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Supply Chain Resilience in the Global Financial Crisis: An Empirical Study on Japan

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Supply Chain Resilience

Abstract

Intricate trading networks have emerged in East Asia. They are associated with technology transfer, mushrooming productivity growth, and tumbling prices for final goods. This chapter recounts the emergence and evolution of manufacturing production networks in the region. It then documents the burgeoning surpluses between Asia and the rest of the world in goods produced within these regional value chains. Empirical evidence indicates that exchange rates throughout the supply chain affect these surpluses. Given intense pushback against globalization, as evidenced by the British vote to exit the European Union, a harmonized appreciation of Asian currencies would be desirable to reduce the risks of protectionism. To increase the resilience of supply chains, Asian countries should also improve infrastructure, fight corruption, strengthen protections for intellectual property rights, improve the supply of electricity, and invest in the health and education of its people.

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Notes

  1. 1.

    Results for Singapore were inconclusive.

  2. 2.

    Britain’s exit from the EU may or may not lead to more protectionism. It is a symptom, though, that those harmed by import competition are willing to take great risks to their own economies to change the political equilibrium. In this type of environment, protectionist policies are a greater risk.

  3. 3.

    An example of how service link costs are important for the electronics industry comes from the Philippines. Intel was the first semiconductor firm to open a factory in the Philippines. However, the investment climate is marred by poor infrastructure and corruption. An unfavorable investment climate, high electricity costs, and other infrastructure problems caused Intel to move production to China (see, e.g., Calimag 2008).

  4. 4.

    These data come from the Japanese Society of Semiconductor Industry Specialists.

  5. 5.

    Technology development in Korea and other East Asian economies is related to declines in transportation costs and increases in liberalization throughout the region. I am indebted to the reviewers for this observation.

  6. 6.

    Although not shown, the residuals are generally well behaved.

  7. 7.

    García-Herrero and Koivu (2007) also argued that there may be a structural break associated with China’s WTO Accession.

  8. 8.

    For Malaysia, these countries are Australia, Canada, France, Germany, Japan, Mexico, the Netherlands, Singapore, Taiwan, Thailand, the U.S., and the U.K. For the Philippines, these countries are Germany, Japan, and the U.S. For Singapore, they are Australia, China, Germany, Hong Kong, Japan, Malaysia, the Netherlands, South Korea, Taiwan, Thailand, the U.K., and the U.S. For Thailand, they are Canada, France, Germany, Hong Kong, Japan, Malaysia, Singapore, and the U.S.

  9. 9.

    Singapore is not included with the other three because it is at a higher level of development and its role as an entrepôt makes it different from the other three.

  10. 10.

    In this paragraph the discussion focuses on Malaysia as the exporter of final goods, but the same procedures are used to calculate data for the Philippines, Singapore, and Thailand as final exporters.

  11. 11.

    These paragraph and the next one draws on Thorbecke (2013).

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Acknowledgements

This research was conducted as part of the project of the Economic Research Institute for ASEAN and East Asia (ERIA) ‘Reducing the Vulnerability of Supply Chains and Production Networks’. The author thanks Venkatachalam Anbumozhi, Michael C. Huang, Fukunari Kimura, Shandre M. Thangavelu, and other project participants for valuable comments and suggestions. The opinions expressed in this paper are the sole responsibility of the authors and do not reflect the views of ERIA.

Author information

Authors and Affiliations

  1. Research Institute of Economy, Trade and Industry, Center for International Development at Harvard, 1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo, 100-8901, Japan

    Willem Thorbecke

Authors
  1. Willem Thorbecke
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Corresponding author

Correspondence to Willem Thorbecke .

Editor information

Editors and Affiliations

  1. Economic Research Institute for ASEAN and East Asia, ERIA, Gelora Bung Karno, Senayan, Jakarta, Indonesia

    Venkatachalam Anbumozhi

  2. Economic Research Institute for ASEAN and East Asia, ERIA, Gelora Bung Karno, Senayan, Jakarta, Indonesia

    Fukunari Kimura

  3. Jeffrey Cheah Institute for Southeast Asia, Sunway University, Selangor, Malaysia

    Shandre Mugan Thangavelu

Appendix

Appendix

This appendix presents data on intermediate goods inflows into individual East Asian countries from the region as a whole. It examines the three key industries within regional value chains, automobiles, clothing, and electronics (Figs. 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, and 3.20).

Fig. 3.14
figure 14

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to China. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

Full size image
Fig. 3.15
figure 15

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to South Korea. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

Full size image
Fig. 3.16
figure 16

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to Japan. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

Full size image
Fig. 3.17
figure 17

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to Taiwan. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

Full size image
Fig. 3.18
figure 18

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to Malaysia. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

Full size image
Fig. 3.19
figure 19

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to Philippines. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

Full size image
Fig. 3.20
figure 20

Source CEPII-CHELEM database

Flow of intermediate goods in three leading industries to Thailand. Note East Asia includes China, Japan, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand. Intermediate goods in the electronics sector are defined as International Standard Industrial Classification (ISIC) product category 321 (electronic valves and tubes); intermediate goods in the clothing sector are defined as ISIC product categories 171, 172, and 173 (spinning, weaving and finishing of textiles, manufacture of other textiles, and knitted fabrics and articles); and intermediate goods in the automotive sector as ISIC product categories 342 and 343 (bodies for motor vehicles and parts for motor vehicles).

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Thorbecke, W. (2020). Supply Chain Resilience in the Global Financial Crisis: An Empirical Study on Japan. In: Anbumozhi, V., Kimura, F., Thangavelu, S. (eds) Supply Chain Resilience. Springer, Singapore. https://doi.org/10.1007/978-981-15-2870-5_3

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