Supply-chain Disruptions under COVID: A Window of Opportunity for Local Producers?

Abstract

Chinese imports replace locally manufactured products in developing countries. The import of consumer goods from China to West Africa is closely linked to commercial travel, and China’s border restrictions during the Covid outbreak put a near-halt to such travelling. Furthermore, the pandemic caused a global logistics crisis that disrupted supply chains with production in China. This paper asks whether Ghanaian manufacturers and artisanal producers could take advantage of these disruptions to enhance their competitive position. Did China’s border closure provide space for local Ghanaian producers to thrive? We address this question by drawing on data collected among Ghanaian plastic manufacturers and furniture makers, who have faced tough competition from Chinese imports. Our analysis shows that supply chain disruptions from China led to the substitution of certain products previously imported from China, and these effects were partially sustained after the Covid-induced barriers to imports from China were removed. However, the disruptions were also costly for many Ghanaian producers, as they depended on Chinese intermediary products, tools, and other inputs. This illustrates how economic lives in Ghana and China have become so profoundly intertwined that indiscriminate decoupling is neither possible nor desirable.