Firm-Level Propagation of The Effect of Disruption of International Trade Through Domestic Supply Chains

Risks of disruption to global supply chains are rising and threatening the sustainability of global supply chains. This study simulates how the disruption of imports from various regions affect the total production of Japanese firms. We particularly incorporate the propagation of the economic effect...

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Bibliographic Details
Published in2023 Annual Modeling and Simulation Conference (ANNSIM) pp. 294 - 305
Main Authors Inoue, Hiroyasu, Todo, Yasuyuki
Format Conference Proceeding
LanguageEnglish
Published SCS 23.05.2023
Subjects
Analytical models
global supply chains
International trade
network analysis
Network topology
Production
Supply chains
Sustainable development
trade disruption
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Summary:Risks of disruption to global supply chains are rising and threatening the sustainability of global supply chains. This study simulates how the disruption of imports from various regions affect the total production of Japanese firms. We particularly incorporate the propagation of the economic effect through domestic supply chains, using data on more than one million firms and four million supply chain ties. We find that the negative effect of disruption of intermediate imports grows exponentially as its duration and level increase because of downstream propagation. In addition, the propagation of the economic effect is substantially affected by the network topology of importers, such as the number of importers (affected nodes) and their upstreamness in supply chains, but not necessarily by their centrality. Furthermore, the negative effect of import disruption can be mitigated by reorganisation of domestic supply chains, even when the reorganisation is conducted among only network neighbours.