A growing chorus of expert opinion predicts that COVID-19 will slow down the forces of globalization, with obituaries being written for its impending death. The pandemic, many say, will be the final straw in a long chain of events that have dented the momentum of global integration, including the China-U.S. trade war, Brexit, and economic nationalism in many parts of the world. As businesses and policy makers shift emphasis from economic efficiency to resilience and flexibility, the process of reshoring production is expected to accelerate, hastening the end of global economic integration.

Trade of manufactured goods has already been on a retreat since the Great Recession of 2008. After recovering from the sharp downturn in 2009, global trade in manufacturing—and more broadly value chain integration—has registered a secular decline since 2011 (Figure 1). According to the World Input-Output Database (WIOD), the share of…

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