Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession

Escaith, Hubert (2009): Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession.

Abstract

Global supply chains reshaped international trade since the end 1980s. Their role in explaining the trade collapse that followed the financial crisis of September 2008 was determinant. Because production is internationally diversified, adverse external shocks affect firms not only through final demand, but also through a rupture in the flow of inputs received from their suppliers. The future of supply chain will also determine the alternative exit scenarios from the Great Recession; as a result of global rebalancing, they will probably be smaller and more regional. Left unchecked, these centripetal forces may lead to a deterioration of global governance and to deglobalization. The reshaping of global effective demand is of particular importance for the labour abundant lesser advanced developing countries that where relying on the strength of the global supply chains to attract productive investments. On the other hand, because trade in goods for processing inflated artificially some bilateral trade deficit, rebalancing them will prove easier in the short term, while the technical factors that made possible the internationalization of production will still promote further "flattening of the Earth" in the longer term

• Item Type: MPRA Paper
• Language: English
• Keywords: international trade; crisis; global supply chains; transmission channels; global rebalancing; trade and development
• Subjects: F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and Transmission; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development ; Role of International Organizations

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