The Promise of Strategic Shoring: Supply Chain Resilience, Economic Growth, and Development Finance
The pandemic underscored U.S. dependence on imports from China for essential goods such as personal protective equipment (PPE), precursor chemicals for vaccines, other medical supplies, and computer chips. Alongside further disruptions caused by Russia’s invasion of Ukraine in February 2022, these incidents caused the U.S. administrations under Presidents Donald Trump and Joseph Biden to more seriously explore deliberate strategies of reshoring and nearshoring to build more resilient supply chains. Whereas some scholars have proposed terms such as “allied shoring,” this report uses the term “strategic shoring” to describe efforts to move manufacturing to not only the Western Hemisphere but other countries the United States has close and growing relationships with as well. The United States cannot meet its production needs simply through reshoring, no matter the incentives and financial support it offers industry. To be successful, it will need to adopt a comprehensive strategy by adopting a flexible approach to supply chain resilience.
This report argues that the United States should adopt a policy of strategic shoring and use its foreign assistance and other forms of development finance to support the shifting of global supply chains away from China. Foreign aid and development finance alone will not accomplish the goals behind strategic shoring, but they may play an important leveraging role. Using foreign aid and development finance to advance a policy of strategic shoring can provide a win-win scenario for the United States through more resilient supply chains and deliver economic benefits to developing countries. Properly deployed alongside other forms of incentives, grant-based assistance can help improve the local regulatory environment, enhance the business and investment climate, and support critical workforce and skills development.
This report was made possible by the generous financial support of the Smith Richardson Foundation.