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

  • Escaith, Hubert

Global supply chains reshaped international trade since the 1980s. Their role in explaining the trade collapse that followed the financial crisis of September 2008 was significant. Because manufacture production is internationally fragmented, adverse external shocks affect firms not only through final demand, but also through the disruption on the flow of inputs received from their suppliers. The future of supply chains depends of 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 rampant deglobalization. On the other hand, because trade in goods for processing inflated artificially some bilateral trade imbalances, correcting them will prove easier in the short term, while the technical factors that made possible the internationalization of production will keep promoting further "flattening of the Earth" in the longer term. The reshaping of global effective demand is of particular importance for the labour abundant Least Developed Countries that were relying on global supply chains to attract productive investments.

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File URL: http://mpra.ub.uni-muenchen.de/31864/1/MPRA_paper_31864.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 31864.

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Date of creation: Oct 2009
Date of revision: Jun 2011
Handle: RePEc:pra:mprapa:31864
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  1. Kristian Behrens & Giordano Mion, 2010. "Trade crisis? What trade crisis?," LSE Research Online Documents on Economics 48910, London School of Economics and Political Science, LSE Library.
  2. Bricongne, Jean-Charles & Fontagné, Lionel & Gaulier, Guillaume & Taglioni, Daria & Vicard, Vincent, 2012. "Firms and the global crisis: French exports in the turmoil," Journal of International Economics, Elsevier, vol. 87(1), pages 134-146.
  3. C. Menichini, Anna Maria, 2009. "Inter-firm trade finance in times of crisis," Policy Research Working Paper Series 5112, The World Bank.
  4. Escaith, Hubert, 2007. "Old and new dualisms in Latin America and Asia: labour productivity, international competitiveness and income distribution," MPRA Paper 14510, University Library of Munich, Germany, revised 2008.
  5. Agnès Bénassy-Quéré & Yvan Decreux & Lionel Fontagné & David Khoudour-Castéras, 2009. "Economic Crisis and Global Supply Chains," Working Papers 2009-15, CEPII research center.
  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. Sébastien Miroudot & Alexandros Ragoussis, 2009. "Vertical Trade, Trade Costs and FDI," OECD Trade Policy Papers 89, OECD Publishing.
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