Goods are being produced closer to their final buyers: This reduces productive efficiency at the global level but also inequality between countries

The global organisation of production is evolving from a model of value chain segmentation to a model of production in proximity to the final buyers of goods. This trend is of course being bolstered by protectionism. When value chains are segmented, production is distributed among countries according to their comparative advantages. When production shifts closer to final buyers, the world’s productive efficiency is therefore reduced. But this new model allows production to shift to poorer emerging countries at the expense of more efficient countries (for example, plane parts are built in India instead of being exported from Europe to India). This is a positive development in terms of equity, even though it is negative in terms of global productive efficiency.