No.828 A Risk Analysis on Geographical Concentration of Global Supply Chains
by Satoshi Inomata and Tesshu Hanaka
In this paper we present and analyze new referential statistics for risk assessment on geographical concentration of global supply chains. The study’s net contribution rests on the development of a metric which indicates geographical concentration in terms of the frequency of supply chain engagement with the regions of analytical concerns, alongside the traditional approach based on volume measures of value-added concentration.
Japan, a country with a high propensity to encounter natural hazards, and China, under a mounting geopolitical tension with the United States, are chosen as target regions for the risk assessment. The analysis follows a line of techniques in input-output economics known as the "key sector analysis", yet with methodological augmentation by a compatible analytical framework in the network theory. Using the latest set of multi-country input-output tables constructed by the Organisation for Economic Co-operation and Development (OECD), the concentration risks of some key global supply chains such as the automotive industry and the ICT/electronics equipment industry are identified.
Keywords: risk assessment, global supply chains, choke points, input-output analysis
JEL classification: C67, F52, F60
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