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

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  • Escaith, Hubert

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

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18274.

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Date of creation: 28 Oct 2009
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Handle: RePEc:pra:mprapa:18274

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Keywords: international trade; crisis; global supply chains; transmission channels; global rebalancing; trade and development;

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  1. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "The rise of offshoring: it's not wine for cloth anymore," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, pages 59-102.
  2. repec:spo:wpecon:info:hdl:2441/2537 is not listed on IDEAS
  3. Escaith, Hubert & Gonguet, Fabien, 2009. "International Trade and Real Transmission Channels of Financial Shocks in Globalized Production Networks," MPRA Paper 15558, University Library of Munich, Germany.
  4. Escaith, Hubert & Lindenberg, Nannette & Miroudot, Sébastien, 2010. "International Supply Chains and Trade Elasticity in Times of Global Crisis," MPRA Paper 20478, University Library of Munich, Germany.
  5. Guillaume Daudin & Paola Veroni & Christine Rifflart & Danielle Schweisguth, 2006. "Le commerce extérieur en valeur ajoutée," Sciences Po publications info:hdl:2441/2537, Sciences Po.
  6. Agnès Bénassy-Quéré & Yvan Decreux & Lionel Fontagné & David Khoudour-Castéras, 2009. "Economic Crisis and Global Supply Chains," Working Papers 2009-15, CEPII research center.
  7. Escaith, Hubert, 2008. "Measuring trade in value added in the new industrial economy: statistical implications," MPRA Paper 14454, University Library of Munich, Germany.
  8. Sébastien Miroudot & Alexandros Ragoussis, 2009. "Vertical Trade, Trade Costs and FDI," OECD Trade Policy Papers 89, OECD Publishing.
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Cited by:
  1. Byron Gangnes & Ari Van Assche, 2010. "Global Production Networks in Electronics and Intra-Asian Trade," Working Papers, University of Hawaii at Manoa, Department of Economics 201004, University of Hawaii at Manoa, Department of Economics.
  2. Kimura, Fukunari & Obashi, Ayako, 2011. "Production Networks in East Asia: What We Know So Far," ADBI Working Papers, Asian Development Bank Institute 320, Asian Development Bank Institute.
  3. Joseph F. Francois & Julia Wörz, 2011. "Shifts in International Trade and Value Added from 1995 to 2007: Insights into the Drivers of Growth," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 37-56.
  4. Koopmann, Georg & Hoekstra, Ruth, 2010. "Aid for trade and the political economy of trade liberalization," HWWI Research Papers 2-22, Hamburg Institute of International Economics (HWWI).

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