Role of Production Networks in Sustaining and Rebalancing Asia's Growth

Thorbecke, Willem; Bhattacharyay, Biswa Nath

doi:10.2139/ssrn.2137512

Cited by 2 publications

(2 citation statements)

References 10 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Our findings continue the analysis of previous studies confirming the importance of the networks for economic growth (Bernard et al (2018) [ 34 ], Carvalho and Tahbaz-Salehi (2019) [ 10 ], or Carvalho (2014) [ 9 ]); the study also stresses the importance of financial constraints for economic recovery–consistent with the findings of Bigio and La’O (2016) [ 28 ]; the average life use of intermediate inputs is influencing the resilience of economies to the crisis, which is consistent with the findings of Obashi (2009) [ 26 ], Thorbecke and Bhattacharyay (2012) [ 24 ].…”

Section: Discussion Of Results and Implicationssupporting

confidence: 85%

“…Some papers expanded the idea of networks in restoring the equilibrium in the Asian continent after the crises. While Thorbecke & Bhattacharyay (2012) [24] demonstrated that production networks have contributed to trade development and economic growth in East Asia, Ando (2013) [25] analysed machinery sectors in Japan concluding that 'regardless of whether creating demand shock or supply shock, the economic/natural disasters revealed the stability and robustness of production networks'. Obashi (2009) [26] discussed the resiliency of international production networks in Japan underlying 'its stability after considering adverse effects of the crisis'.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Production networks and resilience: How dense production networks shield economies in financial crisis

Caraiani,

Dima,

Păun

et al. 2024

PLoS ONE

View full text Add to dashboard Cite

The research delves into the underexplored area of how production network structures influence the severity of economic downturns, particularly during the last financial crisis. Utilizing the RSTAN database from the OECD, we meticulously derived critical measures from the input-output matrices for 61 economies. Our methodology entailed a panel analysis spanning from 2008 to 2010, which is a period marked by significant recessionary pressures. This analysis aimed to correlate economic performance with various production network metrics, taking into account control factors such as interest rates and the prevalence of service sectors. The findings reveal a noteworthy positive correlation between the density of production networks and economic resilience during the crisis, which remained consistent across multiple model specifications. Conversely, as anticipated, higher interest rates were linked to poorer economic performance, highlighting the critical interplay between monetary policy and economic outcomes during periods of financial instability. Given these insights, we propose a policy recommendation emphasizing the strategic enhancement of production network density as a potential buffer against economic downturns. This approach suggests that policymakers should consider the structural aspects of production networks in designing economic stability and growth strategies, thus potentially mitigating the impacts of future financial crises.

show abstract