Implications for Trade, Incomes and Economic Vulnerability
Edited by Benno Ferrarini and David Hummels
Chapter 3: The vulnerability of the Asian supply chain to localized disasters
There are good reasons to believe that globalization of supply chains leads to significant productivity gains for national economies. But heightened interdependence comes with a down side: shocks to one economy may create ripples, or in some cases, tidal waves which come crashing down on the economies of its trade partners. Economic shocks to global supply chains can take many forms. At the micro scale, key input suppliers may fail to meet quality and scheduling targets or simply go out of business. Shocks of this sort can be extraordinarily harmful to agents with close vertical links to the failing firm, but may have few discernible effects on the economy as a whole. In contrast, macro scale shocks such as deep recessions, wars and terrorist attacks, and large natural disasters may create widespread damage. Regrettably, there is good reason to believe that the severity of these macro scale shocks is on the rise. The Great Recession and subsequent trade collapse of 2008–2009 represents the largest downturn in international transactions on record. Climate change is expected to increase the frequency and intensity of natural disasters. And high profile terrorist attacks against vital infrastructure, waged in person or online, may significantly impede movements of goods, services and people.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.