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

  • Escaith, Hubert

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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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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  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, pages 59-102.
  2. Escaith, Hubert & Lindenberg, Nannette & Miroudot, Sébastien, 2010. "International supply chains and trade elasticity in times of global crisis," WTO Staff Working Papers ERSD-2010-08, World Trade Organization (WTO), Economic Research and Statistics Division.
  3. Escaith, Hubert & Gonguet, Fabien, 2009. "International trade and real transmission channels of financial shocks in globalized production networks," WTO Staff Working Papers ERSD-2009-06, World Trade Organization (WTO), Economic Research and Statistics Division.
  4. repec:spo:wpecon:info:hdl:2441/2537 is not listed on IDEAS
  5. Sébastien Miroudot & Alexandros Ragoussis, 2009. "Vertical Trade, Trade Costs and FDI," OECD Trade Policy Papers 89, OECD Publishing.
  6. Escaith, Hubert, 2008. "Measuring trade in value added in the new industrial economy: statistical implications," MPRA Paper 14454, University Library of Munich, Germany.
  7. Guillaume Daudin & Paola Monperrus-Veroni & Christine Rifflart & Danielle Schweisguth, 2006. "Le commerce extérieur en valeur ajoutée," Revue de l'OFCE, Presses de Sciences-Po, vol. 98(3), pages 129-165.
  8. Agnès Bénassy-Quéré & Yvan Decreux & Lionel Fontagné & David Khoudour-Castéras, 2009. "Economic Crisis and Global Supply Chains," Working Papers 2009-15, CEPII research center.
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