How are global supply chains adapting to a rapidly changing world?

Rapid technological innovation, an accelerating climate crisis and the transformation of geopolitical relations are subjecting global supply chains to profound change. So how are they adapting? To answer this question, the Horizon Europe Project RETHINK-GSC has connected more than 30 researchers from 11 institutions, a collaboration that has undertaken the development of new datasets on the role of knowledge and innovation, surveyed firms on their strategies to deal with trade uncertainty, modelled economic shocks and conducted empirical studies on a variety of related questions. We have arrived at three insights.

First, firms adapt their supply chains to shocks in differentiated ways, with many reconfiguring their supplier networks in response to the new circumstances. Those that were involved in innovative networks that facilitate knowledge sharing were most likely to adapt.

Second, knowledge and the trade in goods are deeply interconnected. Our understanding of goods flows in supply chains is still far ahead of our understanding of the global knowledge economy, and it was a key part of this project to deepen our understanding of the links between production networks and innovation. Research from the project shows that trade, production and innovation are connected; policies promoting one area also affect the others.

Third, innovation drives resilience. Research conducted in the project shows a clear link between innovation, jobs and regional growth. However, Europe is still struggling with closing the gap between research and the commercialisation of its products; strengthening this link is key to unlocking the economic benefits of research.

Thus, supply chains are evolving under pressure, and building resilience is still possible despite present challenges. Better understanding the link between knowledge, trade and a prosperous economy will help us understand which policies will unlock the benefits of innovation.

The project “Rethinking Global Supply Chains: measurement, impact and policy” (RETHINK-GSC) has received funding from the European Union’s Horizon Europe research and innovation programme under grant agreement number 101061123.

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