International Production Networks Are Overcoming COVID-19 Shocks: Evidence from Japan's Machinery Trade

2021 ◽  
pp. 1-33
Author(s):  
Mitsuyo Ando ◽  
Fukunari Kimura ◽  
Ayako Obashi
Keyword(s):  
Production Networks ◽  
Price Effect ◽  
Demand Shocks ◽  
Empirical Results ◽  
International Production ◽  
Supply Shocks ◽  
Heterogeneous Effects ◽  
Trade Relationships ◽  
Quantity Effect

Abstract This paper investigates the impacts of COVID-19 on international production networks in machinery sectors by shedding light on negative supply shocks, negative demand shocks, and positive demand shocks. Specifically, we examined changes in trade in the trade-fall periods amid COVID-19 in 2020 using Japan's machinery trade at the most disaggregated level and decomposed them into two intensive margins (i.e., the quantity effect and the price effect) and two extensive margins (i.e., the entry effect and the exit effect). Our empirical results show that trade relationships for parts and components were robust even amid COVID-19 and that international production networks in machinery sectors were almost intact. They also demonstrate that COVID-19 brought positive demand shocks for specific products with special demand due to its nature in addition to negative supply shocks and negative demand shocks, which partially explains heterogeneous effects not only among sectors but also among products in the same sector. As of October 2020, Japan's machinery trade seems to have mostly recovered.

Vertical Contracts in a Supply Chain and the Bullwhip Effect

2020 ◽  
Author(s):  
Zhan Qu ◽  
Horst Raff
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Operations Management ◽  
Bullwhip Effect ◽  
Price Effect ◽  
Demand Shocks

This paper shows that decentralized supply chains, in which upstream firms use linear wholesale prices, may experience lower upstream production and downstream sales volatility than vertically integrated supply chains and may be less susceptible to the bullwhip effect by which the variance of upstream production exceeds the variance of downstream sales. The reason is that decentralized supply chains exhibit a price effect, whereby upstream producers raise wholesale prices in the case of positive demand shocks and lower wholesale prices in the case of negative demand shocks. Whereas upstream producers benefit from the price effect and, thus, from a dampening of the bullwhip effect, downstream firms may lose, and overall supply chain profit may decrease. This paper was accepted by Vishal Gaur, operations management.

scholarly journals The structural characteristics of world trade and the merchandise exports of Serbia

2009 ◽  
Vol 54 (181) ◽  
pp. 55-91
Author(s):  
Radovan Kovacevic
Keyword(s):  
Developing Countries ◽  
World Trade ◽  
New Technologies ◽  
Structural Characteristics ◽  
Developed Countries ◽  
Added Value ◽  
Production Networks ◽  
International Production ◽  
Starting Point ◽  
Merchandise Trade

This paper analyses the world merchandise trade structure and the structure of Serbian merchandise exports. The analysis shows that the prominent characteristic of post-World War II world trade is more dynamic growth in the volume of manufactured goods as compared to agricultural goods. Due to the lessening share of agricultural products world merchandise trade has decreased and rapid industrialization has been fostered in developing countries. An increased share for developing countries followed the developed countries' decreasing share in world manufacturing trade. The developing countries' increased share was strongest in telecom and office equipment exports. These sectors are characterized by production fragmentation, which is being realized by transnational companies. Serbia, like the other South East European countries, has not yet managed to significantly integrate into international production networks. Serbia's most important exports are manufactured products with a low level of added value . In addition, Serbia still has a high share of primary products in its exports. A higher share of exports of goods and services in the gross domestic products (GDP) cannot be achieved without increasing imports of new technologies and equipment, i.e. without a higher investment share of the GDP. The main conclusion of this article is that the creation of a favorable investment climate and an increase in Serbia's international credit rating are the preconditions for stronger foreign direct investment (FDI), which would be the main channel for restructuring in the real sector. Creation of new small and medium enterprises (SMEs) through greenfield investment and their integration into the international production networks is the starting point for the restructuring of Serbian industrial production and merchandise export, i.e. the way of increasing the share of merchandise exports in the GDP.

Profit change and its drivers in the English and Welsh water industry: is output quality important?

Water Policy ◽  
2014 ◽  
Vol 20 (5) ◽  
pp. 995-1012 ◽  
Author(s):  
Alexandros Maziotis ◽  
David S. Saal ◽  
Emmanuel Thanassoulis ◽  
María Molinos-Senante
Keyword(s):  
Negative Impact ◽  
Scale Effects ◽  
Price Effect ◽  
Output Effect ◽  
Future Performance ◽  
Output Quality ◽  
Main Driver ◽  
Significant Negative Impact ◽  
Water Companies ◽  
Quantity Effect

Abstract The assessment of profit change over time and its drivers is essential to analyse firms' financial performance. This paper investigates profit change and its components for the 10 English and Welsh water and sewerage water companies over the period 1991–2008 and for three regulatory sub-periods. Profit changes and their drivers are computed following two approaches, namely: without controlling for water and sewerage quality issues, and after decomposing the output effect into high quality and low quality output effect. In both cases, profit change is decomposed into various factors such as quantity and price effect, technical change, efficiency change, resource mix, product mix, and scale effect. Profit change over the whole period was negative, with the substantial negative price effect being the main driver, which outstripped the positive quantity effect. This negative profit change was significantly marked from 2000 to 2005 while in the sub-period 1994–2000, which covers the 1994 price review, the profit change was positive. A further decomposition illustrated the significant negative impact of the input price and scale effects on profit changes. The methodology and conclusions of this paper are of great interest for both regulators and water utilities managers to improve future performance.

scholarly journals Are Production Networks Passé in East Asia? Not Yet

2018 ◽  
Vol 17 (3) ◽  
pp. 86-107 ◽  
Author(s):  
Ayako Obashi ◽  
Fukunari Kimura
Keyword(s):  
International Trade ◽  
Raw Materials ◽  
East Asian ◽  
Production Networks ◽  
Trade Data ◽  
International Production ◽  
End Products ◽  
Great Trade Collapse ◽  
Primary Goods ◽  
Asian Context

Many people have a vague notion that the room for expanding international production networks is almost exhausted and that therefore international trade has slowed down since the recovery from the great trade collapse. This paper presents evidence against such a belief in the East Asian context by classifying finely disaggregated trade data based on the stages of the production process. The trade slowdown was attributed mainly to sluggishness of trade in primary goods and processed raw materials. In contrast, East Asian trade in manufactured parts and components and the assembled end-products within production networks continued to expand steadily.

Promoting technology spillovers from trade and investments

2014 ◽  
Vol 13 (1) ◽  
pp. 25-34
Author(s):  
Ronald U. Mendoza ◽  
Ailyn Lau
Keyword(s):  
Technology Policy ◽  
Learning By Doing ◽  
Technology Spillovers ◽  
Production Networks ◽  
Firm Level ◽  
Technological Spillovers ◽  
Content Type ◽  
International Production ◽  
Innovation Activities ◽  
Innovation And Technology

Purpose – Trade and investment flows into less-advanced economies could bring about important technological spillovers that could boost firm-level productivity and bolster their long-term economic growth. However, learning by doing and various forms of innovation activities are typically underprovided in a laissez faire policy environment. This brief paper outlines some of the motivations for public sector interventions to support learning by doing and stronger technological spillovers. The paper aims to discuss these issues. Design/methodology/approach – To accomplish this, the paper provides a brief discussion of three key areas for policy attention, covering: the features that make international production networks fertile platforms for these spillovers; the opportunities for technology spillovers in the services sector; and the challenges associated with policies to link SMEs into these sectors that are fertile ground for technology spillovers and innovation. Findings – This paper concludes by presenting a few possible guidelines on innovation and technology policy based on the lessons of industrialization attempts in the last several decades. A key insight tying these strategies together is that of creating incentives to compete and innovate, and ensuring that support is outcome oriented and temporary. Originality/value – This paper contributes to the literature and practitioner-oriented scholarship by providing a clear framework for thinking about how to promote technology spillovers from trade and investments, as part of new industrial policies.

DO GLOBAL CRUDE OIL MARKET SHOCKS HAVE DIFFERENTIAL EFFECTS ON US REGIONS?

2017 ◽  
Vol 23 (5) ◽  
pp. 1978-2008 ◽  
Author(s):  
Bebonchu Atems ◽  
Mark Melichar
Keyword(s):  
Crude Oil ◽  
Aggregate Demand ◽  
Personal Income ◽  
Oil Shocks ◽  
Demand And Supply ◽  
Demand Shocks ◽  
Industrial Composition ◽  
Oil Market ◽  
Supply Shocks ◽  
Market Shocks

The paper investigates whether US regions respond differently to shocks in the crude oil market. We disentangle oil market shocks into distinct demand and supply shocks and examine the response of regional personal income to these shocks. Results indicate that for most regions, oil supply shocks decrease real personal income. Except for the Rocky Mountains and the Southwest, global aggregate demand shocks are recessionary, typically about a year and a half after the shock. When we split our data into oil-producing and non-oil-producing regions, we find that global aggregate demand shocks have no effect on oil-producing regions but cause a decrease in income in non-oil-producing regions. Our analysis further indicates that oil-specific demand shocks have positive and persistent impacts on oil-producing regions but are recessionary in non-oil-producing regions. We also document significant asymmetries in the regional responses to small versus large oil shocks. In addition, the paper shows that regional differences in industrial composition explain some of the variation in the responses of real regional personal income to oil shocks.

Sign in / Sign up

Export Citation Format

Share Document