The economic impact of supply chain disruptions from the Great East-Japan earthquake

Abstract

The Great East Japan Earthquake of March 11, 2011 had a serious negative economic impact on the Japanese economy. The earthquake substantially reduced production not only in regions directly hit by the earthquake but also in other parts of Japan through supply chain disruptions. We examine the economic impact of the supply chain disruptions immediately following the earthquake using regional input-output (IO) tables, the Japan Industrial Productivity (JIP) database, and other regional statistics. To conduct our analysis, we modify the forward linkage methodology to take into account the first-stage bottleneck effect in the intermediate input of manufacturing production. We also create our own interregional input-output table by combining two different regional IO tables. Our estimates show that the production loss caused by the supply chain disruptions would be a maximum of 0.41% of the country's gross domestic product (GDP). We also analyzed the possible damage mitigating effects of establishing multiple supply chains to cope with potential natural disasters in the future. However, as multiple supply chains may lose production efficiency at the firm level, we need some policies that give incentives to firms which diversify supply chains.

Risk perception and determinants in small‐ and medium‐sized agri‐food enterprises amidst the COVID‐19 pandemic: Evidence from Egypt

“…The first risk‐source category is “ supply chains ,” as extreme events disrupt SMEs' supply chains and often substantially reduce their production (e.g. Lu et al, 2020; Tokui et al, 2017). The second risk‐source category is “ sales and revenue ,” as SMEs, despite being more dynamic and opportunistic than larger enterprises, are vulnerable to significant fluctuations in demand for their goods and services (e.g., Cowling et al, 2015; M. A. U. Khan & Sayem, 2013).…”

Using Disruptive Innovation for Disaster Mitigation and Ensuring Supply Chain Continuity

“…The production loss caused by the supply chain disruption was 0.35% of the GDP of Japan (Tokui, J. et al 2017) 9 .…”

Natural Disasters and Firm Resilience in Italian Industrial Districts

“…Focusing on the firms located outside the damaged areas, Tokui et al (2017) assess the transmission through supply chain disruptions of the negative effects of the Great East-Japan earthquake. Tokui and co-authors construct an interregional IO table to assess the economic impact of supply chain disruptions in regions of Japan outside the damaged areas and find that the existence of multiple supply chains would have highly mitigated the indirect damage of the disaster, which was instead remarkable.…”

“…7 Thus, given the high density of the (productive, technological and commercial) relationships among firms in industrial districts, the shock transmission along the supply chain may be stronger within these local systems than in non-district areas. 8 As shown by Todo et al (2013) and Tokui et al (2017), firms may indeed benefit from enjoying a geographically diversified network of suppliers and clients, because this facilitates the substitution of damaged partners after a localized shock. Another potential channel through which firms in an industrial district may be more severely hit pertains to the financial realm: if banks have localized lending relationships, a disaster may negatively impact on the provision of external finance to the firms located in the affected area.…”