Global Supply Chains and the Great Trade Collapse: Guilty or Casualty?

Abstract:     
Trade and industrial production have been increasingly interlinked, thanks to the vertical integration of global manufacturing through outsourcing and off-shoring. The expansion of international supply chains apparently determined an increase in trade elasticity observed since the late 1980s, and may explain also the overshooting of trade elasticity during the 2008-2009 trade collapse. After reviewing the available evidences, the article analyses the future of globalized production networks in a post-crisis scenario. In the short term, global rebalancing might prove easier than expected. Supply chains may become smaller and more regional as a result of this rebalancing. This scenario creates a challenge for labour abundant less advanced developing countries in the periphery of the large regional networks.

Number of Pages in PDF File: 18

Keywords: global supply chains, trade, outsourcing, off-shoring, trade elasticity, internationalization of production

JEL Classification: F42, E32, F23, O24, O19, G01

Accepted Paper Series