, efficiency and cost
reduction, labour flexibility and free trade have become widely accepted emblems of sensible and
responsible public policy. COVID-19 may be the impetus that fundamentally disrupts this trajectory.

8
4 Sand in the Wheels of Global Neoliberalism?
As the pandemic has spread across the globe, the west’s reliance on supply chains based in China has
been laid bare. A common response to the ‘global scramble’ for medical supplies and medicines has
been a rallying cry for self-sufficiency. The pandemic has given rise to national control of supply in
extraordinary ways. Early in the pandemic China did not authorise mask exports, meaning that even the
Chinese production of the American conglomerate 3M could not be exported to the US. Similarly, the
US invoked the Defense Production Act to prevent 3M from supplying premium masks to Canada and
Latin America. In mid-April, Syria became the 76th country to impose export restrictions on emergency
medical supplies like ventilators and masks (Global Trade, 2020). Concern with self-sufficiency in
relation to medical equipment has, in turn, spilled over to wider concerns about reliance on international
suppliers (IBISWorld, 2020).

Moreover, the COVID-19 crisis comes at a time where global neoliberalism is already under attack
from growing nationalist populism. According to Palley (2019), neoliberal globalisation now confronts
severe challenges from “above” and “below”. From below, it is being confronted by the anger and
resentment of working-class voters in developed economies, manifesting as right-wing populism –
Trump in the US, Brexit in the UK, and the emergence of the Alt-right in Europe (e.g., Marie Le Pen
in France, Geert Wilders in the Netherlands, Nigel Farage in the UK, and the Vlaams Belang Party in
Belgium). 11 And in many ways, the COVID-19 crisis is the perfect fuel for nationalist paranoia;
stemming out of China, with a botched WHO handling of the pandemic, and devastating consequences
for citizens. From above, it is being challenged by a US elite concerned by growing geopolitical
threats. 12 COVID-19 is further straining US‒China relations at a time of increasing hostility between
the world’s two largest economies. As the number of COVID-19 deaths has grown dramatically in the
US, Trump has canvassed a range of initiatives, including new tariffs and sanctions and ordering federal
pension funds not to invest in China, that significantly further undermine geopolitical relations.

The pandemic has emerged as China increasingly seeks to influence geopolitical power relations and
international trade. A central plank of China’s international positioning is the so-called the Belt and
Road Initiative (BRI), an umbrella initiative which encompasses transportation infrastructure,
multilateral financing, and technology transfer between partner countries to facilitate the flow of goods,
investment and people. Since its inception, it has unleashed an enormous set of large-scale
transportation infrastructure projects carried out by Chinese enterprises in a wide number of countries
on the so-called BRI route (as Figure 5 illustrates, the BRI comprises two parts: (1) the ‘Belt’ – the
roads/rails/pipelines in the regions of Asia and Europe; and (2) the Maritime Road – noting that more
than 90% of the world trade in terms of volume is moved by sea, comprising maritime routes connecting
South-East Asian nations) (Thürer et al, 2020). The BRI is focused on countries in the global south with
high populations but limited international connectivity. Promising to enrich the economies of China and
65 partner countries, it has the potential to significantly disrupt global supply chains, deviating trade
from traditional routes. It has generated deep scepticism and concern about China’s expansionist
attitude (Kalaria, 2020).

[Insert Figure 5 about here]

Furthermore, while neoliberal globalisation elevates the market and profit above environmental
considerations (Lehman, 2009), growing recognition of the existential threat posed by climate change
is placing increasing pressure on global supply chains. Climate change activism is increasingly forcing
governments and businesses to focus on the environmental impacts of neoliberal globalisation. Beyond
these forces, there is an increasing recognition that neoliberal reforms have widened inequality of both
wealth and income internationally between developed and developing states as well as domestically
within western nations due to less progressive tax systems and less generous social welfare payments.
Fundamentally, are there more important things than economic growth?

9
Influential post-mortems of neoliberal globalisation are being drafted with increasing regularity (Palley,
2019; King, 2018). It remains to be seen how COVID-19 acts to hasten anti-globalist trends. However,
at the supply chain level, the pandemic is likely to have far-reaching effects. In response to COVID-19
national taskforces have been formed in many nations, including Australia, which have ventilated
concerns about reliance on other nation’s outputs and called for greater degrees of onshoring. These
developments call into question the sustainability of existing patterns of global supply.

5 Manufacturing in the Post-COVID-19 World: Supply Chain’s New World Order?

A number of possible scenarios are likely to play out from here. For analytical purposes, we distinguish
between three high-level outcomes: (1) the resumption of the pre-COVID-19 status quo; (2) the
shortening of supply chains resulting in greater regionalisation; and (3) the re-emergence of onshoring
in the global north whereby supply chains either in part or in toto are taken back within national borders.
Of course, these represent archetypes and the future is likely to comprise a blend of approaches across
these categories. However, there are arguments to support all three in current public discourse.

The first scenario is that COVID-19 will be a temporary blip on the existing China-centric roadmap.
The way that China’s production has ramped up post the initial COVID-19 shock has been impressive
and reassured many vendors (The Economist, 2020). China’s ability to efficiently mobilise its workforce
post-shutdown has meant that it has resumed production at the same time that other states are in the
midst of the pandemic. However, as Bloomberg recently reported, “businesses are reassessing China’s
role in global supply chains, and by the time this virus burns out, many of them will have started
planning to relocate at least some of their production elsewhere” (Bloomberg, 2020b). Even
notwithstanding COVID-19, Sino-American trade tension and suspicion are likely to continue to rise in
both military and business circles into the foreseeable future.

A second scenario is a shift to diversify operations across other geographic areas. Asian economies,
such as Vietnam or Indonesia, may be positioned as new frontiers of manufacturing operations,
capitalising on low labour costs relative to China. Shortened, regionally circumscribed supply chains
are also a possibility, with US companies moving production to Mexico and European companies
manufacturing out of Eastern Europe or Turkey. China’s BRI comprises both hard infrastructure
(highways, railways, ports, roads and energy generation) and soft infrastructure (trade agreements and
aligning of regulatory standards) designed expressly to strengthen regional networks. Regionally
localised production increases resilience against growing geopolitical uncertainty.

A third scenario is further onshoring in the global north. The French Minister of Economy and Finance
recently called for EU governments to rethink their approach to supply chains in order to assure
“sovereign” and “independent” supplies (Le Maire, 2020). Several governments in the global north
have announced plans to encourage more domestic production of basic necessities. Though careful to
play down any moves towards more protectionist policies, Australian Prime Minister Scott Morrison
has talked up promoting Australia’s “economic sovereignty” in a post COVID-19 world. A new
manufacturing task force has been set up by the Federal Government’s COVID Commission. The
manufacturing element of the task force is led by Andrew Liveris, who was recently quoted as saying
that Australia had “drank the free-trade juice” for too long and signalled an end to the era of “off-
shoring” (Australian Financial Review, 2020). The taskforce has signalled a focus on sectors that may
leverage Australia’s comparative advantage and national interests, including food, defence, mining,
medical and engineering.

Technological advances in manufacturing are likely to provide an additional impetus for greater
onshoring in the global north. Advanced manufacturing technology, artificial intelligence and robotics,
as well as 3D printing, offer considerable potential to overcome differential manufacturing wage rates
and enable local production. Industrial robots and additive manufacturing, which combines 3D printers
with computer-aided design and manufacturing, are poised to automate traditional manufacturing labour
roles and are seen to offer substantial cost savings at an industrial scale. Direct digital manufacturing
processes, such as the fabrication of tools and spare parts or the seamless adding of parts made of

10
different materials, have the potential to reduce the complexity of assembly. Similarly, digital supply
networks (DSNs), taking advantage of the Internet of Things, artificial intelligence, robotics and 5G,
have attracted enormous attention (Tsolakis et al., forthcoming). 13 Small but technologically advanced
nations such as Australia are well poised to take advantage of these developments. However, if Australia
is serious about the creation of more resilient supply chains that can be guaranteed to provide essential
items when the next crisis hits, Australian government will need to commit to significant national
planning and prioritisation, as well as a willingness from governments, the private sector and the public
to endure higher costs.

Protectionist policies are likely to generate strong debate. Primarily for employment, innovation and
resilience reasons, the arguments for Australia staying in manufacturing are gaining traction. Many see
manufacturing as an essential ground for research and innovation that in turn generates future streams
of products and incomes. Overall, it is likely that the future will contain traces of all three scenarios.
Whichever trajectory emerges, COVID-19 has prompted reflection about how to build greater resilience
to global shocks. Given the complex implications of “peak globalisation”, companies will need to plan
for a new order; one that is likely to be characterised by tariffs and other trade barriers, more rigorous
legislation in the global south, greater exposure of overseas direct investments to political and trade
credit risks and increased restrictions on movement between countries, all with important implications
for their labour force (Marsh, 2020). This will require firms to address key existing drivers of supply
chain fragility as identified in proceeding Section 6, which have been motivated by neoliberal
globalisation.

6 Accounting for more robust supply chains

For decades, low-cost supply and minimal inventory have been central tenets of supply chain
management. However, in an increasingly turbulent world, an over-dependence on these factors has
revealed vulnerability, which COVID-19 has emphatically illustrated. The three key drivers of supply
chain fragility at the organisational level include the following:

● Consolidated centres of production: The globalisation of supply chains has resulted in the
consolidation of specialist production zones – primarily cities in China and South-East Asia. This
has fuelled an abundance of key supply chain components, thereby lowering the total cost of supply.
However, the lack of capacity in other parts of the world creates supply problems during times of
crisis.
● Reduced inventory levels: In the pursuit of increased efficiency and lower total cost, the
implementation of just-in-time manufacturing has significantly reduced inventory levels. However,
this has exposed supply chains to unexpected shocks and supply shortages, thereby undermining
supply chain resilience.
● Lack of supply chain transparency: The increasing complexity of global supply chains means
that businesses frequently have a limited view of production beyond the first tier of their supply
chains. This limits their ability to identify production and capacity threats, making it difficult to
manage and respond to situations like the COVID-19 pandemic.

It is likely that assumptions about supply chain management and appropriate supply chain accounting
have been shifted by the pandemic. And it should be noted that accounting techniques can also act build
agility and resilience, many of which have been ignored or neglected in the frenzied pursuit of
profitability and neoliberal globalisation. To this end, Seal et al. (2004) talk about the disembedding
(accounting associated with corporate unbundling and outsourcing) and reembedding (accounting
associated with tighter partnerships and strategic collaboration) roles of supply chain accounting. In a
review that is necessarily partial, we set out several supply chain accounting and planning techniques
that we argue are likely to become more prominent in the aftermath of COVID-19. These techniques
would not have prevented the current crisis, but they may better equip organisations for the next one
and position them to more effectively negotiate the next phase of globalization.

6.1 Risk management

11
Managers’ focus on supply chain risks is typically relates to standard business concerns, such as product
quality and on-time delivery. Less attention has been paid to factors such as supply shocks, demand
fluctuations and shifts in customer behaviours. One likely enduring outcome of COVID-19 is the
recognition that risk management for manufacturing firms should be focused on these broader supply
chain considerations. In a comprehensive review of the supply chain management literature, Ho et al.,
(2015) identify seven different types of supply chain risk (see Table 2). These categories underscore the
scope of supply chain risks as well as their susceptibility to unexpected shocks. These shocks, such as
Brexit and the US–China trade war, climate-related disasters and public health crises, are increasing in
frequency.

[Insert Table 2 about here]

COVID-19 is likely to stimulate crisis scenario planning designed to stress test an operation’s ability to
manage disruption and evaluate the impact of current threats identified in risk assessments. Developing
an appropriate risk mitigation approach invites firms to consider a range of organisational responses.
These include building inventories, fostering alternative channels for supply, supplier development or
building in-house, greater consignment stock holdings and attempts to manage customer demand. 14 Of
course, the quality of model-based risk management support in resilient supply chains depends on the
availability of data and when that critical data can be acquired. Success in supply chain disruption risk
management will become increasingly dependent on data analytics in combination with simulation
modelling (Ivanov and Dolgui, forthcoming).

The extent of supply-chain risk management professionalisation varies considerably among companies,
with many still adopting a reactive approach to supply-chain disruptions, and others working closely
with their suppliers, undertaking systematic supplier audits to monitor and evaluate risk. Post-COVID,
businesses will need to go beyond their usual consensus forecasts and formulate for a wider range of
anticipated outcomes and operational risk circumstances. Companies may need to rethink their views
on risk, focusing on global developments that have potential supply chain repercussions, and
acclimatising their business operations to a vastly different ‘post-globalisation’ operating climate.
Supply-chain risk management, underpinned by more diverse sourcing and digitisation, is likely to be
fused into regular decision-making and planning procedures to facilitate an authentic risk culture that
is receptive and resilient (Ivanov and Dolgui, 2019; Wiengarten et al., 2016).

6.2 New supply measures

We expect that performance measures such as resilience, re-configurability and responsiveness will
attract increasing attention and increasingly enter supply chain dashboards typically focused on more
traditional KPIs such as cost, quality, and delivery. Supply chain management researchers have
increasingly sought to draw attention to related terms and concepts in this area, including as agility and
robustness (Wieland and Wallenburg, 2013), connectivity and visibility (Brandon‐Jones et al., 2014),
flexibility and adaptability (Ivanov et al., 2014), and relational collaboration (Tukamuhabwa et al.,
2015). In a comprehensive review of the literature, Karl et al., (2018) identify order and delivery lead
time, on-time delivery, supplier delivery efficiency and customer satisfaction as the KPIs with the most
useful measures of resilience. Soni et al., (2014) identify a supply chain resilience index (SCRI).
However, Pettit et al., (2013, 2019) caution that supply chain resilience is an augmentation to, not
substitute for, risk management. A balanced zone of supply chain resilience is achieved when an
organisation is neither eroding profits nor experiencing excessive exposure to risk (Pettit et al., 2019).
According to this view, “resilience analytics must extend beyond a firm's self‐assessment to investigate
the strengths or weaknesses of its suppliers and customers all along the supply chain—from raw
materials to end consumers, as well as reverse logistics channels as the supply chain is only as strong
as its weakest link” (Pettit et al., 2019, p. 58). More recently, Golan et al., (2020), much like Wilding
(2020) in calling for procurement for resilience rather than cost, suggest that trade-offs between being
lean, efficient and resilient needs to be visually integrated into more advanced supply chain models.

12
We also anticipate a rise in the use of supplier audits, in keeping with growing concern with anti-slavery
audit regimes, 15 which have hitherto been generally regarded as expensive. Indeed, there will likely be
a re-thinking of how and how often we undertake audits of procurement process and identify risks. For
instance, AI generated reports can assist in identifying anomalies in patterns and supply chain processes,
much like a continuous audit (CIPS, 2020) and assess, for example, capabilities, risk tolerance and
contingencies.

6.3 Strategic supply chain mapping

In the context of supply chains, transparency refers to the visibility of information up and down the
extended supply chain. At present, the complexity of global supply chains creates enormous opacity
from a planning perspective. The complexity is primarily the result of fragmented multi-tier supply
chains (Hartmann and Moeller, 2014) where second and third-tier suppliers sit outside the grasp, control
and understanding of the principal company (Wilhelm et al., 2016). This is particularly the case for
large multinationals with complex and very large production and distribution networks that make
activities and transactions difficult to oversee and manage. In this context, it is almost impossible for
the principal company to develop effective control systems and forge trusting relationships that
safeguard suppliers and nurture distributor collaboration. This complexity of global supply chains is
also infused with the multifaceted nature of power dynamics and geopolitical machinations.

When selecting a supplier and drafting contracts, large companies are increasingly likely to include
language that obliges suppliers to participate in supply-chain mapping initiatives. It is also likely that
greater attention will be focused on second and third tier suppliers, with virtual design teams visiting
factories on a regular basis to promote greater information exchange. An increased need for
infrastructures and technical means to foster greater transparency within global supply chains can also
be expected in the future. Ivanov and Dolgui (forthcoming) advocate the concept of a digital supply
chain twin, a computerised digital model that represents the state of the supply chain network in real
time, allowing for complete end-to-end supply chain visibility to improve resilience and test
contingency plans. Predictive models for proactive scheduling and dynamic planning of supply
demands capable of integrating uncertainties and risk factors are being developed. These predictive
models will help corporate decision makers undertake what-if analysis of various scenarios.

This is likely to see an increase in interest in traceability systems that seek to track and trace products
“moving” along the supply chains. Tracking is the ability to follow the downstream path of a product
along the supply chain, while tracing refers to the ability to determine the origin and characteristics of
a particular product, obtained by referring to records held upstream in the supply chain (Dabbene et al.,
2014).

In certain industries, such as microprocessor development or consumer technologies, advanced

electronics manufacturers have already produced comprehensive dashboards and inventory control
towers that lay out in detail the status of production and shipment. These dashboards refresh regularly
to provide a near real-time overview of the entire supply chain. Such technology will inevitably emerge
as the norm. To this end, Toyota also has invested in new capabilities to improve supply chain resilience
(Hosseini et al., 2019; Ivanov and Dolgui, 2019), working with its partners to visualise supply networks
for each component via a dashboard. At the first sign of an emerging crisis, Toyota is able to
immediately identify parts at risk and rapidly respond to market demand shifts.

6.4 Calculating appropriate functional redundancies

COVID-19 is likely to lead to a preference for resilience over the long-term rather than quarter-to-
quarter efficiency. The growing spectre of natural disasters, climate crises, pandemics or other shocks
is likely to lead to greater functional redundancy in supply chains. Redundancy, a term that is typically
associated with inefficiency, in this context means keeping excess capacity or back-up across the entire
supply chain to accommodate shock events. The challenge is to find the right balance between a lean,
efficient supply chain that carries no fat (the ideal of just-in-time inventory regimes) but is susceptible
to unexpected shocks, and an inefficient one that may be robust but expensive to maintain. This will

13
involve a rethinking of just-in-time inventory management and calculative technologies that seek to
make visible supply chain susceptibility.

As the COVID-19 outbreak subsides, it may be that firms will continue sourcing a low but rising
proportion of their input supplies from domestic sources (IBISWorld, 2020). This trend is anticipated
to occur despite locally manufactured goods typically commanding higher prices than imported goods.
New forms of calculation will be required to balance the benefits of robustness against the costs of
supply chain vulnerability. This will involve recognising the benefit of having a local supply
relationship ready and available when global supply chains are in doubt, rather than attempting to begin
production amid a pandemic such as COVID-19.

7 A Post-COVID Research Agenda into Global Supply Chains

This paper has demonstrated that there are many ways in which accounting participates in the
structuring of global supply chains in the era of neoliberal globalisation. The impact of COVID-19 on
the way that accounting operates within global supply chains opens up a number of important research
opportunities that are economically and politically important. In Table 3, we set out five broad areas
where we believe future research could significantly enhance our understanding of contemporary global
supply chains.

[Insert Table 3 about here]

First, there has been inadequate attention within accounting research to the relationships between the
organisation of capitalism in global supply chains and geopolitical power relationships and neoliberal
government policies. The primary focus in accounting research has been on mechanisms for mobilising
networks to increase profit and efficiency, in which considerations of power and politics are largely
neglected. Geopolitical tension post COVID-19 and the evolution of China’s BRI initiatives are likely
to substantially shape supply chain accounting in ways that accounting research has not considered to
date.

Second, COVID-19 is likely to bring risk management approaches squarely into focus. Empirical
research is essential to understanding emerging risk management methodologies and measures that
seeks to manage the threats of supply chain vulnerability and downstream supply chain impacts (Ivanov
and Dolgui, forthcoming). Significant monitoring of supply chain risk measures has the potential to
assist decision makers in real-time responding to risk. Third, so-called risk analytics – the application
of descriptive, predictive and prescriptive data analytic techniques to supply chain data – is an area
likely to garner increasing attention (Feldman, 2016).

COVID-19 has created a strong impetus for firms to go back through their supply chains. A fourth area
warranting further researcher attention is the way that companies audit multi-tier suppliers as well as
how reporting boundaries are involved in the definition and distribution of risks along the supply chain
(see Antonini, Beck and Larrinaga, 2020). Finally, creating smart and nimble supply chains capable of
weathering future storms will require innovation. While technological advances in supply chain
management are long-standing (e.g. Free et al., 2000), documenting new organisational developments
that draw upon emerging technologies frequently grouped together under the umbrella of Smart
Manufacturing and Industry 4.0 – artificial intelligence, Big Data, blockchain, 3D printing, digital
twins, process automation, robotics, Automated material and transportation systems and predictive tools
– is a vital area for empirical management accounting and supply chain research.

8 Conclusion
Even before the outbreak of COVID-19, neoliberal globalisation was exhibiting signs of ill-health. In
many ways, the pandemic has acted to accelerate trends that were already in motion, including US-
China tension, the politicisation of the free movement of people, goods and capital across borders and
growing advocacy of self-reliance. Many of the key drivers of globalisation ‒ shipping, capital flows,
our understanding of comparative advantage, and economies of scale ‒ will, of course, not disappear

14
into a vacuum. But driven by a combination of changes in government policies, nativist sentiment, and
corporate crisis management planning, it seems likely that neoliberal globalisation will be transformed.

We expect that COVID-19 is likely to accelerate changes to the trajectory of global supply chains.
While decades of optimisation have enabled businesses to whittle down unit costs across the supply
chain, these gains have come at a cost. COVID-19 has exposed the way that global supply chains are
fundamentally unresponsive to changes in geopolitics or customer demand. The pandemic is likely to
fuel a growing shift for national manufacturing sovereignty but how wide these localising tendencies
run remains to be seen. For now, signals of post-COVID intent are universally localising. On 12 May
2020, India’s prime minister Narendra Modi declared that a new era of economic self-reliance in India
had begun. Japan’s stimulus package expressly includes subsidies for companies that repatriate factories
from abroad. Leaders from the European Union have used the language of “strategic autonomy”. In the
US, the Trump administration has urged Intel and others to build plants at home. It has also instructed
its main federal pension fund to stop buying shares in Chinese companies. The Economist reports that
countries representing 59% of world GDP have tightened their rules on foreign investment this year, in
a tangible sign of nation-first politics (The Economist, 2020). These developments coincide with a
growing backlash against the increasingly free flow of information, ideas, money, jobs and people,
growing US‒China tension and the rise of nativist populism in much of the global north.

In conclusion, the WHO’s labelling of the COVID-19 outbreak as a pandemic on 11 March 2020 may
also usher a new epoch in international geopolitics. However, this is unlikely to bring a return to the
golden age of national sovereignty and domestic manufacturing. Such a resurgence generates its own
set of risks. Narrow-minded nativism could arrest global trade and challenge international development
progress, as well as undermine international co-operation at a time when collective action is essential
to action on climate change, public health and mass migration of people fleeing war-torn regions. If
nothing else, the COVID-19 crisis illustrates that global cooperation is critical if future pandemics are
to be avoided or the effects of such outbreaks minimised.

15
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List of Figures and Tables

Figure 1: Industrial production in China

23
Table 1: Exports by broad sector, 1985–2014 changes

Region Changes 1985‒2014 (Percentage

points)
Manufactured
Services / total
goods / total
Land-scarce regions
China 45.5 -2.3
Other South Asia 22.3 2.2
India 16.1 10.4
Other East Asia 13.4 5.4
Land-scarce OECD 1.1 7.0
Land-abundant regions
Latin America -1.1 -3.8
Land-abundant OECD -5.8 6.5
Middle East and N Africa -10.8 -1.0
Former Soviet sphere -12.5 4.6
Sub-Saharan Africa -14.2 3.4
World -0.8 3.6
Source: Wood (2017)

24
Figure 2: China Integration in Global Supply Chains, by sector

Source: UNCTAD (2020)

25
Figure 3: A long-run downward trend in protectionism: Effective rates of assistance (ERA)a, 1970‒
1971 to 2018‒2019b

Source: Productivity Commission (2020)

26
Figure 4: Manufacturing share of GDP in Australia

Source: Australian Bureau of Statistics

27
Figure 5: The Belt and Road Initiative routes

Source: Kalaria (2020)

28
Table 2: An overview of supply chain risks

Type of risk Definition

Manufacturing risks These include strikes, accidents and poor working conditions
Disruptions to transportation and logistics as a result of industrial labour action,
Transportation risks
accidents or government controls
Financial risks For example, fluctuations in exchange rates, wages and currency
Examples include IT system breakdowns, information delays and lack of
Information risks
transparency
Demand risks Sudden surges or collapses in demand, forecasting errors and misinformation
Examples include over-reliance on a single supplier or narrow supply base, supplier
Supply risks
disruption and supplier bankruptcy
These include things like natural disasters, disease, war and major economic
Macro risks
downturns
Adapted from Ho et al., (2015)

29
Table 3: Selected areas for research on global supply chains

Theme Research Area

1. Globalisation • How have organisations in the global north transformed their global supply
trends chains post COVID-19?
• How are emerging shifts in geopolitical relations likely to impact neoliberal
policies and global supply chains?
• How will China’s Belt and Road Initiative impact global supply chains post
COVID-19?

2. Risk management • How are supply chain risk and opportunity assessments increasing resilience
and efficiency within supply chain management?
• What strategies have enabled organisations to reduce the severity of disruptive
global events to their supply chain?
• How do firms implement supply chain resilience modelling?
• How are digital supply networks created and aligned with an organisations’
business and risk management strategy?

3. Risk analytics • How are advanced predictive data analytics and visualisation tools utilised for
real-time risk reporting?

4. Reporting and • How do organisations disclose multi-tier global supply chain performance and
assurance risks?
• How are organisations utilising and disclosing systematic supplier audits to
monitor, evaluate and report supply chain risks?

5. Emerging • How are organisations leveraging emerging technologies such as artificial

technologies intelligence, Big Data, blockchain, process automation, robotics, to protect their
supply chain operations?
• How is the adoption of emerging technologies such as Big Data analytics aiding
firms in developing supply chain risk resilience from disruptive global events?
• How is Blockchain utilised as a system in highlighting visibility between supply
chain echelons to prevent supply chain network failure?

30
Endnotes

1
The economic, political and cultural dimensions of globalisation are often conflated. The term neoliberal
globalisation highlights political and economic elements – underscoring that globalisation is a human-made and
ideologically driven set of processes.
2
Taiwanese Foxconn Technology Group (Foxconn) is the largest global manufacturer of electronic components
and third largest technology company by revenue, despite no brand of its own and controversial labour practices.
Foxconn’s operating model integrates “large-scale resources of high-end mass manufacturing of electronic
products, extensive networks of supply-chain management logistics” (Lüthje and Butollo, 2017, p. 220) with
substantial engineering/R&D capacity.
3
To this end, a 1992 OECD study claimed that open international trade would produce by 2002 an annual gain of
US$477 billion (in 1992 prices), with US$221 billion of that amount accruing to developing countries (Goldin
and Van der Mensbrugghe, 1992).
4
This term draws on former CEO of General Electric Jack Welch’s comments that he would ideally like to have
“every plant you own on a barge” to exploit low cost labour low taxes, subsidies and the absence of regulatory
costs (Palley, 2019).
5
The GLI is calculated on products categorized as manufacturing intermediate inputs (e.g., parts and components),
computed at the industry level (as defined by the 4-digit Harmonized System classification) and then aggregated
at the sectoral level using bilateral trade shares. The GLI is then used as a proxy, measuring the percentage of a
given country’s exports in each industry that is vulnerable to supply disruption in China (UNCTAD, 2020).
6
The Automotive Competitiveness and Investment Scheme, established in 2001 to encourage competitive
investment, innovation and economic viability, covered up to 15% of the cost of eligible plant and equipment and
50% of eligible R&D investments.
7
In 2013, Thailand imported the ‘Ford Territory’ vehicle, pricing it at an “unattractive” $100,000 (AU retail
$38,000) with the inclusion of non-tariff duties such as registration fees, pricing it out of the domestic market
despite its free trade agreement with Australia (Allen Consulting Group, 2013).
8
As at May 2020, Thailand government is planning to extend long-term 99-year land leases to foreign investors.
9
Automotive residents such as GM and Ford in Thailand’s automotive hubs of Rayong/Pathum Thani have
taken advantage of an 8-year corporate tax exemption period, permits to remit money in foreign currencies
(ASEAN Briefing, 2018), land ownership rights and relaxed visa and permit processes for foreign automobile
industry advisers (Tajai et al., 2017).
10
For example, ventures in the industry can be 100% foreign owned and do not require a Vietnamese national
as a director.
11
It should be noted that there are both right-wing and left-wing anti-globalisation activists, personified by
populists of the right such as Trump and the populists of the left such as Bernie Sanders. Extreme right-wing
groups see globalisation as a threat to national economies and national identity. Right-wing exponents of anti-
globalism do not argue in favour of an alternative globalisation but suggest nationalism and particularism as cures
for the problems caused by the dominant form of globalisation. Supporters of left-wing anti-globalism argue that
the capitalist logic underlying globalisation results in asymmetrical power relations (both domestically and
internationally) and in the treatment of every aspect of life ‒ including health, the environment, education and
culture ‒ as a commodity.
12
Palley (2019) sets out four reasons why neoliberal globalisation has created tension between the world’s two
largest powers, the US and China: (1) globalisation has diminished the US industrial base; (2) there has been
massive technology inflow and expansion of China’s industrial base, both of which have enhanced China’s
military capacity; (3) China has developed a strategic chokehold over the global supply chain; (4) neoliberal
globalisation has been structured to produce large trade surpluses for China (Palley, 2015), enabling it to
accumulate huge foreign exchange reserves that provide a defensive shield against US financial power and an
asset for wooing allies.
13
Hype relating to the industrial use of new digital technologies in manufacturing currently outstrips the reality,
however important inroads have been made in some sectors. The use of industrial robots has increased since 2010,
concentrated in global north countries (Mayer, 2018). The use of additive manufacturing has also escalated though
frontier 3D-systems, allowing for decentralised batch production of final goods from multiple materials (Ernst
and Young, 2016). These new technologies are expected to be widely accessible by 2022‒2025 (WEF, 2015),
drawing sustenance from advances in big data and cloud computing. Widespread use of artificial intelligence in
manufacturing is expected by 2025–2026 (WEF, 2015).
14
For example, Nike has discussed plans to digitize its supply chain and introduce 1,200 automated machines
and near-shoring in the US, thereby reducing lead times from 60 days to approximately 10 days. This would

31
 result in substantial cost savings in shipping expenses, import duties and costs caused by over-production. It
would also generate 30% fewer stages in the production process and imbue greater resilience (Wilding, 2020).
15
In Australia and elsewhere, modern slavery legislation has been enacted forcing organisations to undertake
supply chain mapping and risk-assessments of their operations and supply chains. The Modern Slavery Act 2018
(Cth) requires an entity based or operating in Australia with an annual consolidated revenue of over A$100 million
to report annually on the risk of modern slavery in its operations and supply chain; actions taken to assess and
address those risks; and the effectiveness of such actions.

32

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