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

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  • Escaith, Hubert

Abstract

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.

Suggested Citation

  • Escaith, Hubert, 2009. "Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession (revised)," MPRA Paper 31864, University Library of Munich, Germany, revised Jun 2011.
    • Handle: RePEc:pra:mprapa:31864
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    References listed on IDEAS

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    More about this item

    Keywords

    international supply chain; global value chains; great trade collapse; exit scenario; trade and development;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • F1 - International Economics - - Trade
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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