How global supply chains, world trade, and international flows of people, capital and ideas produced life-saving Covid-19 vaccines
Last week, I got a shot of globalization injected directly into my arm. I was privileged (there is no other way to say it) to receive my second dose of the Pfizer/BioNTech vaccine — a medicine with 280 different components, manufactured in 86 different sites across 19 countries, driven partly by the research of a son and daughter of Turkish migrants to Germany. That’s globalization in a needle.
Many have marveled at the hyper-speed research and production that underpinned the roll-out of several effective vaccines, but take a moment to consider the trade and supply chain component of the extraordinary effort. The vaccines produced by Moderna, AstraZeneca, Johnson and Johnson and Pfizer/BioNTech are not just stunning examples of hyper-speed research and vaccine production in record time, but also a reflection and reaffirmation of our reliance on global supply chains and a reminder of the value of globalization - an oft-abused term these days.
When Ugur Sahin, the son of Turkish migrants to Germany and CEO of a little-known medical start-up BioNTech, received a call from Pfizer chief executive Albert Bourla in early November, the pharmaceutical giant had some good news to share: Phase 3 trials of their joint vaccine demonstrated 90% protection. A huge milestone had been achieved in the global fight against SARS-CoV-2 - the virus that causes Covid-19.
When Sahin shared the news with his scientist wife and BioNTech partner Ozlem Tureci, also the daughter of Turkish migrants to Germany, the understated couple who don’t even own a car “celebrated with cups of Turkish tea at home,” the Washington Post wrote. There was, after all, little time for much celebration. The time to produce the vaccines had come - and a global supply chain had to be kicked into high gear.
Every aspect of a modern life is reliant on these global supply chains and the web of capital, research, and people that drive them. You might be reading this article on an Apple iPhone, a product made with hundreds of individual parts sourced in 43 countries, and assembled (mostly) in China. If you use a Samsung phone, chances are it was assembled in Vietnam or India - two of its biggest manufacturing hubs - with a similarly complex supply chain process.
Or consider your car in the garage or the Uber that picked you up recently. The ever reliable and functional Toyota Corolla — a car I drove for a decade (and still own) — has 30,000 parts. Even with Toyota production plants in the US or elsewhere buying parts from local suppliers, the components in those parts make up a far-flung supply chain stretching the globe.
As you go up the car ladder, things get even more complex. BMW works with 12,000 suppliers in 70 countries. That’s a dizzyingly global and complex supply chain. Oh, and to add another globalization twist to this story: BMW has been the largest exporter of cars from the U.S to the world (by value) for the past 7 years. The German carmaker produces hundreds of thousands of vehicles annually in Spartanburg, South Carolina, and the company exported some 220,000 of those cars last year at a value approaching $9 billion. Those BMWs can be seen loaded onto ships in ports in South Carolina, Georgia, and Florida, headed for customers across the world.
Those BMW exports are adding to the some $19 trillion in world trade annually. Of course, the pandemic knocked back those numbers, but not by much. The World Trade Organization estimates that world merchandise trade contracted by 5.3% in 2020 and is on track to grow by 8% in 2021. A 5.3% fall is a pittance compared to the collapse in global trade following the 2008-9 financial crisis, when exports fell by some 22%, according to UNCTAD figures.
Given the shock to demand, merchandise trade held up relatively well during the pandemic - partly fueled by massive fiscal stimulus in advanced economies. That also meant that supply chains were firing on all cylinders. Robust demand for cars, laptops and other items that need semiconductors coupled with the February Texas freeze that shut down production has contributed to a chip bottleneck — and chips are vital to supply chains worldwide.
Perhaps the mother of all supply chains would be commercial aircraft. As Laura Ross reports for Thomas Insights: “A single Boeing airplane is made of more than three million parts, which means the company’s supply chain is a massive, global operation. More than 150,000 people are employed in more than 65 countries, not to mention the hundreds of thousands more working for Boeing suppliers across the globe.”
As a frequent flier in the BC (Before Covid) world, it still never ceased to amaze me that you can walk into a massive aluminum tube in Washington or New York and half a day later land in Dubai or Shanghai. I’m not sure what is more daunting to my technology-challenged mind: the science behind flying or the science behind a supply chain of 3 million parts spanning the globe.
While the Covid-19 pandemic has spurred calls for re-shoring and minimizing supply chain risk, it strikes me — as a lay observer — that the genie is already out of the bottle. While companies should always be interrogating their supply chains on ethics grounds and single source risks, it would seem almost impossible (not to mention unwise) to radically change the global status quo.
Shannon K. O’Neil, wrote a smart piece on the topic in Foreign Affairs. She wrote:
“Over the last four decades, the nature of trade has radically transformed. For centuries, countries mostly sent finished goods abroad: olives from Italy; wine from Spain; furs from Canada; and later on, cars from Germany; and sewing machines, printing presses, and cash registers from the United States. Now, countries mostly send abroad pieces or components to be bent, welded, inserted, or sewn together in foreign factories and shops.”
She acknowledged the multiple risks in this process, but she argued that an attempt to radically alter the current system by bringing production home (wherever that is) will backfire. What’s needed is actually MORE global supply chains, not less. She argues that corporations should not be overly reliant on one country for a vital input. They should ensure they have access to that vital input from multiple countries in case of a breakdown. So, in a sense, go even more global.
In short, businesses will need to further globalize their supply chains - but just in a more diversified way. After all, as she writes: “In the long term, dismantling international supply chains will make US businesses less competitive and will blunt their global technological edge. The benefits of comparative advantage that led buyers and suppliers to look abroad in the first place haven’t disappeared.”
This argument reminds me of what Emerging World fellow traveler Parag Khanna said when we Zoom interviewed him back in February: “Globalization is a force greater than all of us….don’t bother talking about the end of globalization. Worry about your place and your role in globalization, because if you don’t have one, you will regret it.”
The needle that went into my arm and protected me is a product of globalization and my place in it, partly as a citizen and resident of the United States, a place that is far more globalized than its politicians understand. It’s also a product of migration and the international flow of research, ideas, and people.
The danger, of course, lies in the fact that far too many in developing and emerging economies remain at the back of the line for vaccines. This vaccine inequality poses the greatest global challenge today. Yes, globalization is vital and the genie is out of the bottle, but a world in which some are driving high-octane sports cars on the globalization highway while others are on rickety bicycles is neither stable nor just.
But shutting down trade, de-globalizing, and erecting walls will do little to help the millions of Indians and others suffering today in new Covid surges. Those same global supply chains and trade arteries will be vital to getting life-saving vaccines to the world.
The author is an Iranian-American expert on global geopolitical risk and geo-economics.
The article has been reprinted under special arrangement, it was first published at Emerging World