Hiroyasu Inoue

This study simulates how the disruption of imports from various regions affects the total production of the importer economy. We particularly incorporate the propagation of the economic effect through domestic supply chains using data on more than one million firms and four million supply chain ties in Japan. Our findings are summarized as follows. First, the negative effect of the disruption of intermediate imports grows exponentially as its duration and strength increase due to downstream propagation. Second, the propagation of the economic effect is substantially affected by the network topology of importers, such as the number of importers (affected nodes) and their degree of upstreamness in supply chains, whereas the effect of their degree centrality is heterogeneous depending on their degree of upstreamness. Finally, the negative effect of import disruption can be mitigated by the reorganization of domestic supply chains, even when conducted only among network neighbors. Our findings provide important policy and managerial implications for the achievement of more robust and resilient global supply chains.

In this paper, we simulate the economic loss resulting from supply chain disruptions triggered by the Great East Japan Earthquake (GEJE) in 2011, applying data from firm-level supply chains and establishment-level attributes to an agent-based model. To enhance the accuracy of the simulation, we extend data and models in previous studies in four ways. First, we identify the damage to production facilities in the disaster-hit regions more accurately by using establishment-level census and survey data and geographic information system (GIS) data on the damages caused by the GEJE and subsequent tsunami. Second, the use of establishment-level data enables us to capture supply chains between non-headquarter establishments in disaster-hit regions and establishments in other regions. Third, we incorporate the effect of power outages after the GEJE on production reduction, which exacerbated the effect of the supply chain disruption, particularly in the weeks immediately after the GEJE. Finally, our model incorporates sectoral heterogeneity by employing sector-specific parameters. Our findings indicate that the extended method can significantly improve the accuracy of predicting the domestic production after the GEJE, particularly due to the first three improvements utilizing various data sources, not because of the use of more sector-specific parameters. Our method can be applied to predict the economic effect of future disasters, such as the Nankai Trough earthquake, on each region more precisely.

Abstract Using multinational input–output data, we analyze how the productivity of countries adjusted for participation in global value chains affects their output growth in manufacturing sectors. Based on parametric and non-parametric methods, we find that value-chain linkages are critical to the productivity–growth nexus and help to explain cross-country differences in sectoral output growth rates compared to the situation where these linkages are ignored. Our results have implications for macroeconomics, where they point to peer effects in productivity as drivers of growth, and for economic development, where they illustrate how the participation in global value chains may outweigh disadvantages in productive performance at the level of individual countries. They may also encourage future empirical tests of replicator dynamics to verify whether global value chains can explain the weak evidence of selection forces at the firm level.