The "New Normal" for Small Businesses with an International Focus

The COVID-19 pandemic has disrupted production, trade, consumption and our lives in general in an unprecedented way. The consequences have been catastrophic for millions of people around the world. Trade and development practitioners, academics and the public are increasingly reflecting on the period of recovery and the implications for production, trade and socio-economic development. Four aspects appear to be of particular importance for internationally oriented micro, small and medium enterprises (MSMEs) to prepare for the 'new normal' and to be at the forefront of generating resilience, inclusiveness, sustainability and growth in the future.

1.  Strengthen public-private dialogue for the robustness and transparency of international supply chains

The current crisis proves that making supply chains efficient and reducing trade barriers is vital for the supply of essential goods, especially for developing countries. However, trade-related practices in recent years have seen an increase in trade restrictive measures, combined with waning political support for an open global economy and multilateralism. Currently, the World Trade Organization is seeing an increasing number of export restrictions in response to the COVID-19 crisis.

Better public-private partnership approaches can identify and overcome the constraints that normally hamper rapid replenishment of essential commodities. At a larger scale, there is often a mismatch between vertical supply chain operations, often across multiple borders, and horizontal multilateral dialogues on regulatory frameworks and related topics in the public-private dialogue.

Take for example the production of a car. The many parts that go into a car are typically produced and assembled in many countries. Parts going into a gearbox, for example, can be produced in different countries and assembled in a gearbox in a third country. The gearbox is then shipped to a fourth country where it is placed in the car and mounted on the engine. The car is then shipped to a fifth country where it is sold. As production takes place in many countries, it is also in the same way that these countries are governed by different national regulations informed by national private-public dialogues. Yet they are part of a vertical supply chain. Therefore, that of procurement are organized vertically and public-private dialogues organized horizontally are problematic. The establishment of vertical private-public dialogue frameworks along supply chains would allow issues to be addressed throughout the chain in a more coherent manner.

One solution could be to ensure that the operations of international supply chains are reflected by an institutional structure, for example through supply chain councils with participants from the public and private sectors of countries in which the different functions of supply chains exist. The concept of international supply chain consulting, promoted among others by Bernard Hoekman, appears very relevant in the current context with a need for rapid deployment of goods and long-term solutions.

Supply chain advice could lead to better private-public dialogues on regulatory frameworks that would ensure reliable operations and better transparency in value chains. This would mean embracing supply chains, not rejecting them, and recognizing that preserving open trade and markets does not conflict with building national resilience to shocks. caused by virus outbreaks or other external factors.

2.  Strengthen the ecosystems in which small businesses operate to protect them in the future - Sourcing Business Partner

The COVID-19 pandemic has severely affected MSMEs across the world in three fundamental ways: a collapse in supply, collapse in demand, and containment requirements.

In some OECD countries, governments have provided financial support programs to ease the blow of the crisis. Most developing countries are unable to do this to the detriment of their MSMEs and affected communities.

The current situation points to the need for more reliable ecosystems to support small businesses and their production, jobs, livelihoods and social well-being. Better access to information, resolution of logistical problems and other obstacles, better access to finance, public procurement, e-commerce, lower taxes, etc. are elements

In addition, “stress testing” of the favorable ecosystems in which MSMEs operate might be a good idea. Stress or pressure testing can help identify weaknesses in systems and inform the approach to enhance reliability. The stress and shock tests of financial systems in the aftermath of the 2008-2009 financial crisis provided interesting and useful information to make these systems more resilient .

Within business ecosystems, the institutions concerned play a particular role. A key insight into the current crisis is that capable and competent institutions, supported by citizens' trust in these institutions, make a huge difference to the ability of countries to cope with the crisis. This applies to business support organizations as well as other organizations in general.

3.  Trade is sure to be a powerful driver of growth and well-being for society, but we need better business outcomes in the post-Covid-19d world

Women, youth and poor communities are hardest hit by the effects of COVID-19. Overall, MSMEs run by women or young people have fewer resources and have less access to markets, information and finance than businesses run by men. As employees, women and youth often occupy vulnerable positions - and many operate in sectors currently facing dramatically reduced demand, such as tourism and hospitality, textiles and clothing, retail , etc.

Poor farming communities face a triple challenge of climate change issues, often combined with substantial price fluctuations and now a deep health crisis. Climate issues have all but disappeared from the daily headlines, but environmental concerns will still be present after the COVID-19 pandemic.

Looking ahead to the end of the COVID-19 crisis, these challenges point to the need for fairer, more equitable and more sustainable outcomes to ensure a prosperous, robust, inclusive and green world. They also make it clear that a substantial part of economic stimulus packages should be geared towards sustainable solutions and pro-poor with an emphasis on labor-intensive activities and development initiatives. fast work.

4.  Find comprehensive solutions to global problems

COVID-19 has reconfirmed our interdependence as a global community and the need for a global dialogue to find global solutions to global problems, whether they relate to another possible virus outbreak, environmental or social issues.

International dialogues and multilateralism are important to ensure recovery and resilience to emerge from this crisis. The institutions that facilitate this dialogue and set the related rules and guidelines that guide us as a global community, such as the United Nations, are essential actors in this space.

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