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Production Chains

Author

Listed:
  • David K Levine

Abstract

More advanced technologies demand higher degrees of specialization - and longer chains of production connecting raw inputs to final outputs. Longer production chains are subject to a "weakest link" effect: they are more fragile and more prone to failure. Optimal chain length is determined by the trade-off between the gains to specialization and the higher failure rate associated with longer chain length. There is a kind of reverse "Keynesian multiplier" that magnifies the effect of real shocks. Consequently, more advanced economies may have lower utilization of resources and be more prone to crisis. (Copyright: Elsevier)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • David K Levine, 2010. "Production Chains," Levine's Working Paper Archive 659843000000000001, David K. Levine.
    • Handle: RePEc:cla:levarc:659843000000000001
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    File URL: http://www.dklevine.com/papers/chains.3.11.pdf
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    Citations

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    Cited by:

    1. Shaowen Luo & Kwok Ping Tsang, 2020. "China And World Output Impact Of The Hubei Lockdown During The Coronavirus Outbreak," Contemporary Economic Policy, Western Economic Association International, vol. 38(4), pages 583-592, October.
    2. Arnaud Costinot & Jonathan Vogel & Su Wang, 2013. "An Elementary Theory of Global Supply Chains," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 109-144.
    3. Evert Meijers & Martijn Burger & Masahisa Fujita & Nobuaki Hamaguchi, 2016. "Supply chain internationalization in East Asia: Inclusiveness and risks," Papers in Regional Science, Wiley Blackwell, vol. 95(1), pages 81-100, March.
    4. Candau, Fabien & Rey, Serge, 2014. "The effect of the euro on aeronautic trade: A French regional analysis," Economic Modelling, Elsevier, vol. 41(C), pages 345-355.
    5. Wanida Ngienthi & Yan Ma & Fumio Dei, 2013. "Supermodularity and Global Supply Chains without the South," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 562-567, August.
    6. Roberto Roson & Martina Sartori, 2016. "Input--output linkages and the propagation of domestic productivity shocks: assessing alternative theories with stochastic simulation," Economic Systems Research, Taylor & Francis Journals, vol. 28(1), pages 38-54, March.
    7. Randall Wright & Yuet‐Yee Wong, 2014. "Buyers, Sellers, And Middlemen: Variations On Search‐Theoretic Themes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(2), pages 375-397, May.
    8. Alberto BUCCI & Vladimir MATVEENKO, 2015. "Horizontal Differentiation and Economic Growth under Non–Homotheticity," Departmental Working Papers 2015-24, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    9. Charles D. Brummitt & Kenan Huremović & Paolo Pin & Matthew H. Bonds & Fernando Vega-Redondo, 2017. "Contagious disruptions and complexity traps in economic development," Nature Human Behaviour, Nature, vol. 1(9), pages 665-672, September.
    10. Alberto Bucci & Vladimir Matveenko, 2017. "Horizontal differentiation and economic growth under non-CES aggregate production function," Journal of Economics, Springer, vol. 120(1), pages 1-29, January.

    More about this item

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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