Title page
Contents
Acknowledgements 4
Executive summary 5
1. Introduction 9
2. Identifying vulnerabilities in granular supply chains 12
Supply of intermediate products and their concentration in production networks 12
Identifying vulnerable intermediate products using granular trade data 16
Supply vulnerability for downstream industries: A focus on motor vehicles 22
3. Quantifying the effects of granular supply shocks: Model-based approach 28
Model-based approach: A simplified framework 28
Diffusion of a natural disaster in Japan through production networks 33
A supply shock on advanced technology products in China 42
4. Conclusion 46
References 47
Annex A. Combining ICIO tables and Comtrade data 51
Annex B. Details on the quantitative framework 52
Endnotes 54
Figure 2.1. Imports of intermediate products are highly concentrated in a handful of suppliers 13
Figure 2.2. Geography has a strong impact on countries' GVC dependencies 15
Figure 2.3. Downstream industries rely on few product suppliers even when exports are not too concentrated 15
Figure 2.4. Relationships with top suppliers are persistent 16
Figure 2.5. A classification of intermediate input supplies by degree of GVCs vulnerability 20
Figure 2.6. About 8% of products are vulnerable across G20 economies 20
Figure 2.7. Raw materials are more often among vulnerable products than complex goods 21
Figure 2.8. China is the main supplier of vulnerable products for the G20 22
Figure 2.9. About 4% of the inputs of the car industries are vulnerable 23
Figure 2.10. Concentration of supply is consistently higher using the proposed granular approach 24
Figure 2.11. Supply concentration is very high for some critical products of the motor vehicle industry 26
Figure 2.12. Supply networks of intermediate input vary greatly across products 27
Figure 3.1. Granular GVC stress-testing: A conceptual framework 29
Figure 3.2. Product-level elasticities of substitution 31
Figure 3.3. Quantifying the effects of a 50% supply shock on product supplies 32
Figure 3.4. Manufacturing and car production in Japan around the March 2011 earthquake 33
Figure 3.5. Short-term impact of a Japanese earthquake 34
Figure 3.6. Impact of a Japanese earthquake: Focus on motor vehicles 36
Figure 3.7. Granular GVC shock: Decomposing the impact on output 38
Figure 3.8. Natural disaster in Japan: Effect of diversification policies 40
Figure 3.9. Natural disaster in Japan: Effect of adaptation policies 41
Figure 3.10. Impact of an earthquake in the Republic of Türkiye 42
Figure 3.11. Short-term impact of a 50% supply shock in ATPs in China 43
Figure 3.12. A 50% supply shock in ATPs in China: The role of China's supplier share 43
Figure 3.13. Impact of a 50% supply shock in ATPs in China: Focus on the ICT sector 44
Figure 3.14. A 50% supply shock in ATPs in China: Effect of diversification policies 45
Boxes
Box 2.1. A review of methodologies to identify vulnerable products 17
Box 2.2. Measuring GVC concentration at product or sector level 24
Box 3.1. Quantifying the effects of upstream supply shocks on output: A simplified framework adapted from Bachmann et al. (2022) 29
Box 3.2. Quantifying the impact of a supply shock on product supplies 31
Box 3.3. Decomposing the simulated impact of a natural disaster in Japan 38
Box 3.4. Consequences of a natural disaster in the Republic of Türkiye 41
Annex Tables
Table A B.1. Elasticities used for the quantification exercise 53