Global supply chains and the great trade collapse: guilty or casualty?

BY Hubert Escaith | 06-06-2017
International Social Science Journal

International Social Science Journal (Chinese Edition)

No.1, 2017

 

Global supply chains and the great trade collapse: guilty or casualty?

(Abstract)

 

Hubert Escaith

 

With globalization, trade and production have been increasingly interlinked, thanks to the vertical integration of industrial production processes through outsourcing and off-shoring. The expansion of international supply chains determined the apparent 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 “New Normal” that characterizes the global economy in the post-crisis period, supply chains may become smaller and more regional. This scenario creates a challenge for labour abundant less advanced developing countries in the periphery of the large regional networks, which will find more difficult to attract productive investments. Yet deglobalization remains a distant threat as long as the technical and institutional factors that made the internationalization of production preserved possible.