1. Measuring exposure to network concentration risk in global supply chains: Volume versus frequency.
- Author
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Inomata, Satoshi and Hanaka, Tesshu
- Subjects
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GLOBAL value chains , *SUPPLY chains , *INFORMATION & communication technologies , *VOLUME measurements ,CHINA-United States relations - Abstract
• We propose a new metric of supply chain exposure to network concentration risk: the pass-through frequency (PTF). • The PTF measures the frequency that a supply chain engages with the industrial sectors in a particular region of analytical concerns (natural hazards, geopolitical risks). • The PTF as a frequency-based indicator is compared with "trade in value-added" as a volume-based indicator, so that the supply chain exposure is evaluated in two analytical dimensions. • An empirical analysis using multi-country input-output tables shows that the US ICT equipment sector is highly skewed towards frequency-based concentration in China's production system, raising likelihood of getting caught by any contingency in the country. • The analysis of mutual risk positions for the US and China's supply chains reveals a notable asymmetry in the dependence structure between the two countries. In this paper, we present new referential statistics for the degree of supply chain exposure to network concentration risk. The study's contribution rests on the development of a metric that indicates network concentration in terms of the frequency of supply chain engagement with the regions of analytical concern, alongside the traditional approach based on volume measurement of value-added concentration. Japan, a country with a high propensity to encounter natural hazards, and China, under mounting geopolitical tension with the United States, are chosen as the target regions for the assessment of network concentration. In addition, the highly asymmetric structure of mutual economic dependency in the US-China relations is identified. [ABSTRACT FROM AUTHOR]
- Published
- 2024
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