Robustness and resilience of supply chains during the COVID-19 pandemic.

Using a unique firm-level data set from Asia, this study examines what determined the robustness and resilience of supply chain links, that is, the ability of maintaining links and recovering disrupted links by substitution, respectively, when firms faced economic shocks due to the spread of the coronavirus disease (COVID-19). We find that a supply chain link was likely to be robust if the link was between a foreign-owned firm and a firm located in the foreign-owned firm's home country, implying that homophily on a certain dimension generates strong ties and thus supply chain robustness. We also find that firms with geographic diversity of customers and suppliers tended to increase their transaction volume with one partner while decreasing the volume with others. This evidence shows that firms with diversified customers and suppliers are resilient, mitigating the damage from supply chain disruption through the substitution of partners. Furthermore, the robustness and resilience of supply chains are found to have led to higher performance.

The Impact of COVID-19 and the USChina Confrontation on East Asian Production Networks

International production networks (IPNs) in East Asia are facing two challenges, i.e., COVID-19 and the US-China confrontation. COVID-19 has generated three kinds of shocks on IPNs: negative supply shocks, positive demand shocks, and negative demand shocks. IPNs have adequately managed these shocks thus far and have been strengthening the relative position of Factory Asia in the world. Nevertheless, the US-China confrontation and its consequences of weakening the rule-based trading regime have enhanced uncertainties in the operations of IPNs. The decoupling pressure may come from either the US or China for middle powers in-between, even with the US Biden Administration. This study posits that the construction of a mega-free trade agreement (FTA) network may partially reduce policy risks and help form a pro-trade middle-power coalition.

ASEAN’s Energy Transition towards Cleaner Energy System: Energy Modelling Scenarios and Policy Implications

The Association of Southeast Asian Nations (ASEAN) faces tremendous challenges regarding the future energy landscape and how the energy transition will embrace a new architecture—including sound policies and technologies to ensure energy access together with affordability, energy security, and energy sustainability. Given the high share of fossil fuels in ASEAN’s current energy mix (oil, coal, and natural gas comprise almost 80%), the clean use of fossil fuels through the deployment of clean technologies is indispensable for decarbonizing ASEAN’s emissions. The future energy landscape of ASEAN will rely on today’s actions, policies, and investments to change the fossil fuel-based energy system towards a cleaner energy system, but any decisions and energy policy measures to be rolled out during the energy transition need to be weighed against potentially higher energy costs, affordability issues, and energy security risks. This paper employs energy modelling scenarios to seek plausible policy options for ASEAN to achieve more emissions reductions as well as energy savings, and to assess the extent to which the composition of the energy mix will be changed under various energy policy scenarios. The results imply policy recommendations for accelerating the share of renewables, adopting clean technologies and the clean use of fossil fuels, and investing in climate-resilient energy quality infrastructure.

Pandemic (COVID-19) Policy, Regional Cooperation and the Emerging Global Production Network†

In this paper, we explore the possible policy responses to the COVID-19 pandemic shock as well as the related economic (financial crisis) shocks on trade and global value chains (GVC) in East Asia. We find that regional policy coordination is critical to mitigate and isolate the pandemic shock. It is important to identify the pandemic events early to flatten the pandemic curve at the national and regional level. This supports a recent study by the World Bank (2020), which highlights the importance of early mitigation policies during the pandemic shock. The cost of the pandemic and economic shocks will increase significantly when several countries in the region experience the pandemic shock concurrently. In this case, flattening the regional pandemic curve becomes important. The results also indicate the need for greater coordination in East Asia to mitigate the pending economic shock in terms of unemployment, corporate bankruptcy and financial market fragility. The paper also highlights that the stability of the GVC network is critical during the pandemic in terms of hedging the risk of disruptions to the procurement of critical medical and health products as well as maintaining service linkages to manufacturing, such as the logistics sector. Regional policy coordination and the stability of GVC will be valuable in the post-pandemic recovery of the region.