The COVID-19 pandemic and the war in Ukraine have focused attention on the security of supply chains leading to significant policy changes in many countries. The computer chip industry, for example, is currently in a state of major re-organisation to secure supplies and shorten supply chains. That will also have the effect of reducing transport costs and carbon.
But the most significant economic driver of change is the US Inflation Reduction Act, which has allocated $370 billion in investment and subsidies for the green economy and eco-friendly products such as electric vehicles. This investment is forcing other similarly sized economic operators, such as Europe and China, to reconsider support for their green economies while threatening to leave smaller economies unable to compete.
Another problem is the fragility of supply chains.15 Governments and industries are developing ways to strengthen these chains in the short term; the Internet of Things is set to play an important role in monitoring where products came from and how far they travel, for example. Blockchain technology had been touted as way to increase the transparency of these processes. However, many experiments with blockchains by insurance, banking and shipping companies have been quietly dropped amid spiralling costs and limited benefits.16 The new focus on resilience also places greater emphasis on stress testing supply chains and on simulations that can predict — and find ways to avoid — the impact of future covid-scale events.
