COVID-19 will likely accelerate the move toward ‘peer value chains’ among countries with similar institutional arrangements. In addition to traditional production factors, the quality of domestic institutions may become an important determinant of a country’s comparative advantage. Nathan Nunn conceptualises ‘contract-intensive’ products, which have complex supply chains that involve multiple transactions at various stages of the production process.
Just like a country with an abundant labour force has a comparative advantage in the production of labour-intensive products, the quality of a legal system may determine a country’s international competitiveness in ‘contract-intensive’ products.
— Read on www.eastasiaforum.org/2020/08/07/how-global-value-chains-will-evolve-in-the-post-covid-19-economy/