Low Interest Rates and Bank’s Profitability – Update May 2019

Low Interest Rates and Bank’s Profitability – Update May 2019

My last post on this important topic was in 2017.  Since then several new articles and research papers have been published. I have compiled them in this post.  Please see references.

In my posts I have shown how many trends in economics for the last thirty years can be explained by unintendend consequences of US Federal Researve monetary policy of lowering interest rates to boost economic growth.

  • Rise of Shadow Banking – MMMF
  • Rise of International capital flows in USA
  • Growth of Consumer credit – Credit Cards and Housing Loans
  • Decline in Net Interest Margins of the Banks
  • Risk taking by banks to maintain and increase their profits
  • Rise of Non interest income of Banks
  • Rise of Non core business of banks
  • Rise of Mergers/Acquisitions/Consolidation in Banking sector

Related to these are:

  • Business Investments by Production side of economy
  • Increase in Market concentration of Products
  • Increase in Mergers and Acquisitions/consolidation among Product market businesses
  • Decreasing monitory policy effectiveness
  • Wrong economic growth forecasts
  • Secular Stagnation Hypothesis
  • Rise of Outsourcing and global value chains
  • Free Trade agreements
  • Increase in Ineqality of wealth and Income
  • Increase in corporate profits and equities market
  • Increase in corporate savings
  • Increase in share buybacks, and dividends payouts

 

 

and this one,

Increasing Market Concentration in USA: Update April 2019

Key Sources of Research:

Monetary policy and bank profitability in a low interest rate environment

Click to access ecb-wp2105.en.pdf

The “Reversal Interest Rate”: An Effective Lower Bound on Monetary Policy∗

Markus K. Brunnermeier and Yann Koby

This version: May 3, 2017

Click to access 16f_reversalrate.pdf

Click to access 26d_rir_bankofcanada.pdf

Interest Rate and Its Effect on Bank’s Profitability

Muhammad Faizan Malik1,2, Shehzad Khan1,2, Muhammad Ibrahim Khan1, Faisal Khan

https://www.researchgate.net/publication/318648785_Interest_Rate_and_Its_Effect_on_Bank’s_Profitability

Bank performance under negative interest rates

VOXEU

https://voxeu.org/article/bank-performance-under-negative-interest-rates

How low interest rates impact bank

BBVA

https://www.bbva.com/en/how-low-interest-rates-impact-bank-profitability/

Negative-nominal-interest-rates-and-banking

Money and Banking

https://www.moneyandbanking.com/commentary/2018/10/21/negative-nominal-interest-rates-and-banking

Monetary policy and bank equity values in a time of low interest rates

Miguel Ampudia, Skander Van den Heuvel

 

Click to access ecb.wp2199.en.pdf

 

Bank Profitability and Financial Stability

Prepared by TengTeng Xu, Kun Hu, and Udaibir S. Das1

IMF

January 2019

 

https://www.imf.org/~/media/Files/Publications/WP/2019/wp1905.ashx

 

Financial stability implications of a prolonged period of low interest rates

Report submitted by a Working Group established by the Committee on the Global Financial System

The Group was co-chaired by Ulrich Bindseil (European Central Bank) and Steven B Kamin (Board of Governors of the Federal Reserve System)

July 2018

 

Click to access cgfs61.pdf

 

Monetary policy and bank profitability in a low interest rate environment

Carlo Altavilla Miguel Boucinha José-Luis Peydró
Economic Policy, Volume 33, Issue 96, October 2018, Pages 531–586,
Published: 09 October 2018

 

https://academic.oup.com/economicpolicy/article/33/96/531/5124289

 

 

Determinants of bank profitability in emerging markets

by E. Kohlscheen, A. Murcia and J. Contreras

Monetary and Economic Department

January 2018

BIS

Click to access work686.pdf

 

 

 

The Risk-Taking Channel of Monetary Policy Transmission in the Euro Area

 

Matthias Neuenkirch, Matthias Nöckel

4/2018

 

Click to access cesifo1_wp6982.pdf

 

 

 

 

ADAPTING LENDING POLICIES WHEN NEGATIVE INTEREST RATES HIT BANKS’ PROFITS

Óscar Arce, Miguel García-Posada, Sergio Mayordomo and Steven Ongena

2018

Click to access dt1832e.pdf

 

 

Banks, Money and the Zero Lower Bound

Michael Kumhof

Xuan Wang

Click to access 2018-16.pdf

 

 

 

Banking in a Steady State of Low Growth and Interest Rates

by Qianying Chen, Mitsuru Katagiri, and Jay Surti

IMF

https://www.imf.org/~/media/Files/Publications/WP/2018/wp18192.ashx

 

 

 

Changes in Monetary Policy and Banks’ Net Interest Margins: A Comparison across Four Tightening Episodes

Jared Berry, Felicia Ionescu, Robert Kurtzman, and Rebecca Zarutskie

Federal Reserve

2019

https://www.federalreserve.gov/econres/notes/feds-notes/changes-in-monetary-policy-and-banks-net-interest-margins-a-comparison-20190419.htm

 

 

 

Monetary Policy and Bank Profitability, 1870 – 2015

47 Pages Posted: 8 Feb 2019

Kaspar Zimmermann

University of Bonn

Date Written: January 25, 2019

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3322331

 

 

The effect of falling interest rates and yield curve to banks’ interest margin and profitability: cross-country evidence from the EU banks in the aftermath of 2008 financial crisis

Giorgi Chagoshvili

MS Thesis

 

https://repository.ihu.edu.gr/xmlui/bitstream/handle/11544/29306/The%20effect%20of%20falling%20interest%20rates%20and%20yield%20curve%20to%20banks%20%20interest%20margin%20and%20profitability%20cross%20country%20evidence%20from%20the%20EU%20banks%20in%20the%20aftermath%20of%202008%20financial%20crisis.pdf?sequence=1

 

 

 

 

Bank Performance under Negative Interest Rates

 

by Jose A. Lopez, Andrew K. Rose, and Mark M. Spiegel

 

Click to access VOXNNIR.pdf

Determinants of bank’s interest margin in the aftermath of the crisis: the effect of interest rates and the yield curve slope

  • Paula Cruz-García
  • Juan Fernández de GuevaraEmail author
  • Joaquín Maudos

https://link.springer.com/article/10.1007/s00181-017-1360-0

 

 

 

 

Key Determinants of Net Interest Margin of Banks in the EU and the US

MS Thesis

Charles University

Bc. Petr Hanzlík

 

https://dspace.cuni.cz/bitstream/handle/20.500.11956/99546/120297262.pdf?sequence=1

 

Increasing Market Concentration in USA: Update April 2019

Increasing Market Concentration in USA: Update April 2019

In this post, I have compiled recent articles and papers on the issues of:

  • Increased Market Power
  • Increased Market Concentration
  • Increased Corporate Profits
  • Increased Inequality
  • Anti Trust Laws and Competition policy
  • Interest rates and Business Investments
  • Interest rates and Mergers and Acquisitions
  • Stock Buybacks, Dividends, and Business Investments
  • Outsourcing, and Global Value Chains
  • Corporate Savings Glut
  • Slower Economic Growth
  • Reduced Dynamism

 

From Low Interest Rates, Market Power, and Productivity Growth

How does the production side of the economy respond to a low interest rate environment? This study provides a new theoretical result that low interest rates encourage market concentration by giving industry leaders a strategic advantage over followers, and this effect strengthens as the interest rate approaches zero. The model provides a unified explanation for why the fall in long-term interest rates has been associated with rising market concentration, reduced dynamism, a widening productivity-gap between industry leaders and followers, and slower productivity growth. Support for the model’s key mechanism is established by showing that a decline in the ten year Treasury yield generates positive excess returns for industry leaders, and the magnitude of the excess returns rises as the Treasury yield approaches zero.

Please see my related posts:

 

Competition, Concentration, and Anti-Trust Laws in the USA

Concentration, Investment, and Growth

Shareholder Capitalism: Rising Market Concentration, Slower Productivity Growth, Rising Inequality, Rising Profits, and Rising Equities Markets

Rising Market Concentration and Declining Business Investments in the USA – Update June 2018

Rising Profits, Rising Inequality, and Rising Industry Concentration in the USA

Why are Macro-economic Growth Forecasts so wrong?

Low Interest Rates and Business Investments : Update August 2017

Mergers and Acquisitions – Long Term Trends and Waves

Business Investments and Low Interest Rates

Economic Growth Theories – Orthodox and Heterodox

The Decline in Long Term Real Interest Rates

Why do Firms buyback their Shares? Causes and Consequences.

On Inequality of Wealth and Income – Causes and Consequences

Intra Industry Trade and International Production and Distribution Networks

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

Understanding Trade in Intermediate Goods

Trends in Intra Firm Trade of USA

Cash and Investments: Corporate Savings Glut in USA

Key sources:

Markups, Consumption and Market Concentration

American Economic Association

https://www.aeaweb.org/conference/2019/preliminary/814?q=eNqrVipOLS7OzM8LqSxIVbKqhnGVrJQMlWp1lBKLi_OTgRwlHaWS1KJcXAgrJbESKpSZmwphlWWmloO0FxUUgLQagFwwSH9BYjpIBZANXDDjnB7P

AMERICA’S CONCENTRATION CRISIS

AN OPEN MARKETS INSTITUTE REPORT

https://concentrationcrisis.openmarketsinstitute.org

How Low Interest Rates Have Led To Increased Market Concentration

Seeking Alpha

March, 2019

https://seekingalpha.com/article/4245601-low-interest-rates-led-increased-market-concentration

 

Market Concentration Is Threatening the US Economy

https://www.project-syndicate.org/commentary/united-states-economy-rising-market-power-by-joseph-e-stiglitz-2019-03

Concentration increasing?

John Cochrane

2019

https://johnhcochrane.blogspot.com/2019/03/concentration-increasing.html

Industry Concentration in Europe and North America

OECD

2019

Monopolies are the ‘missing piece of the puzzle’ when it comes to analyzing US inequality, investment researchers argue

Barclays Launches New Research Study Analyzing how Market Concentration is Affecting the US Economy

March 26, 2019

DISRUPTION CONCENTRATION AND THE NEW ECONOMY

The Surprising Thing About Market Concentration

by esteban rossi-hansberg, pierre-daniel sarte and nicholas trachter

 

Increased market power: a global problem that needs solving?

January 2019

https://www.oxera.com/agenda/increased-market-power-a-global-problem-that-needs-solving/

Click to access Increased-market-power.pdf

 

 

 

70 Years of US Corporate Profits∗

Simcha Barkai

Seth G. Benzell

April 2018

 

Click to access 2270yearsofuscorporateprofits.pdf

 

 

Low Interest Rates, Market Power, and Productivity Growth

Ernest Liu, Atif Mian, Amir Sufi

January 2019

NBER

https://www.nber.org/papers/w25505

Click to access BFI-MFRI-2019-09.pdf

Chapter 2: The Rise of Corporate Market Power and Its Macroeconomic Effects

World Economic Outlook

April 2019

IMF

https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019

Outsourcing, Occupational and Industrial Concentration

Nicholas Bloom (Stanford), Audrey Guo (Stanford) and Brian Lucking (Stanford)
November 2018

 

 

 

Diverging Trends in National and Local Concentration∗

Esteban Rossi-Hansberg Pierre-Daniel Sarte

Nicholas Trachter

February 26, 2019

 

Click to access DTNLC.pdf

 

 

 

Macroeconomics and Market Power: Facts, Potential Explanations, and Open Questions

Chad Syverson

January 2019

Brookings

 

Click to access ES_20190116_Syverson-Macro-Micro-Market-Power.pdf

A Theory of Falling Growth and Rising Rents

Author(s): Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter J. Klenow, and Huiyu Li

March 2019

Fed Reserve San Francisco

https://www.frbsf.org/economic-research/publications/working-papers/2019/11/

Competition and market concentration in the United States

 

December 2018

https://www.tresor.economie.gouv.fr/Articles/bd779c20-ede1-4266-94ee-13eb70d0b882/files/c19bc114-e2ee-4f2e-99a4-6ca645b6f0d5

Concentration, Market Power and Dynamism in the Euro Area

ECB Working Paper No. 2253 (2019); ISBN 978-92-899-3515-9

 

Posted: 26 Mar 2019

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3360233&download=yes

The Rise of Market Power and the Macroeconomic Implications

Jan De Loecker
Jan Eeckhout
Gabriel Unger
November 22, 2018

 

Click to access RMP.pdf

 

Resource Flows: Material Flow Accounting (MFA), Life Cycle Analysis (LCA), Input Output Networks and other methods

Resource Flows: Material Flow Accounting (MFA), Life Cycle Analysis (LCA), Input Output Networks and other methods

 

 

 

From Materials Flow and Sustainability

mfa5mfa6

 

Key Terms:

  • MFA (Material Flow Analysis)
  • MFCA (Material Flow Cost Accounting)
  • LCA (Life Cycle Analysis)
  • SFA (Substance Flow Analysis)
  • MF WIO (Material Flow Waste Input Output)
  • IO LCA (Input Output Life Cycle Analysis)
  • KLEM (Capital, Labor, Energy, Materials)
  • PIOT ( Physical Input Output Tables)
  • MIOT (Monetary Input Output Tables)
  • IO MFN (Input Output Material Flow Network)
  • Social Ecology
  • Industrial Ecology
  • Urban Metabolism
  • Industrial Symbiosis
  • Industrial Metabolism
  • M-P Chains (Material Product Chains)
  • Global Value Chains
  • National Footprint Accounts
  • Inter Industry Analysis
  • Input Output Economics
  • End to End Supply Chains
  • Supply and Use Tables
  • Material Balance
  • Mass Balance
  • Biophysical Economics
  • Ecological Economics
  • Environmentally Extended Input Output Analysis (EE-IOA)
  • Stocks and Flows
  • MaTrace
  • Global MaTrace

 

Software for Data Analysis and Visualization:

 

This article lists several other software packages for MFA/SFA

https://www.azavea.com/blog/2017/08/09/six-sankey-diagram-tool/

 

 

Material Flow Analysis

From Practical Handbook of MATERIAL FLOW ANALYSIS

Material flow analysis (MFA) is a systematic assessment of the flows and stocks of materials within a system defined in space and time. It connects the sources, the pathways, and the intermediate and final sinks of a material. Because of the law of the conservation of matter, the results of an MFA can be controlled by a simple material balance comparing all inputs, stocks, and outputs of a process. It is this distinct characteristic of MFA that makes the method attractive as a decision-support tool in resource management, waste management, and environmental management.

An MFA delivers a complete and consistent set of information about all flows and stocks of a particular material within a system. Through balancing inputs and outputs, the flows of wastes and environmental loadings become visible, and their sources can be identified. The depletion or accumulation of material stocks is identified early enough either to take countermeasures or to promote further buildup and future utilization. Moreover, minor changes that are too small to be measured in short time scales but that could slowly lead to long-term damage also become evident.

Anthropogenic systems consist of more than material flows and stocks (Figure 1.1). Energy, space, information, and socioeconomic issues must also be included if the anthroposphere is to be managed in a responsible way. MFA can be performed without considering these aspects, but in most cases, these other factors are needed to interpret and make use of the MFA results. Thus, MFA is frequently coupled with the analysis of energy, economy, urban planning, and the like.

In the 20th century, MFA concepts have emerged in various fields of study at different times. Before the term MFA had been invented, and before its comprehensive methodology had been developed, many researchers used the law of conservation of matter to balance processes. In process and chemical engineering, it was common practice to analyze and balance inputs and outputs of chemical reactions. In the economics field, Leontief introduced input–output tables in the 1930s, thus laying the base for widespread application of input–output methods to solve economic problems. The first studies in the fields of resource conservation and environmental management appeared in the 1970s. The two original areas of application were (1) the metabolism of cities and (2) the analysis of pollutant pathways in regions such as watersheds or urban areas. In the following decades, MFA became a widespread tool in many fields, including process control, waste and wastewater treatment, agricultural nutrient management, water-quality management, resource conservation and recovery, product design, life cycle assessment (LCA), and others.

 

Substance Flow Analysis

From Feasibility assessment of using the substance flow analysis methodology for chemicals information at macro level

SFA is used for tracing the flow of a selected chemical (or group of substances) through a defined system. SFA is a specific type of MFA tool, dealing only with the analysis of flows of chemicals of special interest (Udo de Haes et al., 1997). SFA can be defined as a detailed level application of the basic MFA concept tracing the flow of selected chemical substances or compounds — e.g. heavy metals (mercury (Hg), lead (Pb), etc.), nitrogen (N), phosphorous (P), persistent organic substances, such as PCBs, etc. — through society.

An SFA identifies these entry points and quantifies how much of and where the selected substance is released. Policy measures may address these entry points, e.g. by end‐of‐pipe technologies. Its general aim is to identify the most effective intervention points for policies of pollution prevention. According to Femia and Moll (2005), SFA aims to answer the following questions:

• Where and how much of substance X flows through a given system?

• How much of substance X flows to wastes?
• Where do flows of substance X end up?
• How much of substance X is stored in durable goods?
• Where could substance X be more efficiently utilised in technical processes?
• What are the options for substituting the harmful substance?
• Where do substances end up once they are released into the natural environment?

When an SFA is to be carried out, it involves the identification and collection of data on the one hand, and modelling on the other. According to van der Voet et al. (OECD, 2000), there are three possible ways to ‘model’ the system:

Accounting (or bookkeeping) The input for such a system is the data that can be obtained from trade and production statistics. If necessary, further detailed data can be recovered on the contents of the specific substances in those recorded goods and materials. Emissions and environmental fluxes or concentration monitoring can be used for assessing the environmental flows. The accounting overview may also serve as an identification system for missing or inaccurate data.

Missing amounts can be estimated by applying the mass balance principle. In this way, inflows and outflows are balanced for every node, as well as for the system as a whole, unless accumulation within the system can be proven. This technique is most commonly used in material flow studies, and can be viewed as a form of descriptive statistics. There are, however, some examples of case studies that specifically address societal stocks, and use these as indicator for possible environmental problems in the future (OECD, 2000).

Static modelling is the process whereby the network of flow nodes is translated into a mathematical ‘language’, i.e. a set of linear equations, describing the flows and accumulations as inter‐dependent. Emission factors and distribution factors over the various outputs for the economic processes and partition coefficients for the environmental compartments can be used as variables in the equations. A limited amount of substance flow accounting data is also required for a solution of the linear equations. However, the modelling outcome is determined largely by the substance distribution patterns.

Static modelling can be extended by including a so‐called origin analysis in which the origins of one specific problematic flow can be traced on several levels. Three levels may be distinguished:

• direct causes derived directly from the nodes balance (e.g one of the direct causes of cadmium (Cd) load in soil is atmospheric deposition);

• economic sectors (or environmental policy target groups) directly responsible for the problem. This is identified by following the path back from node to node to the point of emission (e.g. waste incineration is one of the economic sectors responsible for the cadmium load in soil);

• ultimate origins found by following the path back to the system boundaries (e.g. the extraction, transport, processing and trade of zinc (Zn) ore is one of the ultimate origins of the cadmium load in soil).

Furthermore, the effectiveness of abatement measures can be assessed with static modelling by recording timelines on substances (OECD, 2000).

Dynamic modelling is different to the static SFA model, as it includes substance stocks accumulated in society as well as in various materials and products in households and across the built‐up environments.

For SFA, stocks play an important role in the prediction of future emissions and waste flows of products with a long life span. For example, in the case of societal stocks of PVC, policy makers need to be supplied with information about future PVC outflows. Today’s stocks become tomorrow’s emissions and waste flows. Studies have been carried out on the analysis of accumulated stocks of metals and other persistent toxics in the societal system. Such build‐ups can serve as an ‘early warning’ signal for future emissions and their potential effects, as one day these stocks may become obsolete and recognisably dangerous, e.g. as in the case of asbestos, CFCs, PCBs and mercury in chlor‐alkali cells. As the stocks are discarded, they end up as waste, emissions, factors of risks to environment and population. In some cases, this delay between inflow and outflow can be very long indeed.

Stocks of products no longer in use, but not yet discarded, are also important. These stocks could include: old radios, computers and/or other electronic equipment stored in basements or attics, out‐of‐use pipes still in the ground, obsolete stocks of chemicals no longer produced but still stored, such as lead paints and pesticides. These ‘hibernating stocks’ are likely to be very large, according to OECD estimates (2000). Estimating future emissions is a crucial issue if environmental policy makers are to anticipate problems and take timely, effective action. In order to do this, stocks cannot be ignored. Therefore, when using MFA or SFA models for forecasting, stocks should play a vital part. Flows and stocks interact with each other. Stocks grow when the inflows exceed the outflows of a (sub)‐system and certain outflows of a (sub)‐system are disproportional to the stocks.

For this dynamic model, additional information is needed for the time dimension of the variables, e.g. the life span of applications in the economy; the half life of compounds; the retention time in environmental compartments and so forth. Calculations can be made not only on the ‘intrinsic’ effectiveness of packages of measures, but also on their anticipated effects in a specific year in the future. They can also be made on the time
it takes for such measures to become effective. A dynamic model is therefore most suitable for scenario analysis, provided that the required data are available or can be estimated with adequate accuracy (OECD, 2000).

 

Life Cycle Analysis (LCA)

 

What is Life Cycle Assessment (LCA)?

As environmental awareness increases, industries and businesses are assessing how their activities affect the environment. Society has become concerned about the issues of natural resource depletion and environmental degradation. Many businesses have responded to this awareness by providing “greener” products and using “greener” processes. The environmental performance of products and processes has become a key issue, which is why some companies are investigating ways to minimize their effects on the environment. Many companies have found it advantageous to explore ways of moving beyond compliance using pollution prevention strategies and environmental management systems to improve their environmental performance. One such tool is LCA. This concept considers the entire life cycle of a product (Curran 1996).

Life cycle assessment is a “cradle-to-grave” approach for assessing industrial systems. “Cradle-to-grave” begins with the gathering of raw materials from the earth to create the product and ends at the point when all materials are returned to the earth. LCA evaluates all stages of a product’s life from the perspective that they are interdependent, meaning that one operation leads to the next. LCA enables the estimation of the cumulative environmental impacts resulting from all stages in the product life cycle, often including impacts not considered in more traditional analyses (e.g., raw material extraction, material transportation, ultimate product disposal, etc.). By including the impacts throughout the product life cycle, LCA provides a comprehensive view of the environmental aspects of the product or process and a more accurate picture of the true environmental trade-offs in product and process selection.

The term “life cycle” refers to the major activities in the course of the product’s life-span from its manufacture, use, and maintenance, to its final disposal, including the raw material acquisition required to manufacture the product. Exhibit 1-1 illustrates the possible life cycle stages that can be considered in an LCA and the typical inputs/outputs measured.

 

Methods of LCA

  • Process LCA
  • Economic Input Output LCA
  • Hybrid Approach

 

 

From Life cycle analysis (LCA) and sustainability assessment

 

mfa8

 

 

Material Input Output Network Analysis

  • PIOT (Physical Input Output Tables)
  • MIOT (Monetary Input Output Tables)
  • WIOT (Waste Input Output Tables
  • MRIO (Multi Regional Input Output)
  • SUT (Supply and Use Tables)

 

From Industrial ecology and input-output economics: An introduction

Although it was the pioneering contributions by Duchin (1990, 1992) that explicitly made the link between input–output economics and industrial ecology, developments in input– output economics had previously touched upon the core concept of industrial ecology.

Wassily Leontief himself incorporated key ideas of industrial ecology into an input– output framework. Leontief (1970) and Leontief and Ford (1972) proposed a model where the generation and the abatement of pollution are explicitly dealt with within an extended IO framework. This model, which combines both physical and monetary units in a single coefficient matrix, shows how pollutants generated by industries are treated by so-called ‘pollution abatement sectors.’ Although the model has been a subject of longstanding methodological discussions (Flick, 1974; Leontief, 1974; Lee, 1982), its structure captures the essence of industrial ecology concerns: abatement of environmental problems by exploiting inter-industry interactions. As a general framework, we believe that the model by Leontief (1970) and Leontief and Ford (1972) deserves credit as an archetype of the various models that have become widely referred to in the field of industrial ecology during the last decade, including mixed-unit IO, waste IO and hybrid Life Cycle Assessment (LCA) models (Duchin, 1990; Konijn et al., 1997; Joshi, 1999; Nakamura and Kondo, 2002; Kagawa et al., 2004; Suh, 2004b). Notably, Duchin (1990) deals with the conversion of wastes to useful products, which is precisely the aim of industrial ecology, and subsequently, as part of a study funded by the first AT&T industrial ecology fellowship program, with the recovery of plastic wastes in particular (Duchin and Lange, 1998). Duchin (1992) clarifies the quantity-price relationships in an input–output model (a theme to which she has repeatedly returned) and draws its implications for industrial ecology, which has traditionally been concerned exclusively with physical quantities.

Duchin and Lange (1994) evaluated the feasibility of the recommendations of the Brundtland Report for achieving sustainable development. For that, they developed an input–output model of the global economy with multiple regions and analyzed the consequences of the Brundtland assumptions about economic development and technological change for future material use and waste generation. Despite substantial improvements in material efficiency and pollution reduction, they found that these could not offset the impact of population growth and the improved standards of living endorsed by the authors of the Brundtland Report.

Another pioneering study that greatly influenced current industrial ecology research was described by Ayres and Kneese (1969) and Kneese et al. (1970), who applied the massbalance principle to the basic input–output structure, enabling a quantitative analysis of resource use and material flows of an economic system. The contribution by Ayres and Kneese is considered the first attempt to describe the metabolic structure of an economy in terms of mass flows (see Ayres, 1989; Haberl, 2001).

Since the 1990s, new work in the areas of economy-wide research about material flows, sometimes based on Physical Input–Output Tables (PIOTs), has propelled this line of research forward in at least four distinct directions: (1) systems conceptualization (Duchin, 1992; Duchin, 2005a); (2) development of methodology (Konijn et al., 1997; Nakamura and Kondo, 2002; Hoekstra, 2003; Suh, 2004c; Giljum et al., 2004; Giljum and Hubacek, 2004; Dietzenbacher, 2005; Dietzenbacher et al., 2005; Weisz and Duchin, 2005); (3) compilation of data (Kratterl and Kratena, 1990; Kratena et al., 1992; Pedersen, 1999; Ariyoshi and Moriguchi, 2003; Bringezu et al., 2003; Stahmer et al., 2003); and (4) applications (Duchin, 1990; Duchin and Lange, 1994, 1998; Hubacek and Giljum, 2003; Kagawa et al., 2004). PIOTs generally use a single unit of mass to describe physical flows among industrial sectors of a national economy. In principle, such PIOTs are capable of satisfying both column-wise and row-wise mass balances, providing a basis for locating materials within a national economy.3 A notable variation in this tradition, although it had long been used in input–output economic studies starting with the work of Leontief, is the mixed-unit IO table. Konijn et al. (1997) analyzed a number of metal flows in the Netherlands using a mixed-unit IO table, and Hoekstra (2003) further improved both the accounting framework and data. Unlike the original PIOTs, mixed-unit IOTs do not assure the existence of column-wise mass-balance, but they make it possible to address more complex questions. Lennox et al. (2004) present the Australian Stocks and Flows Framework (ASFF), where a dynamic IO model is implemented on the basis of a hybrid input–output table. These studies constitute an important pillar of industrial ecology that is generally referred to as Material Flow Analysis (MFA).4

Although the emphasis in industrial ecology has arguably been more on the materials side, energy issues are without doubt also among its major concerns. In this regard, energy input–output analysis must be considered another important pillar for the conceptual basis of ‘industrial energy metabolism.’ The oil shock in the 1970s stimulated extensive research on the structure of energy use, and various studies quantifying the energy associated with individual products were carried out (Berry and Fels, 1973; Chapman, 1974). Wright (1974) utilized Input–Output Analysis (IOA) for energy analysis, which previously had been dominated by process-based analysis (see also Hannon, 1974; Bullard and Herendeen, 1975; Bullard et al., 1978). The two schools of energy analysis, namely process analysis and IO energy analysis, were merged by Bullard and Pillarti (1976) into hybrid energy analysis (see also van Engelenburg et al., 1994; Wilting,1996). Another notable contribution to the area of energy analysis was made by Cleveland et al. (1984), who present a comprehensive analysis, using the US input–output tables, quantifying the interconnection of energy and economic activities from a biophysical standpoint (see Cleveland, 1999; Haberl, 2001; Kagawa and Inamura, 2004). These studies shed light on how an economy is structured by means of energy flows and informs certain approaches to studying climate change (see for example Proops et al., 1993; Wier et al., 2001).

What generally escapes attention in both input–output economics and industrial ecology, despite its relevance for both, is the field of Ecological Network Analysis (ENA). Since Lotka (1925) and Lindeman (1942), material flows and energy flows have been among the central issues in ecology. It was Hannon (1973) who first introduced concepts from input–output economics to analyze the structure of energy utilization in an ecosystem. Using an input–output framework, the complex interactions between trophic levels or ecosystem compartments can be modeled, taking all direct and indirect relationships between components into account. Hannon’s approach was adopted, modified and re-introduced by various ecologists. Finn (1976, 1977), among others, developed a set of analytical measures to characterize the structure of an ecosystem using a rather extensive reformulation of the approach proposed by Hannon (1973). Another important development in the tradition of ENA is so-called environ analysis. Patten (1982) proposed the term ‘environ’ to refer to the relative interdependency between ecosystem components in terms of nutrient or energy flows. Results of environ analysis are generally presented as a comprehensive network flow diagram, which shows the relative magnitudes of material or energy flows between the ecosystem components through direct and indirect relationships (Levine, 1980; Patten, 1982). Ulanowicz and colleagues have broadened the scope of materials and energy flow analysis both conceptually and empirically (Szyrmer and Ulanowicz, 1987). Recently Bailey et al. (2004a, b) made use of the ENA tradition to analyze the flows of several metals through the US economy. Suh (2005) discusses the relationship between ENA and IOA and shows that Patten’s environ analysis is similar to Structural Path Analysis (SPA), and that the ENA framework tends to converge toward the Ghoshian framework rather than the Leontief framework although using a different formalism (Defourny and Thorbecke, 1984; Ghosh, 1958).

 

 

From Materials and energy flows in industry and ecosystem netwoks : life cycle assessment, input-output analysis, material flow analysis, ecological network flow analysis, and their combinations for industrial ecology

 

MFA

 

From Regional distribution and losses of end-of-life steel throughout
multiple product life cycles—Insights from the global multiregional
MaTrace model

mfa4

From Feasibility assessment of using the substance flow analysis methodology for chemicals information at macro level

 

mfa2MFA3

 

Sankey Diagram

From Hybrid Sankey diagrams: Visual analysis of multidimensional data for understanding resource use

Sankey diagrams are used to visualise flows of energy, materials or other resources in a variety of applications. Schmidt (2008a) reviewed the history and uses of these diagrams. Originally, they were used to show flows of energy, first in steam engines, more recently for modern systems such as power plants (e.g. Giuffrida et al., 2011) and also to give a big-picture view of global energy use (Cullen and Allwood, 2010). As well as energy, Sankey diagrams are widely used to show flows of resources (Schmidt, 2008a). Recent examples in this journal include global flows of tungsten (Leal-Ayala et al., 2015), biomass in Austria (Kalt, 2015), and the life-cycle of car components (Diener and Tillman, 2016). More widely, they have been used to show global production and use of steel and aluminium (Cullen et al., 2012; Cullen and Allwood, 2013), and flows of natural resources such as water (Curmi et al., 2013). In all of these cases, the essential features are: (1) the diagram represents physical flows, related to a given functional unit or period of time; and (2) the magnitude of flows is shown by the link1 widths, which are proportional to an extensive property of the flow such as mass or energy (Schmidt, 2008b). Creating these diagrams is supported by software tools such as e!Sankey (ifu Hamburg, 2017), and several Life Cycle Assessment (LCA) and Material Flow Analysis (MFA) packages include features to create Sankey diagrams.

 

From Hybrid Sankey diagrams: Visual analysis of multidimensional data for understanding resource use

 

mfa7

 

Please see my related posts:

Wassily Leontief and Input Output Analysis in Economics

Shell Oil’s Scenarios: Strategic Foresight and Scenario Planning for the Future

Water | Food | Energy | Nexus: Mega Trends and Scenarios for the Future

Stock Flow Consistent Input Output Models (SFCIO)

Measuring Globalization: Global Multi Region Input Output Data Bases (G-MRIO)

Production and Distribution Planning : Strategic, Global, and Integrated

Intra Industry Trade and International Production and Distribution Networks

Trends in Intra Firm Trade of USA

Development of Global Trade and Production Accounts: UN SEIGA Initiative

Accounting For Global Carbon Emission Chains

Stock Flow Consistent Models for Ecological Economics

Jay W. Forrester and System Dynamics

Classical roots of Interdependence in Economics

Stock-Flow Consistent Modeling

 

 

 

 

Key Sources of Research:

SPECIAL SESSION ON MATERIAL FLOW ACCOUNTING

OECD

Paris, 24 October 2000

Click to access 4425421.pdf

An Innovative Accounting Framework for the Food-Energy-Water Nexus
Application of the MuSIASEM approach to three case studies

Click to access i3468e.pdf

Creating your own online data visualizations: SankeyMatic, OMAT, CartoDB

https://metabolismofcities.org/blog/4-creating-your-own-online-data-visualizations

Hybrid Sankey diagrams: Visual analysis of multidimensional data for understanding resource use

https://www.sciencedirect.com/science/article/pii/S0921344917301167

e!Sankey

Visualization of energy, cash and material flows with a Sankey diagram

https://www.ifu.com/en/e-sankey/sankey-diagrams/

UPIOM: A New Tool of MFA and Its Application to the Flow of Iron and Steel Associated with Car Production

https://pubs.acs.org/doi/pdf/10.1021/es1024299

Material flow analysis

WIKIPEDIA

https://en.wikipedia.org/wiki/Material_flow_analysis

Economy-wide Material Flow Accounting. Introduction and Guide.

Version 1.0

Article · January 2015

Fridolin Krausmann, Helga Weisz, Nina Eisenmenger, Helmut Schütz, Willi Haas
and Anke Schaffartzik

https://www.researchgate.net/publication/272885234_Economy-wide_Material_Flow_Accounting_Introduction_and_Guide_Version_10

Society’s Metabolism The Intellectual History of Materials Flow Analysis,

Part II, 1970-1998

Marina Fischer-Kowalski and Walter Huttler

Institute for Intenliscipiimny
Studies of Austrian Universities
University of Vienna
Vienna, Austria

Click to access Fischer-Kowalski_Huttler_1998.pdf

“Society’s Metabolism. The Intellectual History of Material Flow Analysis,

Part I, 1860 – 1970″.

Fischer-Kowalski, M.

1998.

Journal of Industrial Ecology 2(1): 61-78

https://www.researchgate.net/publication/249481665_Society%27s_Metabolism_The_Intellectual_History_of_Materials_Flow_Analysis_Part_I_1860-_1970

Analysis on energy–water nexus by Sankey diagram: the case of Beijing

https://www.tandfonline.com/doi/abs/10.1080/19443994.2013.768038

Unified Materials Information System (UMIS): An Integrated Material Stocks and Flows Data Structure

First published: 07 February 2018

 

https://onlinelibrary.wiley.com/doi/abs/10.1111/jiec.12730

Material Flow Cost Accounting with Umberto®

Schmidt, A. Hache, B.; Herold, F.; Götze, U.

Click to access 2-05_Material_Flow_Cost_Accounting.pdf

Click to access WEF_Richards.pdf

Study on Data for a Raw Material System Analysis: Roadmap and Test of the Fully Operational MSA for Raw Materials

Final Report

BIO by Deloitte

(2015)

Prepared for the European Commission, DG GROW.

https://www.certifico.com/component/attachments/download/2886

Integrated Analysis of Energy, Material and Time Flows in Manufacturing Systems

 

https://ac.els-cdn.com/S2212827116305479/1-s2.0-S2212827116305479-main.pdf?_tid=90701061-86fc-4c11-b078-cb577d8f8bdf&acdnat=1525719999_9dcee960cd6033d950a583cea379539f

e! Sankey

Visualization of energy, cash and material flows with a Sankey diagram

The most popular software for creating Sankey diagrams. Visualize the cash, material & energy flow or value streams in your company or along the supply chain. Share these appealing diagrams in reports or presentations.

 

https://www.ifu.com/en/e-sankey/?gclid=CjwKCAjw8r_XBRBkEiwAjWGLlIcWq2pRigMmJLKAXP4-ndFXR9ik41MUp9ahFZL2M9Ht5CKtwKIvTRoCdbsQAvD_BwE

MATERIAL FLOW ANALYSIS WITH SOFTWARE STAN

Oliver Cencic* and Helmut Rechberger
Institute for Water Quality Resources and Waste Management
Vienna University of Technology
Vienna A-1040, Austria

Click to access CENCIC%20and%20RECHBERGER%202008%20Material%20Flow%20Analysis%20with%20Software%20STAN.pdf

Recovery of Key Metals in the Electronics Industry in the
People’s Republic of China: An Opportunity in Circularity
(Initial Findings)

January 2018

Created as Part of the Platform for Accelerating the Circular Economy

Click to access 39777_Recovery_Key_Metals_Electronics_Industry_China_Opportunity_Circularity_report_2018.pdf

Sankey diagram

WIKIPEDIA

https://en.wikipedia.org/wiki/Sankey_diagram

MATERIAL FLOWS IN THE UNITED STATES
A PHYSICAL ACCOUNTING OF THE U.S. INDUSTRIAL ECONOMY

DONALD ROGICH
AMY CASSARA
IDDO WERNICK
MARTA MIRANDA

WRI

Click to access material_flows_in_the_united_states.pdf

Industrial ecology and input-output economics: An introduction

Sangwon Suh

2005

Click to access Industrial-ecology-and-input-output-economics-An-introduction.pdf

A Handbook of Industrial Ecology

Robert Ayres

Leslie Ayres

http://pustaka.unp.ac.id/file/abstrak_kki/EBOOKS/A%20Handbook%20of%20Industrial%20Ecology.pdf#page=100

Physical and Monetary Input-Output Analysis:
What Makes the Difference?

Helga Weisz
Klagenfurt University
Faye Duchin
Rensselaer Polytechnic Institute

Click to access ab5b067aacafe555acbc1e077b5b42e1fc92.pdf

Theory of materials and energy flow analysis in ecology and economics

Sangwon Suh

2005

Click to access Materials-and-energy-flows-in-industry-and-ecosystem-networks.pdf

Conceptual Foundations and Applications of Physical Input-Output Tables

Stefan Giljum

Hubacek Klaus

2009

Click to access Conceptual-Foundations-and-Applications-of-Physical-Input-Output-Tables.pdf

Alternative Approaches of Physical Input-Output Analysis to Estimate
Primary Material Inputs of Production and Consumption Activities

Stefan Giljum

Hubacek Klaus

2004

Click to access 00b7d51cc1257aba71000000.pdf

Industrial Ecology: A Critical Review

Click to access IE.pdf

EXIOPOL – development and illustrative analyses of a detailed global
multiregional environmentally-extended supply and use table/input output
table

Article in Economic Systems Research · May 2013

Click to access 561d652a08aecade1acb3bfc.pdf

Developing the Sectoral Environmental Database for Input- Output Analysis: Comprehensive Environmental Data Archive of the U.S.

Article in Economic Systems Research · December 2005

Click to access 0c960531f1d910cda1000000.pdf

The material basis of the global economy

Worldwide patterns of natural resource extraction and their
implications for sustainable resource use policies

Arno Behrens,⁎, Stefan Giljum, Jan Kovanda, Samuel Niza

Click to access Material_Basis.pdf

The Sankey Diagram in Energy and Material Flow Management

Part I: History

https://onlinelibrary.wiley.com/doi/full/10.1111/j.1530-9290.2008.00004.x

The Sankey Diagram in Energy and Material Flow Management

Part II: Methodology and Current Applications

First published: 28 April 2008

https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1530-9290.2008.00015.x

Material and Energy Flow Analysis

First published: 23 March 2010

https://onlinelibrary.wiley.com/doi/pdf/10.1002/ceat.201090015

8. Biophysical economics: from physiocracy to ecological economics and industrial
ecology

Cutler J Cleveland

Article · January 1999

Click to access 0deec51b7274ca0035000000.pdf

The Use of Input-Output Analysis in REAP to allocate Ecological Footprints and Material Flows to Final Consumption Categories

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.457.7453&rep=rep1&type=pdf

Waste Input–Output Material Flow Analysis of Metals in the Japanese Economy

Shinichiro Nakamura1 and Kenichi Nakajima2

Click to access 2550.pdf

A multi-regional environmental input-output model to quantify embodied material flows

Stefan Giljum a, Christian Lutz b,Ariane Jungnitz

Click to access Giljum%20et%20al_IIOA.pdf

Click to access jungnitzgiljumlutz.pdf

Material Flow Accounting and Analysis (MFA)

A Valuable Tool for Analyses of Society-Nature Interrelationships

Entry prepared for the Internet Encyclopedia of Ecological Economics

Friedrich Hinterberger *, Stefan Giljum, Mark Hammer

Sustainable Europe Research Institute (SERI)

Click to access material.pdf

Human Ecology: Industrial Ecology

Faye Duchin
Rensselaer Polytechnic Institute

Stephen H. Levine
Tufts University

Click to access rpi0603.pdf

Development of the Physical Input Monetary Output Model for Understanding Material Flows within Ecological -Economic Systems

XU Ming

2010

Click to access 2010010204.pdf

Accounting for raw material equivalents of traded goods

A comparison of input-output approaches in physical, monetary, and mixed units

Click to access working-paper-87-web.pdf

Material Flow Accounts and Policy. Data for Sweden 2004

by: Annica Carlsson, Anders Wadeskog, Viveka Palm, Fredrik Kanlén Environmental Accounts, Statistics Sweden,

2006.

Click to access mi1301_2004a01_br_mift0701.pdf

Economy-wide Material Flow Accounts with Hidden Flows for Finland: 1945–2008

Jukka Hoffrén (ed.)

Click to access isbn_978-952-244-233-8.pdf

EXIOBASE
Analysing environmental impacts of the global, interlinked economy

Konstantin Stadler, Richard Wood

Industrial Ecology Programme, NTNU, Norway

2014

http://www.syke.fi/download/noname/%7B3C267869-D6AE-447F-A98D-547C1D2B5819%7D/105511

ESSAYS ON INTERNATIONAL TRADE AND ENVIRONMENT
An Input-Output Analysis

http://repositorio.conicyt.cl/bitstream/handle/10533/179687/MUNOZ_PABLO_2868D.pdf?sequence=1

Using Material Flow Analysis for Sustainable Materials Management: Part of the Equation for Priority Setting

Frederick W. Allen

Priscilla A. Halloran

Angela H. Leith

M. Clare Lindsay

https://digitalcommons.unl.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1113&context=usepapapers

“Supply-Extension versus Use-Extension in Environmentally Extended Input-Output Modelling: Analyzing Physical Flows within the Austrian Economy”

Hanspeter Wieland*1, Nina Eisenmenger2, Dominik Wiedenhofer2, Martin Bruckner1

Click to access IO-Workshop-2017_Wieland_abstract.pdf

A Material Flow Analysis of Phosphorus in Japan
The Iron and Steel Industry as a Major Phosphorus Source

Kazuyo Matsubae-Yokoyama, Hironari Kubo, Kenichi Nakajima,
and Tetsuya Nagasaka

Click to access gpa_101_wa.pdf

Material Flows and Economic Development
Material Flow Analysis of the Hungarian Economy

Click to access IR-02-057.pdf

The material footprint of nations

Thomas O. Wiedmanna,b,c,1, Heinz Schandlb,d, Manfred Lenzenc, Daniel Moranc,e, Sangwon Suhf, James Westb, and Keiichiro Kanemotoc

Click to access 6271.full.pdf

Calculation of direct and indirect material inputs by type of raw material and economic activities

Paper presented at the London Group Meeting
19 – 21 June 2006

Karl Schoer

Wiesbaden, July 2006

Click to access Raw_material_Germany.pdf

Waste Input-Output  (WIO) Table

Shinichiro NAKAMURA and Yasushi KONDO,

Waste Input-Output Analysis: Concepts and Application to Industrial Ecology.

In Series: Eco-Efficiency in Industry and Science,

Vol. 26, Springer, February 2009.

http://www.f.waseda.jp/nakashin/WIO.html

Economy Wide Material Flow Accounting (EW-MFA)

http://data.geus.dk/MICASheetsEditor/document/21e5c517-53b9-4b00-b7a3-55939829824b

Material flow analyses in technosphere and biosphere
– metals, natural resources and chemical products

Viveka Palm

Click to access FULLTEXT01.pdf

The UK waste input-output table: Linking waste generation to the UK economy.

Salemdeeb, R., Al-Tabbaa, A. and Reynolds, C.

Waste Management & Research, 34 (10). pp. 1089-1094.

Click to access Re_Main_Document.pdf

Multiregion input / output tables and material footprint accounts session

Discussion of aspects of of MRIO / material footprinting work, and considerations for developing and resource based economies.

James West | Senior experimental scientist
25 May 2016

Click to access 10_MFand_MRIO_CSIRO_English.pdf

Construction of hybrid Input-Output tables for E3 CGE model calibration and consequences on energy policy analysis

COMBET Emmanuel – CIRED
GHERSI Frédéric – CIRED
LEFEVRE Julien – CIRED
LE TREUT Gaëlle – CIRED

Click to access 6988.pdf

Prospects and Drivers of Future European Resource Requirements
Evidence from a Multi-National Macroeconomic Simulation Study*

Paper prepared for the final WIOD Conference
Groningen, April 2012
by
Martin Distelkamp, Mark Meyer** and Bernd Meyer

GWS mbH Osnabrueck

Click to access Paper_Distelkamp_et_al.pdf

Material Flow Analysis to Evaluate Sustainability in Supply Chains

Haroune Zaghdaoui, Anicia Jaegler, Natacha Gondran, Jairo Montoya-Torres

Click to access 4189.pdf

Physical and monetary input–output analysis: What makes the difference?

Helga Weisz , Faye Duchin

Click to access Physical%20and%20monetary%20input-output.pdf

Recycling and Remanufacturing in Input-Output Models

Randall W Jackson, West Virginia University
Taelim Choi, Georgia Institute of Technology
Nancey Green Leigh, Georgia Institute of Technology

Click to access WP2008-4.pdf

The Water Footprint Assessment Manual

Click to access TheWaterFootprintAssessmentManual_2.pdf

The New Plastics Economy
Rethinking the future of plastics

Click to access WEF_The_New_Plastics_Economy.pdf

A Comparison of Environmental Extended Input-Output (EEIO) and Process Data in Life Cycle Assessment

Click to access Comparing-Input-Output-and-Process-LCA-Data.CE-form2-LM-edits.pdf

Managing Logistics Flows Through Enterprise Input-Output Models

V. Albino1, A. Messeni Petruzzelli1 and O. G. Okogbaa2

Click to access InTech-Managing_logistics_flows_through_enterprise_input_output_models.pdf

Social Metabolism and Accounting Approaches

Module:ECOLECON

Ecological economics

https://proxy.eplanete.net/galleries/broceliande7/social-metabolism-and-accounting-approaches

Input-Output Analysis in Laptop Computer Manufacturing

https://waset.org/publications/9998422/input-output-analysis-in-laptop-computer-manufacturing

IRON, STEEL AND ALUMINIUM IN THE UK: MATERIAL FLOWS AND THEIR
ECONOMIC DIMENSIONS

Final Project Report, March 2004

Click to access 0304_WP_Biffaward_Steel_Al-Final.pdf

A Framework for Sustainable Materials Management

Joseph Fiksel

Click to access Framework_for_SMM.pdf

Energy and water conservation synergy in China: 2007–2012

Yi Jina, Xu Tanga,⁎, Cuiyang Fenga, Mikael Höökb

Click to access Energy-and-water-conservation-synergy-in-China-2007-2012.pdf

Contributions of Material and Energy Flow Accounting to Urban Ecosystems Analysis: Case Study Singapore

Niels B. Schulz

Click to access IAS-WP136.pdf

A review of recent multi-region input–output models used for consumption-based
emission and resource accounting

Thomas Wiedmann

http://wedocs.unep.org/bitstream/handle/20.500.11822/19433/a_review.pdf?sequence=1&isAllowed=y

Physical Input Output (PIOT) Tables:  Developments and Future

Click to access 35_20100427111_Hoekstra-PIOT.pdf

Materials and energy flows in industry and ecosystem netwoks : life cycle assessment, input-output analysis, material flow analysis, ecological network flow analysis, and their combinations for industrial ecology

Suh, S,

2004

https://openaccess.leidenuniv.nl/handle/1887/8399

Applying Ecological Input‐Output Flow Analysis to Material Flows in Industrial Systems: Part I: Tracing Flows

First published: 08 February 2008

Applying Ecological Input‐Output Flow Analysis to Material Flows in Industrial Systems: Part II: Flow Metrics

First published: 08 February 2008

Local systems, global impacts
Using life cycle assessment to analyse the
potential and constraints of industrial symbioses

rising to global challenges

25 Years of Industrial Ecology

 https://is4ie.org/resources/documents/4/download

Literature study on Industrial Ecology

Gerard Fernandez Gonzalez

 

https://upcommons.upc.edu/bitstream/handle/2117/77035/Final%20version%20-%20Document.pdf?sequence=1&isAllowed=y

 

 

 

 

 

Practical Handbook of MATERIAL FLOW ANALYSIS

Paul H. Brunner and Helmut Rechberger

Handbook of Input-Output Economics in Industrial Ecology


 
edited by Sangwon Suh

Taking Stock of Industrial Ecology

edited by Roland Clift, Angela Druckman

Ecological Input-Output Analysis-Based Sustainability Analysis of Industrial Systems

 

Cristina Piluso and Yinlun Huang*

 

Helen H. Lou

An Extended Model for Tracking Accumulation Pathways of Materials Using Input–Output Tables: Application to Copper Flows in Japan

Ryosuke Yokoi * ID , Jun Nakatani ID and Yuichi Moriguchi
2008

TRACING MATERIAL FLOWS ON INDUSTRIAL SITES

Kálmán KÓSI and András TORMA
2005

 

 

 

Metabolism of Cities

 

https://metabolismofcities.org

 

 

 

 

 

Feasibility assessment of using the substance flow analysis methodology for chemicals information at macro level

 

https://www.eea.europa.eu/publications/technical_report_2007_1/file

 

 

 

Structural Investigation of Aluminum in the US Economy using Network Analysis

Philip Nuss, Wei-Qiang Chen Hajime Ohno, and T.E. Graedel

 

Click to access 2016_SA_Network-Analysis-Aluminum_EST.pdf

 

 

 

 

Economy-wide Material Flow Analysis and Indicators

http://www.umweltgesamtrechnung.at/ms/ugr/ugr_en/ugr_physicalaccounts/ugr_materialflowaccounts/

 

 

 

 

Regional distribution and losses of end-of-life steel throughout
multiple product life cycles—Insights from the global multiregional
MaTrace model

 

Stefan Pauliuka,∗, Yasushi Kondob, Shinichiro Nakamurab, Kenichi Nakajimac

 

https://ac.els-cdn.com/S0921344916302774/1-s2.0-S0921344916302774-main.pdf?_tid=838ffb90-95a9-4f3a-a617-f619f32d4558&acdnat=1531385937_3f722f2c2f71337c47a1024b0c841d16

 

 

 

 

MaTrace: Tracing the Fate of Materials over Time and Across Products in Open-Loop Recycling

Shinichiro Nakamura,*,† Yasushi Kondo,† Shigemi Kagawa,‡ Kazuyo Matsubae,§ Kenichi Nakajima,⊥ and Tetsuya Nagasaka§

https://pubs.acs.org/doi/pdf/10.1021/es500820h

 

 

 

 

 

Tracing China’s energy flow and carbon dioxide flow based on Sankey diagrams

 

Feiyin Wang1,2 • Pengtao Wang1,2 • Xiaomeng Xu1,2 • Lihui Dong1,2 • Honglai Xue1,2 • Shuai Fu1,2 • Yingxu Ji

 

Click to access Tracing-Chinas-energy-flow-and-carbon-dioxide-flow-based-on-Sankey-diagrams.pdf

 

 

 

 

Materials Flow and Sustainability

USGS

 

 

 

Life-cycle assessment

https://en.wikipedia.org/wiki/Life-cycle_assessment

 

 

 

 

LIFE CYCLE ASSESSMENT: PRINCIPLES AND PRACTICE

Scientific Applications International Corporation (SAIC) 11251 Roger Bacon Drive
Reston, VA 20190

 

Click to access chapter1_frontmatter_lca101.pdf

 

 

 

 

Life cycle analysis (LCA) and sustainability assessment

 

Click to access IntroductiontoLCAAU32013.pdf

USA and China: What are Trade in Value Added (TiVA) Balances

USA and China: What are Trade in Value Added (TiVA) Balances

 

Changes in Global Trade

  • Global Value Chains
  • Production Fragmentation
  • Vertical Specialization
  • Value added content of Trade

 

FROM INTERCONNECTED ECONOMIES : BENEFITING FROM INDUSTRY GLOBALISATION

TIVA4TIVA5

 

From Domestic Value Added in Chinese Exports

 

TIVA12

 

From Measurement and Determinants of Trade in Value Added

 

TIVA11

 

From OECD WTO TIVA

TIVA13

 

Ongoing TiVA Projects

  • OECD TIVA Initiative
  • EU FIGARO Initiative
  • NA TIVA Initiative
  • APEC TiVA Initiative

 

There is also OECD TiVA – MNE Project which incorporates Intra Firm trade of MNEs.

 

From An Overview on the Construction of North American Regional Supply-Use and Input-Output Tables and their Applications in Policy Analysis

Introduction

Trade-in-Value Added (TiVA) is a statistical approach used to measure the interconnectivity and marginal contribution in production of participating economies in global value chains (GVCs) (Degain and Maurer, 2015). The advantage of TiVA over traditional trade statistics is that TiVA measures trade flows consistent with internationally, vertically integrated global production networks, often called GVCs. TiVA statistics allow us to better analyze three aspects of international trade: measuring the contribution of domestic versus foreign intermediates in the exports, tracing production across countries to their final destination, and finally quantifying how individual industries contribute to producing exports (Lewis, 2013).

TiVA statistics allow us to map and quantify the interdependencies between industries and economies, and help us develop better estimates of the contribution from each country in the production processes and, consequently, better measure the impact from GVC engagement for domestic economies. However, it is necessary to highlight the underlying compilation methodology of TiVA in order to better understand the characteristics, scope and interpretation of TiVA. Hence, it is important to remember that TiVA statistics are estimated statistics that are derived, in part, from official statistics. TiVA statistics are meant to complement but not to replace official statistics.

Measuring trade flows in value added as opposed to gross value of trade flows has become increasingly important as the influence that GVCs has on international trade continues to rise. (Johnson, 2014; Ahmad and Ribarsky, 2014). The proliferation of GVCs means that production has become increasingly fragmented and vertically integrated across countries (Jones and Kierzkowski, 1988; Hummels, Ishii, and Yi, 2001; OECD, 2013). At the micro level, this means that many firms in disparate countries are interconnected. Across international borders, these firms take part in particular stages of the production process, together forming a global supply chain. As a result, intermediate inputs may cross international borders several times before being used to produce final consumable goods. This matters for several reasons. First, when goods cross multiple borders multiple times, they are exposed to more trade costs, which accumulate and compound before the goods are sold for final consumption. Additionally, traditional gross trade flows are overstated because gross trade flows may count intermediates multiple times. Relatedly, gross trade flows obscure the marginal contributions of countries along GVCs. TiVA measures the flows related to the value that is added at each stage of production by each country and maps from where value is created, where it is exported, and how it is used, as final consumption or as an input for future exports. How we understand gains from trade from trade flows is fundamental, and value-added approaches lead to better understanding of GVCs and their role in international trade.

There are two ways to capture TiVA. The first method is a direct approach, which decomposes existing data on trade statistics. Johnson (2012) introduce a TiVA indicator using value-added to output ratios from the source country to compute the value-added associated with the implicit output transfer to each destination. Koopman, Wang, and Wei (2014) build on the literature in vertical specialization (e.g. Hummels, Ishii, and Yi 2001) and the literature on TiVA (e.g. Johnson and Noguera, 2012; Daudin, Rifflart, and Schweisguth, 2011) to implement a complete decomposition of a country’s gross exports by value added components. This work has evolved into a second, indirect method of capturing TiVA. The indirect method is employed in the regional North American supply-use table (NASUT) and the regional North American inter-country input-output table (NAIOT). Estimating TiVA this way relies on national and international input-output tables as well as bilateral trade statistics to derive the international intermediate and final supply-demand matrices. These matrices reveal the origin and use of goods and services produced and exchanged among the countries and industries within the table domain. Other major international input-output tables include the Asian International Input-Output (AIO) Tables published by the Institute of Developing Economies Japan External Trade Organization (IDE-JETRO), the Inter-Country Input-Output (ICIO) Tables published by the OECD, the World Input-Output Tables (WIOT) published by the World Input-Output Database (WIOD) project, and the Eora Multi-region Input-Output Database (Eora MRIO).

The studies based on the above two approaches have revealed a trend of rising foreign value-added content in international trade flows and the resulting implications for trade policies. Johnson and Noguera (2016) find that value-added exports are falling relative to gross exports, which means that double-counting is increasingly more common in trade flows. This is consistent with increased GVC activity. Hummels, Ishii, and Yi (2001) show that vertical specialization has grown about 30 percent and accounts for about one-third of the growth in trade from about 1970 to 1990.

In recent years, more than half of global manufacturing imports are intermediate goods and more than 70 percent of global services imports are intermediate services (OECD, 2013). This is relevant because tariffs (and other trade costs) have a higher impact on the cost of GVC activity. Each time an intermediate input crosses an international border as part of the production process, the input incurs trade costs. As first observed by Yi (2003), trade costs are compounded when intermediate goods cross borders multiple times to complete the production process. Rouzet and Miroudot (2013) demonstrate that small tariffs can add up to a significant sum by the time a finished product reaches its consumers. Other trade costs such as non-tariff measures also have such accumulative effect on downstream products.

What the literature indicates the trends in GVCs mean for trade flows, generally, are two-fold. First, with the growth of GVC activity, gross value of trade flows will continue to be larger than the value of final goods that cross borders. Second, trade policy designed with respect to gross trade flows could have the potential to be overly restrictive or even impose costs indirectly on domestic production. Trade-in-Value Added thus provides a supplementary, relevant reference for evaluating the economic effect of trade policies.

In this paper, we introduce the North American Trade-in-Value Added (NA-TiVA) project, a trilateral, multiyear initiative that aims to produce a regional TiVA database that maps the value chains connecting Canada, the United States, and Mexico. Furthermore, we introduce and discuss the project’s deliverables, the agencies involved, how the NA-TiVA project complements other ongoing TiVA initiatives around the world, the technical framework for producing a regional inter-country input-output table for the NA region, and the value of this work to resolving open policy questions within international trade.

Ongoing TiVA Initiatives

Currently there are three major ongoing global and regional TiVA projects that are related to the North America TiVA project. They are the World Input-Output database (WIOD), OECD-WTO TiVA, and APEC TiVA initiatives.

The World Input-Output database (WIOD): The official WIOD project ran from May 1, 2009 to May 1, 2012, as a joint effort of eleven European research institutions. It was funded by the European Commission. Under the official WIOD project, the accounting framework and methodologies of constructing the TiVA databases, as well as the first version of the World Input-Output database were developed. The database was officially launched in April 2012. Since then, two additional versions of WIOD databases, namely the 2013 and 2016 Releases, were published. The 2016 Released database covers 28 EU countries and 15 other major economies in the world for years 2000-2014 with 56 industries.

The OECD-WTO TiVA database: The Organization for Economic Cooperate and Development (OECD) and World Trade Organization (WTO) undertook a joint initiative on TiVA in 2013. Since then, two versions of TiVA databases have been released (2013 and 2015 release). The 2015 release of OECD-WTO TiVA database covers 61 countries and 13 regions, with 34 industries, for years 1995, 2000, 2005, 2008-2011.

APEC TiVA initiative: In 2014, APEC economic leaders endorsed the APEC TiVA database initiative, a four-year project co-led by China and the United States. Under this project, an APEC TiVA database would be constructed by the end of 2018, covering 21 APEC economies.

Each of these three major global and regional TiVA initiatives include Canada, Mexico, and the United States. In the light of this, why is there still a need for constructing the NA TiVA database? What kind of additional value can the NA TiVA project bring to this global and regional network of TiVA initiatives?

The NA-TiVA project was motivated by regional statistical developments and continuous improvements in compiling TiVA databases. The 2003 Mexican input-output table distinguishes trade flows by domestic producers and production undertaken in Maquiladoras, a tax-free, tariff-free special processing zone, which allowed the estimates of separate production coefficients and thus TiVA measures for these two distinctive zones in Mexico (Koopman, Powers, Wang, and Wei, 2010; De la Cruz, Koopman, Wang, and Wei, 2011). The government of Canada further highlighted the importance and relevance of global value chains in the publication of a book assessing the impact and implication of GVCs (Foreign Affairs and International Trade Canada, 2011); and as of the 2015 edition of the OECD’s ICIO tables, Mexico is broken out as Mexico Global Manufacturers and Mexico Non-Global Manufacturers. This NA TiVA project builds off of these developments.

Constructing inter-country input-output tables, or so called TiVA databases, requires the harmonization of national supply-use tables (SUTs) or input-output tables (IOTs) as well as bilateral trade statistics from different countries. However, the data produced by countries often vary greatly in the level of detail and differ in industry and product classifications. Thus, the more countries are included in a global or regional TiVA project, the higher level of aggregation would be required for the purpose of harmonization. With only three countries involved, it is feasible for the NA TiVA database to include more products and sectors than other global and regional TiVA projects.

Moreover, other factors, such as all three countries adopt the same industry and product classifications (e.g. using the North American Industry Classification System (NAICS)), and produce SUTS at similarly detailed levels, would ensure the compatibility of data components, and thus lead to better quality of the resulting NA TiVA database.

Finally, the NA TiVA project could synthesize the ongoing trilateral trade statistics reconciliation effort and produce better-quality balanced bilateral trade data to feed into other global and regional TiVA initiatives. One of the key inputs for constructing TiVA databases is balanced bilateral trade statistics. However, countries rarely report symmetric bilateral trade statisticsone country’s reported exports rarely equals its trading partner’s reported imports, and vice versa. To reconcile such asymmetries to produce balanced bilateral trade statistics, joint effort by both trading countries is warranted, including investigating the causes of asymmetries at detailed product level and making corresponding adjustment mechanically. However, global and regional TiVA initiatives often have to consider an incredible number of country pairs, making such an elaborate reconciliation practice rather infeasible. Thus, global and regional TiVA initiatives often turn to economic modelling to balance bilateral trade statistics which could be applied in a systematic way to all countries. Although such approach can be mathematically sound, the resulting data often require additional scrutiny, validation, and adjustment, as they do not always reflect the reality accurately. Canada, Mexico, and the United States have ongoing bilateral trade reconciliation. This NA TiVA project provides additional motivation and framework for this effort.

The History, Scope, and Major Objectives of the NA TiVA Initiative

In October 2014, the representatives from the United States, Canada, and Mexico met and kicked off the idea of constructing the NA TiVA database at a UN conference in Mexico. The main objective of this project is to construct the NA TiVA database by 2021 covering three NA countries with more detailed industry and firm information, and to improve the quality of TiVA measures for the value chains in the NA region.

The NA-TiVA project involves eight government agencies across the three NA countries: for Canada, Statistics Canada (STATCAN) and Global Affairs Canada; for Mexico, Instituto Nacional de Estadística y Geografía (INEGI) and Banco de Mexico; and for the United States, the Bureau of Economic Analysis (BEA), the U.S. Census Bureau (CENSUS), the U.S. International Trade Commission (USITC), and the Office of the U.S. Trade Representative (USTR).

In addition, because the resulting NA-TiVA database would be eventually integrated into the OECD-WTO TiVA database to improve the quality of information on the North American region, participants of the NA-TiVA project regularly meet with OECD representatives to harmonize TiVA database compilation methodologies, exchange data to synthesize the effort and ensure consistency across countries, and discuss best practices. Other international organizations, such as United Nations Statistics Division (UNSD), and WTO, are often consulted as well for national account and trade statistics related issues.

Under the NA-TiVA initiative, three parallel work streams have been established: The trade in goods and services reconciliation team, which is tasked to produce balanced bilateral trade statistics for goods and services; the SUT team, whose goal is to harmonize the national SUTs and compile the regional NASUTs and NAIOTs; and the White Paper team, the goal of which is to produce documentation that outlines the conceptual methodology, identifies major technical issues, describes policy applications of a NA-TiVA initiative, and details project outputs as well as future work.

FROM INTERCONNECTED ECONOMIES :BENEFITING FROM INDUSTRY GLOBALISATION

 

TIVA6

 

 

From Supply-Use Tables, Trade-in-Value-Added Initiatives, and their Applications

TIVATIVA2TIVA3

Please see my related posts:

Understanding Global Value Chains – G20/OECD/WB Initiative

The Collapse of Global Trade during Global Financial Crisis of 2008-2009

Development of Global Trade and Production Accounts: UN SEIGA Initiative

Trends in Intra Firm Trade of USA

Understanding Trade in Intermediate Goods

Intra Industry Trade and International Production and Distribution Networks

Production Chain Length and Boundary Crossings in Global Value Chains

 

Key Sources of Research:

The U.S.-China Bilateral Balance In Trade In Value Added

2017

https://seekingalpha.com/article/4048166-u-s-china-bilateral-balance-trade-value-added

 

 

 

 

Understanding the US-China Trade Relationship

Prepared for the US-China Business Council By Oxford Economics

January 2017

 

Click to access OE%20US%20Jobs%20and%20China%20Trade%20Report.pdf

 

 

 

Implications and Interpretations of Value-Added Trade Balances

John B. Benedetto

2012

 

Click to access implicationsand.pdf

 

 

The U.S.–China trade deficit—a value-added perspective

Demetrio Scopelliti

BLS

2013

Click to access u-s-china-trade-deficit.pdf

 

 

 

The value-added content of trade

Robert Johnson, Guillermo Noguera

07 June 2011

 

https://voxeu.org/article/value-added-content-trade-new-insights-us-china-imbalance

 

 

 

Trade in Value-Added

December 3, 2013

Logan Lewis

 

https://www.federalreserve.gov/econresdata/notes/ifdp-notes/2013/trade-in-value-added-20131203.html

 

 

 

 

China-U.S. Trade Issues

Wayne M. Morrison

Specialist in Asian Trade and Finance
April 2, 2018

FAS

Click to access RL33536.pdf

 

 

 

The China Shock revisited: Insights from value added trade flows

Adam Jakubiky Victor Kummritzz

June 30, 2017

Click to access jk_draft.pdf

 

 

 

 

Measurement and Determinants of Trade in Value Added

Nakgyoon Choi

2013

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2317706

 

 

 

 

OECD-WTO: Statistics on Trade in Value Added

OECD

https://www.oecd-ilibrary.org/trade/data/oecd-wto-statistics-on-trade-in-value-added_data-00648-en

 

 

 

 

NAFTA, VALUE ADDED AND TRADE-IN-TASKS

Antonio Rodriguez-Lopez

Click to access nafta-essays-rodriguez-lopez.pdf

 

 

 

Trade in Value Added and the Value Added in Trade

Robert Stehrer

Click to access Stehrer_background_2.pdf

 

 

 

 

US Trade Wars with Emerging Countries in the 21st Century: Make America and Its Partners Lose Again

Antoine Bouët (International Food Policy Research Institute, Washington, D.C., and Groupe de Recherche en Économie Théorique et Appliquée [GREThA], University of Bordeaux, France)
David Laborde (International Food Policy Research Institute)

2017

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Measuring Value Added in the People’s Republic of China’s Exports: A Direct Approach.

Xing, Y.

2014.

ADBI Working Paper 493. Tokyo: Asian Development Bank Institute

Click to access adbi-wp493.pdf

 

 

 

 

International Trade Costs, Global Supply Chains and Value-added Trade in
Australia

Gerard Kelly and Gianni La Cava
RDP 2014-07

 

Click to access rdp2014-07.pdf

 

 

 

Trade in Value Added Revisited: A Comment on R. Johnson and G. Noguera,
Accounting for Intermediates: Production Sharing and Trade in Value Added

 

Masaaki Kuboniwa
January, 2014

 

Click to access DP598.pdf

 

 

 

 

How iPhone Widens the US Trade Deficits with PRC

Yuqing Xing
And
Neal Detert

Nov 2010

Click to access 10-21.pdf

 

 

 

 

Trade in value added (TIVA)

2012

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Global Value Chains (GVCs)

OECD

http://www.oecd.org/sti/ind/global-value-chains.htm

 

 

 

INTERCONNECTED ECONOMIES: BENEFITING FROM GLOBAL VALUE CHAINS

SYNTHESIS REPORT

OECD

Click to access interconnected-economies-GVCs-synthesis.pdf

 

 

 

TRACING THE VALUE ADDED IN GLOBAL VALUE CHAINS:
PRODUCT-LEVEL CASE STUDIES IN CHINA

UNCTAD

Click to access ditctncd2015d1_en.pdf

 

 

 

 

The Growth of Chinese Exports:
An Examination of the Detailed Trade Data

Brett Berger
Robert F. Martin

US Federal Reserve

Click to access ifdp1033.pdf

 

 

 

 

Comparing Trade Performance of China and India

Sarah Y TONG

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Trade in Value Added : China

OECD WTO

2015

Click to access CN_2015_China.pdf

 

 

 

Value-Added Trade and Its Implications for International Trade Policy

Kemal Derviş, Joshua P. Meltzer, and Karim Foda

https://www.brookings.edu/opinions/value-added-trade-and-its-implications-for-international-trade-policy/

 

 

 

 

Bilateral Trade Balances with China: A Matter of Accounting

Submitted by Dana Vorisek

co-authors: Tianli Zhao

On Thu, 02/05/2015

http://blogs.worldbank.org/prospects/bilateral-trade-balances-china-matter-accounting

 

 

 

Value-Added Exports and U.S. Local Labor Markets:
Does China Really Matter?

Leilei Sheny
Peri Silvaz

WTO

August 2017

Click to access silva_e.pdf

 

 

 

HOW MUCH OF CHINESE EXPORTS IS REALLY MADE IN CHINA? ASSESSING
DOMESTIC VALUE-ADDED WHEN PROCESSING TRADE IS PERVASIVE

 

Robert Koopman
Zhi Wang
Shang-Jin Wei

NBER

June 2008

Click to access w14109.pdf

 

 

 

 

GIVE CREDIT WHERE CREDIT IS DUE:
TRACING VALUE ADDED IN GLOBAL PRODUCTION CHAINS

Robert Koopman
William Powers
Zhi Wang
Shang-Jin Wei

September 2010

Click to access w16426.pdf

 

 

 

SPIDERS AND SNAKES:
OFFSHORING AND AGGLOMERATION IN THE GLOBAL ECONOMY

Richard Baldwin
Anthony Venables

December 2010

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TRADING TASKS: A SIMPLE THEORY OF OFFSHORING

Gene M. Grossman
Esteban Rossi-Hansberg

December 2006

http://www.nber.org/papers/w12721

 

 

 

 

PRODUCTION CHAINS

David K. Levine

December 2010

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AN ELEMENTARY THEORY OF GLOBAL SUPPLY CHAINS

Arnaud Costinot
Jonathan Vogel
Su Wang

April 2011

Click to access w16936.pdf

 

 

 

TRADE-IN-GOODS AND TRADE-IN-TASKS:
AN INTEGRATING FRAMEWORK

Richard Baldwin
Frédéric Robert-Nicoud

April 2010

Click to access w15882.pdf

 

 

Measurement of Trade in Value-Added: using Chinese Input-output Tables
Capturing Processing Trade

Yang Cuihong1, Chen Xikang1, Duan Yuwan1, Jiang Xuemei1, Pei Jiansuo3, Xu Jian2,
Yang Lianling1, Zhu Kunfu1

 

Click to access STS024-P3-S.pdf

 

 

 

Adjusted China-US Trade Balance

Lawrence J. Lau, Xikang Chen and Yanyan Xiong

March 2017

Click to access igef%20working%20paper%20no.%2054%20english%20version.pdf

 

 

 

Domestic Value Added in Chinese Exports

Hiau Looi Kee and Heiwai Tang

World Bank and Tufts University
December 2011

Click to access session2-tang-presentation.pdf

 

 

 

NETWORKS OF VALUE ADDED TRADE

2015
João Amador | Sónia Cabral

Bank of Portugal

Click to access wp201516.pdf

 

 

 

 

Processing Trade, Exchange Rates and China’s Bilateral Trade Balances

Yuqing Xing

Jan 2011

 

Click to access 10-30.pdf

 

 

 

Trade in Value Added
WTO TiVA Profiles

Regional Workshop on
International Merchandise Trade Statistics
11-13 September 2017
Suzhou, China

UNSD

Click to access Agenda%20item%2019%20(c)%20-%20WTO.pdf

 

 

 

 

FRAGMENTATION AND TRADE IN VALUE ADDED OVER FOUR DECADES

Robert C. Johnson
Guillermo Noguera

June 2012

Click to access w18186.pdf

 

 

 

 

TRACING VALUE-ADDED AND DOUBLE COUNTING IN GROSS EXPORTS

Robert Koopman
Zhi Wang
Shang-Jin Wei

November 2012

Click to access w18579.pdf

 

 

 

 

ORGANIZING THE GLOBAL VALUE CHAIN

Pol Antràs
Davin Chor

June 2012

 

Click to access w18163.pdf

 

 

 

 

OFFSHORING: GENERAL EQUILIBRIUM EFFECTS ON WAGES, PRODUCTION
AND TRADE

Richard Baldwin
Frederic Robert-Nicoud

March 2007

 

Click to access w12991.pdf

 

 

 

 

TRADING TASKS: A SIMPLE THEORY OF OFFSHORING

Gene M. Grossman
Esteban Rossi-Hansberg

December 2006

Click to access w12721.pdf

 

 

 

 

Trade in Value Added: Developing New Measures of Cross-Border Trade

World Bank

2013

Click to access 786210PUB0REPL00Box377348B00PUBLIC0.pdf

 

 

 

 

Trade in Value Added

Maria Borga Jiemin Guo

BEA Advisory Committee

May 10, 2013

 

Click to access 0613_borga_guo_trade_in_value.pdf

 

 

 

 

Trade in value added Concepts, applications and challenges

Training Workshop on Trade in Services Negotiations for AU-CFTA Negotiators
Nairobi, Kenya

WTO

Click to access ditc-ted-Nairobi-24082015-WTO-liberatore-2.pdf

 

 

 

Trade in Value-Added: I-O approach and the domestic content of exports

UNSD

 

https://unstats.un.org/unsd/trade/globalforum/trade-value-added.asp

 

 

 

 

TRADE IN VALUE-ADDED: WTO-OECD DATABASE

Courtesy of Sébastien Miroudot (OECD)

UNESCAP

Click to access cbtr9-sebastien.pdf

 

 

 

 

TRADE IN VALUE-ADDED: CONCEPTS, METHODOLOGIES AND CHALLENGES
(JOINT OECD-WTO NOTE)

OECD WTO

Click to access 49894138.pdf

 

 

 

 

Trade in Value Added and the Value Added in Trade

WIOD

Working Paper Number: 8
Author: Robert Stehrer

Click to access wiod8.pdf

 

 

 

Measuring Trade in Value-Added

Draft Chapter 9

Meeting of Group of Experts on National Accounts –
Interim meeting on Global Production
Geneva, 3-4 April 2013

Click to access Working_Paper_9.pdf

 

 

 

Trade in Value Added: The Challenge of International Trade Statistics
With an Empirical Study on Trade in Norway and the Netherlands 2000-2012

Ida Helene Berg

https://www.duo.uio.no/bitstream/handle/10852/40975/BergIdaHelene.pdf?sequence=9

 

 

 

Trade in Value-Added and Comparative Advantage

DrRadford Schantz

25thINFORUM Conference
Riga

August 28-September 2, 2017

Click to access usa_schantz_2017_slides.pdf

 

 

 

Trade in Value Added: An East Asian Perspective.

Inomata, S.

2013.

ADBI Working Paper 451. Tokyo: Asian Development Bank Institute.

Click to access adbi-wp451.pdf

 

 

 

 

Global Value Chains and Trade in Value-Added: New Insights, Better Policies

Ken Ash

March 2013

 

https://www.worldeconomics.com/papers/Global%20Value%20Chains%20and%20Trade%20in%20ValueAdded_f7fe83a3-ec02-4180-9b02-04d1d85bb59a.paper

 

 

 

OECD WORK ON GLOBAL VALUE CHAINS AND TRADE IN VALUE ADDED

Koen De Backer

2013

Click to access 130627_de_backer.pdf

 

 

 

 

The Value-added Structure of Gross Exports and Global Production Network

Robert Koopman and Zhi Wang
United States International Trade Commission

Shang-Jin Wei, Columbia University, CEPR and NBER

Click to access 5839.pdf

 

 

 

Singapore’s Trade in Value Added:
Importance and Implication of Information from the OCED-WTO TiVA Database

Mun–Heng TOH

 

Click to access 2582_20160412091_Singapore_TiVA.pdf

 

 

 

 

Value added and participation in Global Value Chains:
the case of Spain

Marta Solaz
Universitat de Valencia

Fourth World KLEMS Conference, 23-24 May 2016

Click to access worldklems2016_Solaz_slides.pdf

 

 

 

 

Trade in Value Added (TiVA): December 2016

OECD

https://stats.oecd.org/index.aspx?queryid=75537

 

 

 

 

An Overview on the Construction of North American Regional Supply-Use and Input-Output Tables and their Applications in Policy Analysis

Statistics Canada
Anthony Peluso
U.S. Bureau of Economic Analysis
Gabriel Medeiros
Jeffrey Young
U.S. International Trade Commission
Ross J. Hallren
Lin Jones
Richard Nugent
Heather Wickramarachi

ECONOMICS WORKING PAPER SERIES
Working Paper 2017-12-A

Click to access ecwp-2017-12-a-12-12-17-as-pdf_0.pdf

 

 

 

 

C. The rise of global value chains

World Trade Report

2014

Click to access wtr14-2c_e.pdf

 

 

 

 

MEASURING VALUE IN GLOBAL VALUE CHAINS

Rashmi Banga

UNCTAD
May 2013

Click to access ecidc2013misc1_bp8.pdf

 

 

 

 

Highlights and Challenges of Measuring Global Production

Tom Howells
Federal Economic Statistics Advisory Committee
Suitland Federal Center

June 9, 2017

Click to access Howells-Presentation.pdf

 

 

 

 

Value added trade: A tale of two concepts

Robert Stehrer

The Vienna Institute for International Economic Studies (wiiw)
Version: 2012-12-09

December 10-11, 2012 – CompNet workshop
ECB Frankfurt, Germany.

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.361.9428&rep=rep1&type=pdf

 

 

 

Summary Report of the Fifth Meeting of
APEC Technical Group of Measurement on TiVA under GVCs

August 2017

Click to access 20170901142536597.pdf

 

 

 

 

Trade in value added: do we need new measures of competitiveness?

Kirsten Lommatzsch, Maria Silgoner and Paul Ramskogler

2016

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1936.en.pdf?54d5d8210e9e26ed5bf65d4279223622

 

 

 

 

Who Faces the Risk of Collateral Damage from U.S. Tariffs?

wells Fargo

March 2018

Click to access collateral-damage-20180326.pdf

 

 

 

 

Supply-Use Tables, Trade-in-Value-Added Initiatives, and their Applications

William Powers

ADB Supply and Use Tables Validation Workshop

Bangkok, Thailand
30 June, 2016

https://wpqr4.adb.org/dm/atom/library/_Psut_RMain/document/_Psut_RPageLibrary48257E1F0010578E_D0819CE5DCD76117148257FE2002C81CC_ATiVA_5f2016_5fPowers.pdf/media

 

 

 

 

CHAPTER 13. APPLICATIONS OF EXTENDED SUPPLY AND USE TABLES:
CONSTRUCTING GLOBAL SUPPLY AND USE AND INPUT-OUTPUT TABLES

UNSD

 

Click to access Chapter%2013%20-%20Applications%20for%20Global%20Tables.pdf

 

 

 

 

APEC: Trade in Value Added under Global Value Chains

Erich H. Strassner

2ndStatistics Conference “Measuring the Economy in a Globalized World”
Santiago, Chile
3-4 October 2017

http://www.bcentral.cl/documents/20143/926189/4.2.%28Strassner%29.pdf/d18bab8d-2331-3af2-fcc5-e877c1722880

 

 

 

CURRENT DEVELOPMENTS AND FUTURE EXPANSIONS OF
TRADE IN VALUE-ADDED PROJECT IN OECD

Norihiko YAMANO

2016

Click to access current_developments_trade_valueadded_yamano.pdf

 

 

 

 

Estimating Extended Supply-Use Tables in Basic Prices with Firm Heterogeneity for the United States:A Proof of Concept

Lin Z. Jones and ZhiWang (USITC)
James J. Fetzer, Thomas F. Howells III, Erich H. Strassner (BEA)

The Fourth World KLEMS Conference
Madrid, Spain
May 23-24, 2016

Click to access worldklems2016_Strassner_slides.pdf

 

 

 

 

 

Work Plan for the Technical Group for the Measurement of APEC TiVA Under GVCs
Purpose: Information

Submitted by: China, United States
First Committee on Trade and Investment Meeting
Clark, Philippines
3-4 February 2015

Click to access CONTENT50694276526.pdf

 

 

 

 

APEC in 2014

Click to access NewDirections-05apec.pdf

 

 

 

Global value chains and trade in value added

EUROSTAT

http://ec.europa.eu/eurostat/statistics-explained/index.php/Global_value_chains_and_trade_in_value_added

 

 

 

Services and Manufacturing : Patterns of Linkages

Expert Group Meeting on “Global Value Chains, Regional Integration and Sustainable Development: Asia-Pacific Perspectives”

12 Dec 2014 – UNESCAP, Bangkok

Click to access EGM-Session%203-Andre%20Wirjo.pdf

 

 

 

The 3rd Capacity Building Workshop on Strategic Framework on Measurement of APEC TiVA under GVCs and its Action Plan

APEC

2017

https://aimp2.apec.org/sites/PDB/Lists/Proposals/DispForm.aspx?ID=2012

 

 

 

 

Capacity Building Workshop on Strategic Framework on Measurement of APEC TiVA under GVCs and its Action Plan

APEC

2016

https://aimp2.apec.org/sites/PDB/Lists/Proposals/DispForm.aspx?ID=1831

 

 

 

 

Enhancing Value Chains An Agenda for APEC

CSIS

2013

Click to access EnhancingValueChains%20Report.pdf

 

 

 

Changing Patterns of Trade and Global Value Chains in Postcrisis Asia

Ganeshan Wignaraja

Juzhong Zhuang

Mahinthan J. Mariasingham

Madeline Dumaua-Cabauatan

2017

Click to access changing-patterns-trade-gvc.pdf

 

 

 

Global value chains in a changing world

Edited by Deborah K. Elms and Patrick Low

WTO

Click to access aid4tradeglobalvalue13_e.pdf

 

 

 

 

Trade in value added: Concepts, estimation and analysis,

Javorsek, Marko; Camacho, Ignacio

(2015) :

ARTNeT Working Paper Series, No. 150

Click to access 826594735.pdf

 

 

 

India’s Future in Asia: The APEC Opportunity

By Harsha V. Singh and Anubhav Gupta

 

Click to access ASPI_APEC_fullreport_online.pdf

 

 

 

Update on New Measurements of the Impacts of Globalization

James J. Fetzer and Thomas F. Howells III

Advisory Committee Meeting
Washington, DC
November 13, 2015

 

Click to access update-on-new-measurements-of-the-impacts-of-globalization.pdf

 

 

 

 

ASIA-PACIFIC
TRADE AND INVESTMENT REPORT 2016
Recent Trends and Developments

Shamshad Akhtar

Hongjoo Hahm

Susan F. Stone

Copyright © United Nations 2016

Click to access aptir-2016-full.pdf

 

 

 

 

Asia’s Rise in the
New World Trade Order
The Effects of Mega-Regional Trade Agreements on Asian Countries
Part 2 of the GED Study Series:
Effects of Mega-Regional Trade Agreements

 

Click to access NW_Asia_s_Rise_in_the_New_World_Trade_Order.pdf

 

 

 

The role of different types of firms in GVCs

GGDC 25th Anniversary Conference

 

Stephen Chong, Rutger Hoekstra, Oscar Lemmers, Ilke Van Beveren, Marcel van den Berg, Ron van der Wal, Piet Verbiest

Click to access presentation_lemmers.pdf

 

 

 

GLOBAL VALUE CHAINS AND SOUTH-SOUTH TRADE

UNCTAD

Click to access gdsecidc2015d1_en.pdf

 

 

 

 

Annex 5: Strategic Framework on Measurement of
APEC TiVA Under GVCs

APEC

Click to access 14_som2_049anx05.pdf

 

 

 

 

Estimating Extended Supply-Use Tables in Basic Prices with Firm Heterogeneity for the United States: A Proof of Concept

James J. Fetzer, Thomas F. Howells III, Lin Z. Jones, Erich H. Strassner, and Zhi Wang1

The Fourth World KLEMS Conference
Madrid, Spain
May 23-24, 2016

Click to access worldklems2016_Strassner.pdf

 

 

 

 “Participation of Developing Countries in Global Value Chains: Implications for Trade and Trade-Related Policies”

Kowalski, P. et al.

(2015),

OECD Trade Policy Papers, No. 179,
OECD Publishing, Paris

Click to access OECD_Trade_Policy_Papers_179.pdf

 

 

 

 

Complex Network Analysis for Characterizing Global Value Chains in Equipment Manufacturing.

Xiao H, Sun T, Meng B, Cheng L

(2017)

PLoS ONE 12(1):

Click to access pone.0169549.pdf

 

 

 

A Network of Networks Perspective on Global Trade.

Maluck J, Donner RV

(2015)

PLoS ONE 10(7)

Click to access pone.0133310.pdf

 

 

 

Trends of the World Input and Output Network of Global Trade.

del RõÂo-Chanona RM, Grujić J, Jeldtoft Jensen H

(2017)

PLoS ONE 12(1):

Click to access pone.0170817.pdf

 

 

 

World Input-Output Network.

Cerina F, Zhu Z, Chessa A, Riccaboni M

(2015)

PLoS ONE 10(7):

Click to access pone.0134025.pdf

 

 

 

FAQ on GVCs: some answers from the Global I-O tables approach

Rita Cappariello,

 

Click to access Rita-Cappariello.pdf

 

 

 

 

 

A Markovian model of evolving world input-output network.

Moosavi V, Isacchini G

(2017)

PLoS ONE 12(10):

Click to access pone.0186746.pdf

 

 

 

 

Hierarchicality of Trade Flow Networks Reveals Complexity of Products.

Shi P, Zhang J, Yang B, Luo J

(2014)

PLoS ONE 9(6):

Click to access pone.0098247.pdf

 

 

 

International Trade Modelling Using Open Flow Networks: A Flow-Distance Based Analysis.

Shen B, Zhang J, Li Y, Zheng Q, Li X
(2015)

PLoS ONE 10(11):

Click to access pone.0142936.pdf

 

 

 

THE EVOLVING GEOGRAPHY OF PRODUCTION HUBS AND REGIONAL VALUE CHAINS ACROSS EAST ASIA: TRADE IN VALUE-ADDED

G. Suder (Melbourne Business School), P. Liesch (UQ), S. Inomata (JETRO- IDE), I. Jormanainen (Aalto University) and B. Meng (JETRO- IDE and OECD),

For: Journal of World Business

 

https://minerva-access.unimelb.edu.au/bitstream/handle/11343/159095/The%20evolving%20geography%20of%20production%20hubs%20and%20regional%20value%20chains%20across%20East%20Asia-%20Trade%20in%20value-added.pdf?sequence=1&isAllowed=y

 

 

 

 

AN ICIO SPLIT ACCORDING TO DOMESTIC AND FOREIGN OWNERSHIP:
THE OECD TIVA-MNE PROJECT

Charles Cadestin, Koen De Backer, Isabelle Desnoyers-James,
Sébastien Miroudot, Davide Rigo and Ming Ye

OECD

2017

Click to access 2757_20170515071_Cadestin_et_al_2017_ICIO_split_ownership.pdf

 

 

 

 

THE FIGARO PROJECT: THE EU INTER-COUNTRY SUPPLY, USE AND INPUT-OUTPUT TABLES

 

Click to access 2504_20160519071_Item10-12_FIGAROproject.pdf

 

 

Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States

James Fetzer and Erich H. Strassner

June 10, 2015

US BEA

 

Click to access identifying-heterogeneity-in-the-production-components-of-globally-engaged-business-enterprises-in-the-united-states.pdf

 

 

The EU Inter-country Supply, Use and Input-Output Tables (FIGARO Project): Recent progress

Prepared by Eurostat

2017

Click to access 3_-_FIGARO_project.pdf

 

 

Tracing value-added and double counting in sales of foreign affiliates and domestic-owned companies

Sebastien Miroudot and ming ye

Trade and Agriculture Directorate, OECD, Trade and Agriculture Directorate, OECD

14 March 2018

Click to access MPRA_paper_85723.pdf

 

Identifying Heterogeneity in the Production Components of Globally Engaged Business Enterprises in the United States

Prepared by Bureau of Economic Analysis, U.S. Department of Commerce

2015

 

Click to access 11_Identifying_Heterogeneity__US_.pdf

 

 

 

 

Estimating Extended Supply-Use Tables in Basic Prices with Firm Heterogeneity for the United States: A Proof of Concept (Draft)

Prepared by the United States

2017

 

Click to access 7_-_Estimating_Extended_Supply-Use_Tables_in_Basic_Prices.pdf

 

 

TIVA: CONSTRUCTING THE ICIO TABLE AND FUTURE WORK

 

Fabienne Fortanier (Head of Trade Statistics, OECD) Christophe Degain (Senior Statistician, WTO)

OECD

Click to access Session%2012_WTO-OECD%20SUT%20and%20ICIOT%20-%20Training%20module%20(ECA)%20-%20English%20Final.pdf

 

 

 

 

FIGARO
Full International and Global Accounts for Research in Input-
Output analysis
The EU Inter-country Supply, Use and Input-Output Tables

José M. Rueda-Cantuche

Isabelle Rémond-Tiedrez

Item 4, NAWG Meeting, Luxembourg, 11 May 2016

Click to access Item_4d_FIGARO_UNECE_new.pdf

 

 

 

OECD-WTO Trade in Value Added (TiVA) data: introduction

OECD

 

Click to access Session%2011_WTO-OECD%20TiVA%20intro%20-%20Training%20module%20(ECA)%20-%20English%20FINAL.pdf

 

 

 

Trade and Investment Linkages in Global Value Chains: Insights from the new TiVA-MNE Dataset

OECD

2016

 

Click to access trade-investment-linkages-in-gvc.pdf

 

 

INTERCONNECTED ECONOMIES:
BENEFITING FROM INDUSTRY GLOBALISATION

Dirk Pilat,

Global Industry and Economy Forum 2013:
Fostering Industrial Innovation through
Creativity
Seoul, 24 June 2013

 

 

Calculating Trade in Value Added

Prepared by Aqib Aslam, Natalija Novta, and Fabiano Rodrigues-Bastos1

July 2017

IMF

https://www.imf.org/~/media/Files/Publications/WP/2017/wp17178.ashx

 

Supply Chain Finance (SCF) / Financial Supply Chain Management (F-SCM)

Supply Chain Finance (SCF) / Financial Supply Chain Management (F-SCM)

 

 

From STANDARD DEFINITIONS FOR TECHNIQUES OF SUPPLY CHAIN FINANCE

fscm8

There are two Areas where FSCM/SCF names are used but in different contexts.

  • Inter firm FSCM
  • Intra firm FSCM

 

Inter firm F-SCM

  • Trade Finance
  • Supply Chain Finance (SCF)
  • Value Chain Finance
  • Supplier Finance
  • Inter firm Finance
  • Reverse Factoring
  • Collaborative  Cash to Cash Cycles Management

During 2008 global financial crisis, the trade financing dried up resulting in decline in trade of goods and services.

Since the crisis, Financial De-globalization and Decline of Correspondent Banking has also made availability of financial credit harder.

Cash flow and working capital management is helped by inter firm collaboration among Suppliers and Buyers.

Financial Institutions which provide trade credit also benefit from inter firm collaboration.

 From SUPPLY CHAIN FINANCE FUNDAMENTALS: What It Is, What It’s Not and How it Works

What Supply Chain Finance is Not

The world of trade finance is complex and varied. There are numerous ways to increase business capital on hand and, in many cases, the differences are slightly nuanced. Given this landscape, it’s not just important to understand what supply chain finance is; it’s also important to understand what it is not.

It is not a loan. Supply chain finance is an extension of the buyer’s accounts payable and is not considered financial debt. For the supplier, it represents a non-recourse, true sale of receivables. There is no lending on either side of the buyer/supplier equation, which means there is no impact to balance sheets.

It is not dynamic discounting or an early payment program. Early payment programs, such as dynamic discounting, are buyer-initiated programs where buyers offer suppliers earlier payments in return for discounts on their invoices. Unlike supply chain finance, buyers are seeking to lower their cost of goods, not to improve their cash flow. Dynamic discounting and early payment programs often turn out to be expensive for both suppliers (who are getting paid less than agreed upon) and buyers who tie up their own cash to fund the programs.

It is not factoring. Factoring enables a supplier to sell its invoices to a factoring agent (in most cases, a financial institution) in return for earlier, but partial, payment. Suppliers initiate the arrangement without the buyer’s involvement. Thus factoring is typically much more expensive than buyer-initiated supply chain finance. Also, suppliers trade “all or nothing” meaning they have no choice to participate from month-to-month to the degree that their cash flow needs dictate. Finally, most factoring programs are recourse loans, meaning if a supplier has received payment against an invoice that the buyer subsequently does not pay, the lender has recourse to claw back the funds.

 

From Mckinsey on Payments

fscm10

 

From Financial Supply Chain Management

financial-supply-chain-management-4-728

 

From Best Practices in Cash Flow Management and Reporting

46_-3571_20

 

From STANDARD DEFINITIONS FOR TECHNIQUES OF SUPPLY CHAIN FINANCE

fscm9

 

From Financing GPNs through inter-firm collaboration?
Insights from the automotive industry in Germany and Brazil

fscm 3

 

Intra Firm F-SCM

  • Working Capital Management
  • Cash Flow Management
  • Liquidity Management
  • Cash to Cash Conversion Cycle Management (C2C Cycle/CCC)
  • Financial Supply Chain Management (F-SCM) in Manufacturing companies
  • Financial Supply chain management in financial institutions
  • Supply Chain Finance
  • Accounts Payable Optimization
  • Accounts Receivable Optimization
  • Operations and Finance Interfaces
  • Current Asset Management (Current Ratio Analysis)

This is not a new subject.  Corporate Finance, Financial Controls, and working capital management have been active business issues.  Benefits of Supply chain management include increase in inventory turnover and decline in current assets.

There are many world class companies who manage their supply chains well and work with minimal working capital.  Lean Manufacturing, Agile Manufacturing, JIT manufacturing are related concepts.  Just-In-Time manufacturing developed in Toyota Corp. reduces inventory portion of C2C cycle.  Other examples include

  • Apple
  • Walmart
  • Dell

Currently, most of the Supply Chain analytics efforts unfortunately do not integrate analysis of financial benefits of operating decisions.

There are many studies recently which suggest that Cash to Cash Conversion Cycle is a better determinant of corporate liquidity.  C2C Cycle is a dynamic liquidity indicator and Current Assets is a static indicator of liquidity.  I would like to point out that none of the studies relate C2C cycle with Current Ratio.  Current Ratio is based on balance sheet positions of current assets and current liabilities.  C2C cycle is based on flows in supply chains.  Accumulation of flow results in Current assets (Stock).  To make it Stock-Flow Consistent, more work is required.

 

From Supply Chain Finance: some conceptual insights.

fscm2

From Financial Supply Chain Management

financial-supply-chain-management-5-728

 

From The Interface of Operations and Finance in Global Supply Chains

fscm4

 

From SUPPLY CHAIN-ORIENTED APPROACH OF WORKING CAPITAL MANAGEMENT

ifscm5

 

From IMPROVING FIRM PERFORMANCE THROUGH VALUE-DRIVEN SUPPLY CHAIN MANAGEMENT: A CASH CONVERSION CYCLE APPROACH

fscm6

 

From IMPROVING FIRM PERFORMANCE THROUGH VALUE-DRIVEN SUPPLY CHAIN MANAGEMENT: A CASH CONVERSION CYCLE APPROACH

fscm7

 

From THE CYCLE TIMES OF WORKING CAPITAL: FINANCIAL VALUE CHAIN ANALYSIS METHOD

fscm12

 

Call for papers: Supply Chain Finance

Call for papers for Special Topic Forum in Journal of Purchasing and Supply Management (Manuscript Submission:  March 31, 2017)

Supply chain finance is a concept that lacks definition and conceptual foundation.  However, the recent economic downturn forced corporates to face a series of financial and economic difficulties that strongly increased supply chain financial risk, including bankruptcy or over-leveraging of debt.  The mitigation and management of supply chain financial risk is becoming an increasingly important topic for both practitioners and academics leading to a developing area of study known as supply chain finance.  There are two major perspectives related to the idea of managing finance across the supply chain.  The first is a relatively short-term solution that serves as more of a “bridge” and that is provided by financial institutions, focused on accounts payables and receivables.  The second is more of a supply chain oriented perspective – which may or may not involve a financial institution, focused on working capital optimization in terms of accounts payable, receivable, inventory, and asset management.  These longer-term solutions focus on strategically managing financial implications across the supply chain.

Recent years have seen a considerable reduction in the granting of new loans, with a significant increase in the cost of corporate borrowing (Ivashina and Scharfstein, 2010). Such collapse of the asset and mortgage-backed markets dried up liquidity from industries (Cornett et al., 2011). In such difficult times, firms (especially those with stronger bargaining power) forced suppliers to extend trade credit in order to supplement the reduction in other forms of financing (Coulibaly et al., 2013; Garcia-Appendini and Montoriol-Garriga, 2013). The general lack of liquidity, in particular for SMEs, has directly affected companies’ ability to stay in the market, reflecting on the stability of entire supply chains. There are many other factors influencing liquidity and financial health that are critical to assess.

These trends and the continued growth of outsourced spend have contributed considerably to the need for and spread of solutions and programs that help to mitigate and better manage financial risk within and across the supply chain.  One of the most important approaches is what is being termed Supply Chain Finance (SCF) (Gelsomino et al., 2016; Pfohl and Gomm, 2009; Wuttke et al., 2013a). SCF is an approach for two or more organizations in a supply chain, including external service provides, to jointly create value through means of planning, steering, and controlling the flow of financial resources on an inter-organizational level (Hofmann, 2005; Wuttke et al., 2013b).  It involves the inter-company optimization of financial flows with customers, suppliers and service providers to increase the value of the supply chain members  (Pfohl and Gomm, 2009).  According to Lamoureux and Evans (2011) supply chain financial solutions, processes, methods are designed to improve the effectiveness of financial supply chains by preventing detrimental cost shifting and improving the visibility, availability, delivery and cost of cash for all global value chain partners.  The benefits of the SCF approach include reduction of working capital, access to more funding at lower costs, risk reduction, as well as increase of trust, commitment, and profitability through the chain (Randall and Farris II, 2009).

Literature on SCF is still underdeveloped and a multidisciplinary approach to research is needed in this area. In order to better harmonize contributions of a more financial nature with ones coming from the perspective of purchasing & supply chain, there is a need of developing theory on SCF, starting with a comprehensive definition of those instruments or solutions that constitute the SCF landscape. SCF has been neglected in the Purchasing & Supply Management (PSM) literature, although PSM plays a critical role in managing finance within the supply chain.  PSM uses many of the processes and tools that are part of a comprehensive supply chain financial program to better manage the supply base, in terms of relationships, total cost of ownership, cost strategies and pricing volatility (see for example Shank and Govindarajan 1992). Reverse factoring is a technique which is also widely used to manage the supply base (Wuttke et al, 2013a) as is supplier development and investment in suppliers.

Research on SCF from a PSM perspective needs further development. In particular, empirical evidence would prove useful for testing existing models and hypotheses, addressing the more innovative schemes and investigating the adoption level and the state of the art of different solutions. Research is also needed for the development of a general theory of supply chain finance.  There is also limited research that focuses on the link between supply chain financial tools and supply chain financial performance.  Finally, considering the plurality of solutions that shape the SCF landscape, literature should move towards the definition of holistic instruments to choose the best SCF strategy for a supply chain, considering its financial performance and the contextual variables (e.g. structure, bargaining power) that characterize it.

Potential topics

The purpose of this special topic forum is to publish high-quality, theoretical and empirical papers addressing advances on Supply Chain Finance. Original, high quality contributions that are neither published nor currently under review by any other journals are sought. Potential topics include, but are not limited to:

  • Theory development, concept and definition of SCF
  • Taxonomy of SCF solutions
  • Strategic cost management across the supply chain
  • Total cost of ownership
  • Life cycle assessment and analysis
  • Commodity risk and pricing volatility
  • Supply chain financial metrics and measures
  • Cost-benefit analysis
  • Relationship implications of supply chain finance
  • Tax and transfer pricing in the supply chain
  • Foreign exchange and global currency and financing risk
  • Financial network design and financial supply chain flows
  • The organizational perspective on SCF and the implementation process
  • Role of innovative technologies to support SCF ( (e.g. block chain, internet of things)
  • Supply chain collaboration for improved supply chain financial solutions
  • SCF adoption models, enablers and barriers
  • SCF from different party perspectives (especially suppliers and providers)
  • SCF and risk mitigation and management

Manuscript preparation and submission

Before submission, authors should carefully read the Journal’s “Instructions for Authors”. The review process will follow the Journal’s normal practice. Prospective authors should submit an electronic copy of their complete manuscript via Elsevier’s manuscript submission system (https://ees.elsevier.com/jpsm) selecting “STF Supply Chain Finance” as submission category and specifying the Supply Chain Finance topic in the accompanying letter. Manuscripts are due March 31, 2017 with expected publication in June of 2018.

FOR COMMENTS OR QUESTIONS PLEASE CONTACT THE GUEST EDITORS:

Federico Caniato, Politecnico di Milano, School of Management, federico.caniato@polimi.it

Michael Henke, TU Dortmund and Fraunhofer IML, Michael.Henke@iml.fraunhofer.de

George A. Zsidisin, Virginia Commonwealth University, gazsidisin@vcu.edu

References

Cornett, M.M., McNutt, J.J., Strahan, P.E., Tehranian, H., 2011. Liquidity risk management and credit supply in the financial crisis. J. financ. econ. 101, 297–312.

Coulibaly, B., Sapriza, H., Zlate, A., 2013. Financial frictions, trade credit, and the 2008–09 global financial crisis. Int. Rev. Econ. Financ. 26, 25–38.

Garcia-Appendini, E., Montoriol-Garriga, J., 2013. Firms as liquidity providers: Evidence from the 2007–2008 financial crisis. J. financ. econ. 109, 272–291.

Gelsomino, L.M., Mangiaracina, R., Perego, A., Tumino, A., 2016. Supply Chain Finance: a literature review. Int. J. Phys. Distrib. Logist. Manag. 46, 1–19.

Govindarajan, Vijay, and John K. Shank. “Strategic cost management: tailoring controls to strategies.” Journal of Cost Management 6.3 (1992): 14-25.

Wuttke, D. A., Blome, C., Foerstl, K., & Henke, M. (2013a). Managing the innovation adoption of supply chain finance—Empirical evidence from six European case studies. Journal of Business Logistics, 34(2), 148-166.

Wuttke, D. A., Blome, C., & Henke, M. (2013b). Focusing the financial flow of supply chains: An empirical investigation of financial supply chain management. International journal of production economics, 145(2), 773-789.

Hofmann, E., 2005. Supply Chain Finance: some conceptual insights. Logistik Manag. Innov. Logistikkonzepte. Wiesbad. Dtsch. Univ. 203–214.

Ivashina, V., Scharfstein, D., 2010. Bank lending during the financial crisis of 2008. J. financ. econ. 97, 319–338.

Lamoureux, J.-F., Evans, T.A., 2011. Supply Chain Finance: A New Means to Support the Competitiveness and Resilience of Global Value Chains. Social Science Research Network, Rochester, NY.

Lekkakos, S.D., Serrano, A., 2016. Supply chain finance for small and medium sized enterprises: the case of reverse factoring. Int. J. Phys. Distrib. Logist. Manag.

Pfohl, H.C., Gomm, M., 2009. Supply chain finance: optimizing financial flows in supply chains. Logist. Res. 1, 149–161.

Randall, W., Farris II, T., 2009. Supply chain financing: using cash-to-cash variables to strengthen the supply chain. Int. J. Phys. Distrib. Logist. Manag. 39, 669–689.

 

 

Please see my Related Posts.

The Collapse of Global Trade during Global Financial Crisis of 2008-2009

The Dollar Shortage, Again! in International Wholesale Money Markets

Economics of Trade Finance

Hierarchical Planning: Integration of Strategy, Planning, Scheduling, and Execution

Production and Distribution Planning : Strategic, Global, and Integrated

Integrated Macroeconomic Accounts, NIPAs, and Financial Accounts

Key Sources of Research:

 

SUPPLY CHAIN FINANCE FUNDAMENTALS: What It Is, What It’s Not and How it Works

Click to access supplychainFundamentals.pdf

Call for papers: Supply Chain Finance

Call for papers for Special Topic Forum in Journal of Purchasing and Supply Management (Manuscript Submission:  March 31, 2017)

https://www.journals.elsevier.com/journal-of-purchasing-and-supply-management/call-for-papers/call-for-papers-supply-chain-finance

 

FINANCIAL SUPPLY CHAIN MANAGEMENT – CHALLENGES AND OBSTACLES

Peter Kristofik, Jenny Kok, Sybren de Vries, Jenny van Sten-van’t Hoff

2012

Click to access 201202h.pdf

 

 

Supply chain finance: optimizing financial flows in supply chains

Hans-Christian Pfohl • Moritz Gomm

2009

Click to access 5576960408ae75363751afb1.pdf

 

 

Supply Chain Finance: some conceptual insights.

Hofmann, E. (2005)

In: Lasch, R./ Janker, C.G. (Hrsg.): Logistik Management – Innovative Logistikkonzepte, Wiesbaden
2005, S. 203-214.

Click to access Supply%20Chain%20Finance.pdf

 

 

Financial Supply Chain Management – A review

Georgios Vousinas

2017

https://www.researchgate.net/publication/320196808_Financial_Supply_Chain_Management_-_A_review

 

 

Basic areas of management of finance flow in supply chains

Marlena Grabowska1

Częstochowa University of Technology

https://www.czasopismologistyka.pl/artykuly-naukowe/send/301-artykuly-drukowane/4621-artykul

 

THE FLOW OF FINANCIAL RESOURCES:AN INEVITABLE PART OF SUPPLY CHAIN
DESIGN ACTIVITIES

ERIK HOFMANN

Click to access Hofmann_The%20flow%20of%20financial%20resources%20-%20An%20inevitable%20part%20of%20supply%20chain%20design%20activities.pdf

 

Motorola’s global financial supply chain strategy

Ian D. Blackman

Christopher P. Holland

Timothy Westcott

Click to access Motorolas-global-financial-supply-chain-strategy.pdf

A SUPPLY CHAIN-ORIENTED APPROACH OF WORKING CAPITAL MANAGEMENT

 

Erik Hofmann

Herbert Kotzab

2010

 

Click to access Hofmann_et_al-2010-Journal_of_Business_Logistics.pdf

Financial Supply Chain Management – Neue Herausforderungen für die Finanz- und Logistikwelt.

Pfohl, H.-Chr./ Hofmann, E./ Elbert, R. (2003):

In: Logistik Management 5 (2003) 4, S. 10-26

Click to access Financial%20Supply%20Chain%20Management.pdf

 

Financing GPNs through inter-firm collaboration?
Insights from the automotive industry in Germany and Brazil

Christian Baumeister
Hans-Martin Zademach

Click to access MDW_21__2013__Financing_GPNs.pdf

 

 

Die Financial Chain im Supply Chain Management: Konzeptionelle Einordnung und Identifikation von Werttreibern.

Franke, J./ Pfaff, D./ Elbert, R./ Gomm, M./ Hofmann, E. (2005):

In: Ferstel, O. K./ Sinz, E. J./ Eckert, S./ Isselhorst, T. (Hrsg.): Wirtschaftsinformatik 2005. eEcono‐my, eGovernment, eSociety. Heidelberg 2005, S. 567‐584

Click to access 8858fcdb171db931b3c033bb1cdf55ea7683.pdf

 

 

Financial-Chain-Management
Ein generisches Modell zur Identifikation von Verbesserungspotenzialen

Donovan Pfaff
Bernd Skiera
TimWeitzel

Click to access wi2004_2_107-117.pdf

 

 

The Effects of Cross-Functional Integration on Profitability, Process
Efficiency, and Asset Productivity

Morgan Swink and Tobias Schoenherr

Click to access 2016%20-%20Research%20-%20JBL%20-%20The%20Effects%20of%20Cross-Functional%20Integration%20on%20Profitability,%20Process%20Efficiency.pdf

 

 

Quantifying and setting off network performance

Erik Hofmann

2006

Click to access Quantifying%20Network%20Performance_final%20version.pdf

 

 

Developing and discussing a supply chain-oriented model of collaborative working capital management

by
Erik Hofmann, University of St.Gallen, Switzerland
& Herbert Kotzab, Copenhagen Business School, Denmark

2006

 

Click to access Developing_and_discussing_a_supply_chain20151106-23047-gve831.pdf

 

 

The link between Purchasing and Supply Management maturity
models and the financial performance of international firms

Fábio Pollice
Afonso Fleury

 

Click to access The%20link%20between%20purchasing%20and%20supply%20management%20maturity%20models%20and%20the%20financial%20performance%20of%20international%20firms.pdf

 

 

SUPPLY CHAIN FINANCE
A Buyer-Centric Supplier Payables Financing Initiative

Martin Jemdahl
Lund, 2015

http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=8870575&fileOId=8870576

 

 

Supply Chain Finance: Optimal Introduction and Adoption Decisions

David A. Wuttke, Constantin Blome, H. Sebastian Heese and Margarita
Protopappa-Sieke

Click to access __smbhome.uscs.susx.ac.uk_qlfd7_Desktop_Supply%20Chain%20Finance%20Blome.pdf

 

 

The Value of Supply Chain Finance

Xiangfeng Chen and Chenxi Hu

Click to access 17676.pdf

 

Supply Chain Finance “Is SCF ready to be applied in SMEs?”

Jan H Jansen

Click to access 578cb87508ae5c86c9a6355b.pdf

 

 

Win-win and no-win situations in supply chain finance: The case of accounts receivable programs

Erik Hoffman

Click to access Triple-win-situations%20in%20supply%20chain%20finance_final.pdf

 

Introducing a financial perspective in Supply Chain Management: a literature review on Supply Chain Finance

Luca M. Gelsomino, Riccardo Mangiaracina,
Alessandro Perego, Angela Tumino

Click to access gelsomino_et_al.pdf

 

 

Towards A Theory Of Supply Chain And Finance Using Evidence From A Scottish Focus Group

R. de Boer, R. Dekkers, L. M. Gelsomino, C. de Goeij, M. Steeman Q. Zhou,
S. Sinclair, V. Souter

2017

Click to access Towards-A-Theory-Of-Supply-Chain-And-Finance-Using-Evidence-From-A-Scottish-Focus-Group.pdf

 

 

WORKING CAPITAL MANAGEMENT IN SUPPLY CHAINS

Nataliia G. Silaeva

2016

Click to access Master_thesis_Silaeva_Nataliya.pdf

 

 

Blockchain-driven supply chain finance: Towards a conceptual framework from a buyer perspective

Yaghoob Omrana, Michael Henkeb, Roger Heinesc, Erik Hofmann

Click to access WP29-Blockchain-driven%20supply%20chain%20finance%20Towards%20a%20conceptual%20framework%20from%20a%20buyer%20perspective.pdf

 

 

Selecting financial service providers for supply chains: How cross-functional collaboration can improve effectiveness and efficiency

Judith Martin

Prof. Dr. Erik Hofmann

Click to access Paper%20Full%20Version_Selecting%20financial%20service%20providers%20for%20supply%20chains.pdf

 

 

Supply chain finance as a value added service offered by a lead logistics provider

Careaga Franco, V.G.
Award date:
2016

Click to access 840401-1.pdf

 

 

B2B PAYMENTS, SUPPLY CHAIN FINANCE & E-INVOICING MARKET

Mirela Amariei
Tiberiu Avram
Ionela Barbuta
Simona Cristea
Sebastian Lupu
Mihaela Mihaila
Andreea Nita
Adriana Screpnic

2015

Click to access B2B_Payments_Supply_Chain_Finance__E-invoicing_Market_Guide_2015.pdf

 

 

Linking corporate strategy and supply chain management

Erik Hofmann

Click to access 1860230.pdf

 

 

Concepts and Trade-Offs in Supply Chain Finance

Kasper van der Vliet

Click to access 792140.pdf

 

 

Supply Chain Finance as a Value Added Service offered by a Lead Logistics Provider

by
Victor Gerardo Careaga Franco

Click to access Careaga_Franco_2016.pdf

 

Value Chain Finance: How Banks can Leverage Growth Opportunities for SME Banking Customers

Qamar Saleem, Global SME Banking and Value Chain Specialist, IFC

Dr. Eugenio Cavenaghi, Managing Director -Trade, Export & Supply Chain Finance, Banco Santander

Click to access Value%20Chain%20Finance_Qamar%20Saleem.pdf

 

 

 

Supply-chain finance: The emergence of a new competitive landscape

McKinsey

https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Supply%20chain%20finance%20The%20emergence%20of%20a%20new%20competitive%20landscape/MoP22_Supply_chain_finance_Emergence_of_a_new_competitive_landscape_2015.ashx

 

 

Fintechs and the Financial Side of Global Value Chains— The Changing Trade-Financing Environment

IMF

2017

Click to access 17-21.pdf

 

 

Global Supply Chain Management: Front and Center for Treasurers
Delivering Innovative Solutions that Integrate Financial and Physical Supply Chains

JP Morgan

https://www.jpmorgan.com/pdfdoc/jpmorgan/cash/pdf/global_supply_chain_front_and_center_for_treasurers

 

 

 

Supply Chain Finance

Aberdeen Group

2011

Click to access SCF%20Gaining%20Control%200258-6833-RA-SCFinance-SP-10-NSP.pdf

 

 

 

Supply chain financing: Using cash-to-cash variables to strengthen the supply chain

Wesley S. Randall

M. Theodore Farris II

2009

https://www.researchgate.net/publication/235317652_Supply_chain_financing_Using_cash-to-cash_variables_to_strengthen_the_supply_chain

 

 

 

Supply Chain Finance: ANew Means to Support the Competitiveness and Resilience of Global Value Chains

Jean-François Lamoureux and Todd Evans

Click to access 12_Lamoureux_and_Evans_e_FINAL.pdf

 

 

 

Maximising the value of supply chain finance

van der Vliet, K.; Reindorp, M.J.; Fransoo, J.C.

2013

Click to access 387399093290135.pdf

 

 

 

The Interface of Operations and Finance in Global Supply Chains

by
Lima Zhao

2014

Click to access Zhao_Lima_WHU_Diss_2014.pdf

 

 

 

Supply Chain Finance A conceptual framework to advance research

Kasper van der Vliet, Matthew J. Reindorp, Jan C. Fransoo
Beta Working Paper series 418

Click to access 23232338094103.pdf

 

 

COORDINATING WORKING CAPITAL MANAGEMENT MODEL IN COLLABORATIVE
SUPPLY CHAINS

A. Ivakina, N. Zenkevich

# 9 (E) – 2017

Click to access WP_9%28E%29-2017_Ivakina_Zenkevich.pdf

 

 

A conceptual model for supply chain finance for SMEs at operational level ‘An essay on the Supply Chain Finance paradigm ….

Jan H Jansen

2017

Click to access A-conceptual-model-for-supply-chain-finance-for-SMEs-at-operational-level-An-essay-on-the-Supply-Chain-Finance-paradigm-Vestnik-Chelyabinsk-State-University-Version-2-18-April-2017.pdf

 

 

Cash Flow Management and Manufacturing Firm Financial Performance: A Longitudinal Perspective

James R. Kroes

Andrew S. Manikas

http://scholarworks.boisestate.edu/cgi/viewcontent.cgi?article=1040&context=itscm_facpubs

 

 

 

TOWARDS INTER-ORGANIZATIONAL WORKING CAPITAL MANAGEMENT

Sari Monto

2013

https://www.doria.fi/bitstream/handle/10024/90028/isbn9789522653840.pdf?sequence=2

 

 

 

THE CYCLE TIMES OF WORKING CAPITAL: FINANCIAL VALUE CHAIN ANALYSIS METHOD

Miia Pirttilä

2014

https://www.doria.fi/bitstream/handle/10024/102180/Pirttilä_A4.pdf?sequence=2

 

 

Impact of Cash Conversion Cycle on Working Capital through Profitability: Evidence from Cement Industry of Pakistan

Afaq Ahmed Khan1, Mohsin Ayaz2, Raja Muhammad Waseem3, Sardar Osama

Bin Haseeb Abbasi4, Moazzam Ijaz

2016

Click to access Q1803021124131.pdf

 

 

Cash Conversion Cycle and Firms’ Profitability – A Study of Listed Manufacturing Companies of Pakistan

1Raheem Anser, 2Qaisar Ali Malik

2013

Click to access 2a7cb44463d9b8d3b77e2b36e23466cde4ec.pdf

 

 

The Power of Supply Chain Finance

How companies can apply collaborative finance models in their supply chain to
mitigate risks and reduce costs

M. Steeman

Click to access thepowerofsupplychainfinance.pdf

 

 

Supply Chain Finance Payable and Receivable Solutions Guide

2012

JP Morgan

A Conceptual Model of Supply Chain Finance for SMEs at Operational Level

 Jan H Jansen

21 November 2017

 

Click to access A-conceptual-model-for-supply-chain-finance-for-SMEs-at-operational-level-An-essay-on-the-Supply-Chain-Finance-paradigm-Vestnik-Chelyabinsk-State-University-Version-2-18-April-2017.pdf

 

 

Cash-to-cash: The new supply chain management metric

M Theodore Farris II; Paul D Hutchison

International Journal of Physical Distribution & Logistics Management; 2002

Click to access 02e7e5312767de88df000000.pdf

 

 

 

Integrating financial and physical supply chains: the role of banks in enabling supply chain integration

Rhian Silvestro

Paola Lustrato

2012

 

Click to access 552f9c840cf21cb2faf005c0.pdf

 

 

 

Integration of Finance and Supply Chain: Emerging Frontier in Growing Economies

(A Case Study of Exporting Companies)

Muhammad Ahmar Saeed

Xiaonan Lv

 

Click to access FULLTEXT01.pdf

 

Research at the Interface of Finance, Operations, and Risk Management (iFORM): Recent Contributions and Future Directions

Volodymyr Babich

Panos Kouvelis

2017

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3054711

 

 

 

PROCEEDINGS

Interface of Finance, Operations, and Risk Management (iFORM) SIG

2011

Click to access 947ccbd42b1fe0e90f298ab96cfcef8f0448.pdf

 

 

 

Cash to Cash Cycle with a Supply Chain Perspective

Can Duman
Sawanee Sawathanon

2009

 

Click to access FULLTEXT01.pdf

 

DYNAMIC AND STATIC LIQUIDITY MEASURES IN WORKING CAPITAL STRATEGIES

Monika Bolek, PhD

 

http://eujournal.org/index.php/esj/article/viewFile/764/798

 

 

 

Does working capital management affect cost of capital?
A first empirical attempt to build up a theory for supply chain finance

Erik Hofmann, Judith Martin

2016

 

Click to access Final%20paper_working%20capital%20management.pdf

 

 

 

Principle of Accounting System Dynamics – Modeling Corporate Financial Statements –

Kaoru Yamaguchi

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.615.6514&rep=rep1&type=pdf

 

 

 

Money and Macroeconomic Dynamics

Accounting System Dynamics Approach

Edition 3.2

 

Kaoru Yamaguchi Ph.D.

Japan Futures Research Center

 

Click to access Macro%20Dynamics.pdf

 

 

 

Working Capital Management Model in value chains

Timo Eskelinen

2014

 

http://www.doria.fi/bitstream/handle/10024/96733/Working%20Capital%20Management%20Model%20in%20value%20chains_Timo%20Eskelinen.pdf?sequence=2&isAllowed=y

 

 

 

STANDARD DEFINITIONS FOR TECHNIQUES OF SUPPLY CHAIN FINANCE

Global Supply Chain Finance Forum

2016

 

Click to access ICC-Standard-Definitions-for-Techniques-of-Supply-Chain-Finance-Global-SCF-Forum-2016.pdf

Click to access download-the-scf-definitions.pdf

 

 

IMPROVING FIRM PERFORMANCE THROUGH VALUE-DRIVEN SUPPLY CHAIN MANAGEMENT: A CASH CONVERSION CYCLE APPROACH

Pan Theo Große-Ruyken
Stephan M. Wagner
Wen-Fong Lee

Baltic Management Review

Volume 3 No 1

2008

 

 

 

Best Practices in Cash Flow Management and Reporting

Hans-Dieter Scheuermann

http://www.financepractitioner.com/cash-flow-management-best-practice/best-practices-in-cash-flow-management-and-reporting?full

Financial Supply Chain Management

 

Production Chain Length and Boundary Crossings in Global Value Chains

Production Chain Length and Boundary Crossings in Global Value Chains

 

From Structure and length of value chains

In a value chain, value is added in sequential production stages and is carried forward from one producer to the next in the form of intermediate inputs. Value chains driven by the fragmentation of production are not an entirely new economic phenomenon, but the increasing reliance on imported intermediate inputs makes value chains global.

According to a 2013 report by the OECD, WTO and UNCTAD for the G-20 Leaders Summit, “Value chains have become a dominant feature of the world economy” (OECD et al., 2013).

Obviously, this dominant feature of the world economy needs measuring and analyzing. Policy-relevant questions include, but are not limited to:

  • what is the contribution of global value chains to economy GDP and employment? how long and complex are value chains?
  • what is the involvement and position of individual industries in global value chains? do multiple border crossings in global value chains really matter?

These and related questions generated a considerable amount of investigations proposing new measures of exports and production to account for global value chains. Some of those were designed to re-calculate trade  flows in value added terms, whereas other provided an approximation of the average length of production process.

A relatively new stream of research focuses on a deep decomposition of value added or final demand ( rather than exports or imports ) into components with varied paths along global value chains and measurements of the length of the related production processes. Consider, for example, a petrochemical plant that generates some value added equal to its output less all intermediate inputs used. We would be interested to know which part of this value added, embodied in the petrochemicals, is used entirely within the domestic economy and which part is exported.

We would also inquire how much of the latter satisfies final demand in partner countries and how much is further used in production and, perhaps, in exports to third countries and so on. We would be interested, in particular, in counting the number of production stages the value added in these petrochemicals passes along the chain before reaching its final user.

 

From Structure and length of value chains

APL

 

 

From Structure and length of value chains

A natural question is whether this method can be applied to the real economy with myriads of products, industries and dozens of partner countries? It can surely be applied if the data on inter-industry transactions are organized in the form of input-output accounts, and the computations are performed in block matrix environment. In fact, the measurement of the number of production stages or the length of production chains has attracted the interest of many input-output economists. The idea of simultaneously counting and weighting the number of inter-industry transactions was formalized by Dietzenbacher et al. (2005). Their “average propagation length” (APL) is the average number of steps it takes an exogenous change in one industry to affect the value of production in another industry. It is the APL concept on which we build the count of the number of production stages from the petrochemical plant to its consumers in our simplified example above. The only difference is that Dietzenbacher et al. (2005), and many authors in the follow-up studies, neglect the completion stage. First applications of the APL concept to measure the length of cross-border production chains appear in Dietzenbacher and Romero (2007) and Inomata (2008), though Oosterhaven and Bouwmeester (2013) warn that the APL should only be used to compare pure interindustry linkages and not to compare different economies or different industries.

Fally (2011, 2012) proposes the recursive definitions of two indices that quantify the “average number of embodied production stages” and the “distance to final demand”.  Miller and Temurshoev (2015), by analogy with Antras et al. (2012), use the logic of the APL and derive the measures of “output upstreamness” and “input downstreamness” that indicate industry relative position with respect to the nal users of outputs and initial producers of inputs. They show that their measures are mathematically equivalent to those of Fally and the well known indicators of, respectively, total forward linkages and total backward linkages. Fally (2012) indicates that the average number of embodied production stages may be split to account for the stages taking place within the domestic economy and abroad. This approach was implemented in OECD (2012), De Backer and Miroudot (2013) and elaborated in Miroudot and Nordstrom (2015).

Ye et al. (2015) generalize previous length and distance indices and propose a consistent accounting system to measure the distance in production networks between producers and consumers at the country, industry and product levels from different economic perspectives. Their “value added propagation length” may be shown to be equal to Fally’s embodied production stages and Miller & Temurshoev’s input downstreamness when aggregated across producing industries.

Finally, Wang et al. (2016) develop a technique of additive decomposition of the average production length. Therefore, they are able to break the value chain into various components and measure the length of production along each component. Their production length index system includes indicators of the average number of domestic, cross-border and foreign production stages. They also propose new participation and production line position indices to clearly identify where a country or industry is in global value chains. Importantly, Wang et al. (2016) clearly distinguish between average production length and average propagation length, and between shallow and deep global value chains.

This paper builds on the technique and ideas of Wang et al. (2016) and the derivation of the weighted average number of border crossings by Muradov (2016). It re-invents a holistic system of analytical indicators of structure and length of value chains. As in Wang et al. (2016), global value chains are treated here within a wider economy context and are juxtaposed with domestic value chains. This enables developing new indices of orientation towards global value chains. The novel deliverables of this paper are believed to include the following. First, all measurements are developed with respect to output rather than value added or final product  flows. This is superior for interpretation and visualization purposes because a directly observable economic variable ( output ) is decomposed in both directions, forwards to the destination and backwards to the origin of value chain. It is also shown that at a disaggregate country-industry level, the measurement of production length is equivalent with respect to value added and output. Second, the decomposition of output builds on a factorization of the Leontief and Ghosh inverse matrices that allows for an explicit count of production stages within each detailed component. Third, the system builds on a refined classication of production stages, including final and primary production stages that are often neglected in similar studies. Fourth, the paper re-designs the average production line position index and proposes new indices of orientation towards global value chains that, hopefully, avoid overemphasizing the length of some unimportant cross-border value chains. Fifth, a new chart is proposed for the visualization of both structure and length of value chains. The chart provides an intuitive graphical interpretation of the GVC participation, orientation and position indices.

It is also worth noting that both Wang et al. (2016) and this paper propose similar methods to estimate the intensity of GVC-related production in partner countries and across borders. This is not possible with previous decomposition systems without explicitly counting the average number of production stages and border crossings.

 

 Key Terms:

  • Average Propagation Length
  • National Boundaries
  • Networks
  • Value Chains
  • Supply Chains
  • Upstreamness
  • Downstreamness
  • Structure of Chains
  • Smile Curves
  • Vertical Specialization
  • Fragmentation of Production
  • Shock Amplifiers
  • Shock Absorbers
  • Production Sharing
  • World Input Output Chains
  • WIOD
  • Counting Boundary Crossings
  • Production Staging
  • Slicing Up Value Chains
  • Mapping Value Chains
  • Geography of Value Chains
  • Spatial Economy

Key Sources of Research:

 

 

Characterizing Global Value Chains

Zhi Wang

Shang-Jin Wei

Xinding Yu and Kunfu Zhu

GLOBAL VALUE CHAIN DEVELOPMENT REPORT 2016
Background Paper Conference

Beijing, 17-18 March 2016

Click to access Characterizing_Global_Value_Chains.pdf

 

 

The Great Trade Collapse: Shock Amplifiers and Absorbers in Global Value Chains

Zhengqi Pan

2016

Click to access Zhengqi%20Pan_GPN2016_008.pdf

 

 

CHARACTERIZING GLOBAL VALUE CHAINS:PRODUCTION LENGTH AND UPSTREAMNESS

Zhi Wang
Shang-Jin Wei
Xinding Yu
Kunfu Zhu
March 2017

Click to access w23261.pdf

 

 

 

Characterizing Global Value Chains

Zhi Wang
Shang-Jin Wei,
Xinding Yu and Kunfu Zhu

September 2016

Click to access Wang,%20Zhi.pdf

Click to access 8178.pdf

 

 

MEASURING AND ANALYZING THE IMPACT OF GVCs ON ECONOMIC DEVELOPMENT

GLOBAL VALUE CHAIN DEVELOPMENT REPORT 2017

International Bank for Reconstruction and Development/The World Bank
2017

Click to access tcgp-17-01-china-gvcs-complete-for-web-0707.pdf

 

 

 

Global Value Chains

Click to access Lecture%20Global%20Value%20Chains.pdf

 

 

MAPPING GLOBAL VALUE CHAINS

4-5 December 2012
The OECD Conference Centre, Paris

Click to access MappingGlobalValueChains_web_usb.pdf

 

 

 

Structure and length of value chains

Kirill Muradov

Click to access IO-Workshop-2017_Muradov_abstract.pdf

Click to access IO-Workshop-2017_Muradov_ppt.pdf

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3054155

 

Production Staging: Measurement and Facts

Thibault Fally

August 2012

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.717.7092&rep=rep1&type=pdf

 

 

 

TRACING VALUE-ADDED AND DOUBLE COUNTING IN GROSS EXPORTS

Robert Koopman
Zhi Wang
Shang-Jin Wei

November 2012

Click to access w18579.pdf

 

 

 

GIVE CREDIT WHERE CREDIT IS DUE: TRACING VALUE ADDED IN GLOBAL PRODUCTION CHAINS

Robert Koopman
William Powers
Zhi Wang
Shang-Jin Wei

September 2010

Click to access NBER%20working%20paper_1.pdf

 

 

 

Measuring the Upstreamness of Production and Trade Flows

By Pol Antràs, Davin Chor, Thibault Fally, and Russell Hillberry

2012

Click to access acfh_published.pdf

Click to access w17819.pdf

 

 

 

Using Average Propagation Lengths to Identify Production Chains in the Andalusian Economy

 

https://idus.us.es/xmlui/bitstream/handle/11441/17372/file_1.pdf?sequence=1&isAllowed=y

 

 

Production Chains in an Interregional Framework: Identification by Means of Average Propagation Lengths

 2007

 

http://journals.sagepub.com/doi/abs/10.1177/0160017607305366

 

 

 

Vertical Integration and Input Flows

Enghin Atalay

Ali Hortaçsu

Chad Syverson

2013

Click to access verticalownership.pdf

 

 

 

The Rise of Vertical Specialization Trade

Benjamin Bridgman

January 2010

Click to access the_rise_of_vertical_specialization_trade_bridgman_benjamin.pdf

 

 

 

THE NATURE AND GROWTH OF VERTICAL SPECIALIZATION IN WORLD TRADE

David Hummels
Jun Ishii
Kei-Mu Yi*

March 1999

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.475.3874&rep=rep1&type=pdf

 

 

Accounting for Intermediates: Production Sharing and Trade in Value Added

Robert C. Johnson

Guillermo Noguera

First Draft: July 2008
This Draft: June 2009

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.211.9707&rep=rep1&type=pdf

First Draft: July 2008
This Draft: May 2011

Click to access PAPER_4_Johnson_Noguera.pdf

 

 

 

FRAGMENTATION AND TRADE IN VALUE ADDED OVER FOUR DECADES

Robert C. Johnson
Guillermo Noguera

June 2012

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.679.6227&rep=rep1&type=pdf

 

 

 

Can Vertical Specialization Explain The Growth of World Trade

Kei-Mu Yi

1999

Click to access sr96.pdf

 

 

CAN MULTI-STAGE PRODUCTION EXPLAIN THE HOME BIAS IN TRADE?

Kei-Mu Yi

Federal Reserve Bank of Philadelphia
June 2008
This revision: November 2008

https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2008/wp08-12r.pdf?la=en

 

 

 

Global Value Chains: New Evidence for North Africa

D. Del Prete, G. Giovannetti, E. Marvasi

2016

Click to access wp07_2016.pdf

 

 

 

Slicing Up Global Value Chains

Marcel Timmera Abdul Erumbana Bart Losa
Robert Stehrerb Gaaitzen de Vriesa

Presentation at International Conference on Global Value Chains and
Structural Adjustments,

Tsinghua University, June 25, 2013

Click to access session4_timmer.pdf

 

 

 

On the Geography of Global Value Chains

Pol Antràs

Alonso de Gortari

May 24, 2017

Click to access gvc_ag_latest_draft.pdf

 

 

Counting Borders in Global Value Chains

Posted: 12 Jul 2016

Last revised: 29 Aug 2016

Kirill Muradov

 

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2808130

 

 

Determinants of country positioning in global value chains

Kirill Muradov

May 2017

Click to access 2932_20170627121_Muradov2017_countrypositioninGVC_1.1.pdf

 

 

THE CONSTRUCTION OF WORLD INPUT–OUTPUT TABLES IN THE WIOD PROJECT

ERIK DIETZENBACHERa*, BART LOSa, ROBERT STEHRERb, MARCEL TIMMERa and GAAITZEN DE VRIES

2013

 

Click to access WIOD%20construction.pdf

 

 

 

 

On the fragmentation of production in the us

Thibault Fally

July 2011

Click to access Fally.pdf

http://voxeu.org/article/has-production-become-more-fragmented-international-vs-domestic-perspectives

A New Measurement for International Fragmentation of the Production Process: An International Input-Output Approach

Inomata, Satoshi

http://www.ide.go.jp/English/Publish/Download/Dp/175.html

Output Upstreamness and Input Downstreamness of Industries/Countries in World Production

Ronald E. Miller

Umed Temurshoev

 

Date Written: July 9, 2015

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2700845

Input-Output Calculus of International Trade

Kirill Muradov

 

Date Written: June 1, 2015

Posted: 9 Sep 2015 Last revised: 5 Oct 2015

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2643098

 

 

 

 Made in the World?

S. Miroudot

Hakan Nordstrom

Date Written: September 2015

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658562

 

 

 

The Average Propagation Length Conflicting Macro, Intra-industry, and Interindustry Conclusions

October 2013
Jan Oosterhaven

Maaike C. Bouwmeester

https://www.researchgate.net/publication/258142955_The_Average_Propagation_Length_Conflicting_Macro_Intra-industry_and_Interindustry_Conclusions

 

 

 

Accounting Relations in Bilateral Value Added Trade

Robert Stehrer

May 2013

Click to access accounting-relations-in-bilateral-value-added-trade-dlp-3021.pdf

Whither Panama? Constructing a Consistent and Balanced World SUT System including International Trade and Transport Margins

Robert Stehrer

Click to access whither-panama-constructing-a-consistent-and-balanced-world-sut-system-including-international-trade-and-transport-margins-dlp-2905.pdf


https://wiiw.ac.at/p-2905.html

Quantifying International Production Sharing at the Bilateral and Sector Levels

Zhi Wang, Shang-Jin Wei, Kunfu Zhu

NBER Working Paper No. 19677
Issued in November 2013, Revised in March 2014

http://www.nber.org/papers/w19677

Measuring Smile Curves in Global Value Chains

Ming YE, Bo MENG , and Shang-jin WEI

August 2015

http://www.ide.go.jp/English/Publish/Download/Dp/530.html

 

 

 

 FOLLOW THE VALUE ADDED: BILATERAL GROSS EXPORT ACCOUNTING

by Alessandro Borin and Michele Mancini

2015

 

Click to access en_tema_1026.pdf

Production and Distribution Planning : Strategic, Global, and Integrated

Production and Distribution Planning : Strategic, Global, and Integrated

 

Multiple Perspectives on production and distribution planning

  • Plant and Distribution Center Location problem – Strategic – Structural and Design
  • Procurement problem – where to source from – Tactical – Allocation, Assignment
  • Production and Distribution Scheduling – Operational  – Managing Flows
  • Multi Echelon Inventory Management- Operational – Managing Stocks
  • Supply Chain Integration, Collaboration, Coordination – Hierarchical Planning

Normally, production and distribution planning are handled separately in firms.  Integrated planning of production and distribution can add significant value to a company, particularly, in strategic decisions.

 

From Facility Location and Supply Chain Management – A comprehensive review

Since, in the literature, model objectives change as a function of the planning horizon length, we consider it opportune to define the features of each horizon in order to contextualize the parameters chosen for the models’ comparison. According to [14], the planning horizons of the supply chain can be clustered as follows:
Strategic planning: this level refers to a long-term horizon (3-5 years) and has the objective of identifying strategic decisions for a production network and defining the optimal configuration of a supply chain. The decisions involved in this kind of
planning include vertical integration policies, capacity sizing, technology selection, sourcing, facility location, production allocation and transfer pricing policies.
Tactical planning: this level refers to a mid-term horizon (1-2 years) and has the objective of fulfilling demand and managing material flows, with a strong focus on the trade-off between the service level and cost reduction. The main aspects considered in tactical planning include production allocation, supply chain coordination, transportation policies, inventory policies, safety stock sizing and supply chain lead time reduction.
Operational planning: this level refers to a short term period (1 day to 1 year) and has the objective of determining material/logistic requirement planning. The decisions involved in programming include the allocation of customer demands, vehicle routing, and plant and warehouse scheduling.

 

From

pdp2

 

 

From  Integrated Location-Production-Distribution Planning in a
Multi products Supply Chain Network Design Model

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Key words:

  • ‘supply chain strategic design’,
  • ‘supply chain planning’,
  • ‘supply chain optimization’,
  • ‘supply chain network design’,
  • ‘supply chain production planning’,
  • ‘supply chain delocalization’,
  • ‘logistic network design’,
  • ‘facility location’,
  • ‘distribution network design’,
  • ‘production-distribution systems’,
  • ‘location-allocation problem’,
  • ‘supply chain linear programming’
  • ‘supply chain mixed-integer programming’.

From  From Manufacturing to Distribution: The Evolution of ERP in Our New Global Economy

Over the past fifty years, manufacturing has changed from individual companies producing and distributing their own products, to a global network of suppliers, manufacturers, and distributors. Efficiency, price, and quality are being scrutinized in the production of each product. Because of this global network, manufacturers are competing on a worldwide scale, and they have moved their production to countries where the costs of labor and capital are low in order to gain the advantages they need to compete.

Today, the complex manufacturing environment faces many challenges. Many products are manufactured in environments where supplies come from different parts of the world. The components to be used in supply chain manufacturing are transported across the globe to different manufacturers, distributors, and third party logistics (3PL) providers. The challenges for many manufacturers have become how to track supply chain costs and how to deal with manufacturing costs throughout the production of goods. Software vendors, however, are now addressing these manufacturing challenges by developing new applications.

Global competition has played a key role in industrialized countries shifting from being production-oriented economies to service-based economies. Manufacturers in North America, Western Europe, and other industrialized nations have adapted to the shift by redesigning their manufacturing production into a distribution and logistics industry, and the skills of the labor force have changed to reflect this transition. Developing countries have similarly changed their manufacturing production environments to reflect current demands; they are accommodating the production of goods in industries where manufacturers have chosen to move their production offshore–the textile industry being a prime example of this move.

A report from the US Census Bureau titled Statistics for Industry Groups and Industries: 2005 and another from Statistics Canada titled Wholesale Trade: The Year 2006 in Review indicate that wholesalers are changing their business models to become distributors as opposed to manufacturers. Between 2002 and 2005, overall labor and capital in the manufacturing sectors decreased substantially. US industry data (from about 10 years ago) indicates that the North American manufacturing industry was engaged in 80 percent manufacturing processes and only 20 percent distribution activities. Today, however, these percentages have changed dramatically; the current trend is in the opposite direction. Manufacturing processes account for around 30 percent of the industry processes, and wholesale and distribution activities, approximately 70 percent.

In addition, a report from the National Association of Manufacturers indicates that the US economy imports $1.3 trillion (USD) worth of manufactured goods, but exports only $806 billion (USD) worth of goods manufactured in the US. This negative trade balance is a clear indication of the changing economic trend toward the manufacturing of goods in low-cost labor nations.

The main reason for this huge manufacturing shift is the increasing operating costs of production in industrialized countries. These rising costs are forcing manufacturers to move their production to developing nations because of the low cost of labor in these countries. This includes Asian countries (such as China and Indonesia) as well as Eastern European countries (such as the Czech Republic and Slovakia).

The number of workers (in percentages) in specified industries in G7 countries, and uses 1980 as the base year with 100 percent full employment in each industry. The industries with relatively constant rates of employment are the food and drink and the tobacco industries. Since 1995, all other industries have been maintaining less and less manufacturing employees, as indicated by the declining slopes in the graph. The shift in the textiles and leather, metals, and other manufacturing industries is moving toward production of goods in low-wage, developing countries.

Manufacturing is a global industry, and although a manufacturing company may be based in an industrialized country, it may have the bulk of its manufacturing facilities in a developing country. Producing goods in such a country reduces wage and capital costs for the manufacturer; however, some manufacturing control is lost in offshore production. Shipping, distribution, and rental costs, for example, are often difficult to track and manage, and quality control can be compromised in a production environment that is not local.

Two main outcomes can be seen within the manufacturing industry because of this manufacturing shift: manufacturers have a sense of having relinquished control of their production to low-cost labor nations, and supply chain management (SCM) has now become the answer to manufacturing within industrialized nations.

Suppliers that provide components to manufacturers often have issues with quality. Being part of a large network of suppliers, each supplier tries to offer the lowest prices for its products when bidding to manufacturers. Although a supplier may win the bid, its products may not be up to standard, and this can lead to the production of faulty goods. Therefore, when using offshore suppliers, quality issues, product auditing, and supplier auditing become extremely important.

Because the manufacturing model is changing, manufacturing has become more of a service-based industry than a pure manufacturing industry. Even though the physical process of manufacturing hasn’t changed, the actual locations of where the goods are being produced have. This fact is now compelling industrialized countries to engage in more assembly driven activities–a service-based model. The manufacturing process has transformed into obtaining parts and reassembling them into the final product. The final product is then redistributed throughout the appropriate channel or to the consumer. SCM methods are now reacting to this change as well; they are taking into account final assembly needs, and they are distributing particular products to consumers or manufacturers.

SCM is becoming the norm for manufacturers in the industrialized world. Offshoring is now standard practice, and methods such as SCM have been set up to deal with these economic and logistical business realities.

The economic shift happening in both industrialized and developing countries is dramatic. As the level of management knowledge increases, better methods of constructing offshore products are available in SCM solutions. In both types of economies, the changes in the labor force skill sets and manufacturing environments have consequently led to new software solutions being developed in order to manage this dramatic change.

Within the software industry, many SCM and enterprise resource-planning (ERP) vendors are following the economic shift. They are developing new functionality–ERP-distribution software–to meet the recent demands and needs of the changing manufacturing and distribution industries.

SCM and ERP software are converging to better address these new demands in the manufacturing industry. In the enterprise software market, ERP software vendors have reached a point of saturation; their installs are slowing down and they are seeing a reduction in sales. Therefore, ERP providers are developing new functionality in order to remain competitive with other ERP vendors, in addition to looking for new opportunities. ERP vendors are trying to adapt to the changing market in order to increase their revenues. They are integrating SCM functionality into their ERP offerings, creating ERP-distribution software that can span the entire production process across many continents (if necessary), and that is able to track final goods, components, and materials.

Traditional ERP solutions included some SCM functionality, which was needed to distribute the companies’ produced goods. These systems also allowed components and parts to be imported in order to assemble these goods. But offshore manufacturing and expansion into new markets has required SCM functionality in ERP software to be extended. Some larger vendors have acquired other companies in order to meet these changing demands. For example, Oracle acquired G-Log, a transportation management systems (TMS) vendor, and Agile, a product lifecycle management (PLM) vendor; and Activant acquired Intuit Eclipse.

SCM software vendors, in contrast, have felt encroached upon by ERP vendors. The situation has posed a real threat to SCM providers in the market, forcing them to extend their ERP functionality to compete with ERP vendors and to try to gain new clients in the distribution and logistics industry.

ERP-distribution software has integrated SCM functionality into its existing functionality to navigate through the complex global manufacturing environment. SCM software maps five processes into one solution: planning, sourcing (obtaining materials), producing, delivering, and returning final products if defective. These processes help to track and manage the goods throughout their entire life cycles. In addition, ERP solutions are used to manage the entire operations of an organization, not only a product’s life cycle. This gives users the broad capability to manage operations and use the SCM functionality to manage the movement of goods, whether components or finished product.

With the ability to gain accurate inventory visibility and SCM production, ERP-distribution software is able to see the whole chain of manufacturing and distribution events, from supplier to manufacturer, all the way to the final consumer.

There are three business models.

  • The first is the SCM model, which includes the manufacturing process.
  • The second is the retail model, which is the distribution of final products to the consumer, business, or retailer.
  • The third model is a combination of the first two business models, joined by the ERP-distribution software solution into one seamless process.

Within the SCM process, goods can either be brought in (imported) through foreign manufacturers, or acquired locally. The goods are then given to a distributor, 3PL provider, or wholesaler in order to reach the final client.

Within the retail model, the products are taken from a distributor, 3PL provider, or wholesaler, and are distributed to the appropriate person. Note that there is a “shift” for the consumer. This is to indicate that through the Internet or other forms of technology, consumers are now able to buy directly from distributors. The power of the consumer has changed; where manufacturers once provided products to consumers, consumers are now creating demand, and manufacturers have to meet that demand.

SCM solutions focus on the relationship between the supplier and manufacturer. However, ERP- distribution software has taken functionality from SCM software and combined it with retail software (such as point-of-sale and e-commerce solutions); it is now able to span across the entire supply chain and to track goods along the complete manufacturing process.

This is a simplified view of the complexities of today’s manufacturing processes. These complexities have made it crucial for trading partners to unite with manufacturers in order to help alleviate the frustrations that can occur within this global network. Specifically, trading partners are coming together with manufacturers to unite services, products, and customer experience so that business processes (such as manufacturing and distribution) become more efficient and that goods can move through these processes with minimal problems.

SCM can be thought of as the management of “warehousing processes,” in which the movement of goods occurs through multiple warehouses or manufacturing facilities. Tracking the costs of moving products and components through the maze of warehousing and manufacturing facilities is a tricky process, and many organizations lose money at each warehousing step.

Within the flow of goods in the manufacturing sector, the warehouse is a crucial part of the supply chain. Traditionally, the warehouse has been a source of frustration because the manufacturer or supplier pays for the use of the warehouse (whether owned or rented by the company). This leads to two possible scenarios: 1) the costs of the warehouse are incurred by a 3PL or manufacturing company, or 2) the costs are passed from one warehouse to another warehouse, and the original warehouse charges for these costs.

The typical warehouse process includes the following steps: receiving, put away, picking, kitting, packing, repacking, cross-docking, and shipping. ERP-distribution software is able to track costs across the entire organization and to aid companies in reducing costs that were previously tough to track.

ERP-distribution system encompasses the entire production of the final good. The ERP- distribution system is able to include inventory visibility from points “A to Z” (start to finish) and to track each warehouse cost from supplier to manufacturer to user, whether consumer, business, or retailer.

The Final Word: ERP-distribution software has been developed to meet the growing needs of the manufacturing and distribution industries. The capabilities incorporated into the software work across entire organizations, and even across continents.

Because of the economic shift in the manufacturing industry, the emergence of new software has been vital for businesses to stay competitive, meet the industry demands and emerging shift, and to keep business processes efficient to gain better profit margins.

ERP-distribution software is able to track the processes of manufacturing goods and distributing components, even if the manufacturer has facilities in North America and the Far East. With the SCM component in ERP software, manufacturing and tracking goods becomes manageable. Distributors and manufacturers can now work together in order to better meet customer requirements.

In addition of factors for domestic location selection analysis, other factors in international location selection are:

  • Exchange Rates
  • Taxes and Tariffs
  • Transfer Prices

How do companies in Computers, Automotive, Apparel, Electronics, Consumer Goods, Machinery manage their supply chain planning functions?  What software do they use for forecasting, planning, and scheduling?

I know of these software solutions for Network Design and Optimization:

Key Sources of Research:

 

Combined Strategic and Operational Planning – An MILP Success Story in Chemical Industry

Josef Kallrath

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.506.4194&rep=rep1&type=pdf

 

 

Planning in the Process Industry

Josef Kallrath

Click to access kallrath2008d.pdf

 

Solving Planning and Design Problems in the Process Industry Using Mixed Integer and Global Optimization

Josef Kallrath

Click to access kallr05a.pdf

 

 

Mathematical Programming Models and Formulations for Deterministic Production
Planning Problems

Yves Pochet

Click to access Pochet.pdf

 

Supply Network Planning and Plant Scheduling in the Chemical-Pharmaceutical Industry – A Case Study Investigation

Gang Yang, Martin Grunow and Hans-Otto Guenther

Click to access SNPandPSinCPI2003.pdf

 

 

Advanced Planning and Scheduling Solutions in Process Industry

Editors: Günther, Hans-Otto, van Beek, Paul (Eds.)

http://www.springer.com/la/book/9783540002222

 

Advanced Planning and Scheduling in Manufacturing and Supply Chains

Authors: Mauergauz, Yuri

http://www.springer.com/la/book/9783319275215

 

 

Centralised supply chain master planning employing advanced planning systems

Martin Rudberga* and Jim Thulin

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.177.7313&rep=rep1&type=pdf

 

 

Planning and Scheduling in Supply Chains: An Overview of Issues in Practice

Stephan Kreipl • Michael Pinedo

Click to access 2004-01-Kreipl.pdf

 

 

Sales and operations planning in the process industry

Sayeh Noroozi

Joakim Wikner

Click to access Salesandoperationsplanningintheprocessindustry.pdf

 

 

Optimal planning in large multi-site production networks

Christian H. Timpe, Josef Kallrath

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.565.6621&rep=rep1&type=pdf

 

 

Mixed Integer Optimization in the Chemical Process Industry –
Experience, Potential and Future Perspectives

Josef Kallrath

Click to access kall00c.pdf

 

Planning and scheduling in the process industry

Josef Kallrath

2002

https://pdfs.semanticscholar.org/79f2/bba952f67315ccfd639ce874f966b02d1c18.pdf?_ga=2.18515577.1763587969.1506656275-754417939.1465928807

 

Modeling and design of global logistics systems: A review of integrated strategic and tactical models and design algorithms

Marc Goetschalckx  Carlos J.Vidal, Koray Dogan

Click to access 09e4150b3dc45e40ef000000.pdf

 

 

Strategic Analysis of Integrated Production- Distribution Systems: Models and Methods

Morris Cohen and H Lee

1988

Click to access 554578ab0cf23ff71686afbc.pdf

 

 

Integrated production/distribution planning in supply chains: An invited review

Sß. Selcßuk Erengucß a, N.C. Simpson b, Asoo J. Vakharia

1999

Click to access 1999_EJOR.pdf

 

 

A Review of Integrated Analysis of Production-Distribution Systems

Ana Maria Sarmiento, Rakesh Nagi

1999

Click to access ana.pdf

 

Managing Perishability in Production-Distribution Planning: a discussion and review

P. Amorim H. Meyr C. Almeder
B. Almada-Lobo

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.475.3138&rep=rep1&type=pdf

 

 

Input-Output Analysis For Multi-location Supply Chain Management Control:
A Theoretic Model

Wang Lu, Tong Rencheng

Click to access Wang-274.pdf

 

 

Using Operational Research for Supply Chain Planning in the Forest
Products Industry

Sophie D’Amours

Mikael Ro¨nnqvist

Andres Weintraub

http://repositorio.uchile.cl/bitstream/handle/2250/125029/DâAmours_Sophie.pdf?sequence=1

 

 

Mathematical programming models for supply chain production and
transport planning

Josefa Mula *, David Peidro, Manuel Díaz-Madroñero, Eduardo Vicens

2010

Click to access 83f7e2405a9539c86dd593f5bb064f2695d5.pdf

 

 

Formation of a strategic manufacturing and distribution network
with transfer prices

Renato de Mattaa, Tan Millerb

Click to access 28a955be33b7a19b2077402d5b3b9cca1151.pdf

 

 

MEASURING THE IMPACT OF TRANSFER PRICING ON THE CONFIGURATION
AND PROFIT OF AN INTERNATIONAL SUPPLY CHAIN: PERSPECTIVES FROM
TWO REAL CASES

Marc Goetschalckx, Carlos J. Vidal and Javier I. Hernández

Click to access arq0310.pdf

 

 

Integrated Strategic Planning of Global Production Networks and Financial Hedging
under Uncertain Demands and Exchange Rates

Achim Koberstein,
Elmar Lukas,
Marc Naumann

Click to access 10.1007%2FBF03342750.pdf

 

 

 

The Design of Robust Value Creating Supply Chain Networks:  A Critical Review

Click to access CIRRELT-2008-36.pdf

 

 

 

 

Global supply chain design: A literature review and critique.

Meixell, M. J. and Gargeya, V. B.

(2005).

Transportation Research Part E: Logistics and Transportation Review, 41(6): 531-550.

Click to access V_Gargeya_Global_2005.pdf

 

 

 

A strategic model for exact supply chain network design and its application to a global manufacturer

C. Arampantzi, I. Minis, G. Dikas

Click to access DeOPSys_Lab_Report_SSCND_2016-5.pdf

 

 

Sequential Vs Integrated Optimization:  Production, Location, Inventory Control and Distribution

July 2017

Click to access CIRRELT-2017-39.pdf

 

 

Measuring Cost Efficiency in an Integrated Model of Production
and Distribution: A Nonparametric Approach

Subhash C. Ray

2011

Click to access 2011-04.pdf

 

 

Optimization/simulation modeling of the integrated production- distribution plan: an innovative survey

BEHNAM FAHIMNIA, LEE LUONG, ROMEO MARIAN

2008

 

Click to access 30-587.pdf

Click to access Optimization-simulation-modeling-of-the-integrated-production-distribution-plan-An-innovative-survey.pdf

 

 

Strategic Planning and Design of Supply Chains: a Literature Review

Alessandro Lambiase, Ernesto Mastrocinque, Salvatore Miranda and Alfredo Lambiase

2013

http://journals.sagepub.com/doi/pdf/10.5772/56858

 

 

The design of production-distribution networks: A mathematical programming approach

Alain Martel

https://www.researchgate.net/publication/226891333_The_Design_of_Production-Distribution_Networks_A_Mathematical_Programming_Approach

 

 

Process industry supply chains: Advances and challenges

Nilay Shah

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.114.4553&rep=rep1&type=pdf

 

 

Strategic, Tactical and Operational Decisions in Multi-national Logistics Networks:
A Review and Discussion of Modeling Issues

Gunter Schmidt
and
Wilbert E. Wilhelm

http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=5BA6B353BBCA48D0859B902AC3F2610D?doi=10.1.1.25.4951&rep=rep1&type=pdf

Strategic production-distribution models: A critical review with emphasis on global supply chain models

 

 

Dynamics of Global Supply Chain Supernetworks

A. NAGURNEY, J. CRUZ AND D. MATSYPURA

(Received and accepted November 2002)

 

https://ac.els-cdn.com/S0895717703001122/1-s2.0-S0895717703001122-main.pdf?_tid=f781c478-a79f-11e7-b471-00000aab0f6c&acdnat=1506969295_6d30c9e8a854b9cc1ec23a57d00143d0

 

 

Integrated production/distribution planning in the supply chain: the Febal case study

Fabio Nonino

 

 

Integrated supply chain planning under uncertainty using an improved stochastic approach

Hadi Mohammadi Bidhandi a,⇑, Rosnah Mohd Yusuff

 

https://ac.els-cdn.com/S0307904X1000452X/1-s2.0-S0307904X1000452X-main.pdf?_tid=49ede574-a7a1-11e7-87fa-00000aacb360&acdnat=1506969863_699a0bd5cc6d414ed2f1caebcdda820f

 

 

Optimizing the Supply Chain of a Petrochemical Company under Uncertain Operating and Economic Conditions

Haitham M. S. Lababidi,*,† Mohamed A. Ahmed,‡ Imad M. Alatiqi,† and Adel F. Al-Enzi§

Click to access 5620c42208ae93a5c9244ea5.pdf

 

 

A strategic model for exact supply chain network design and its application to a global manufacturer

C. Arampantzi, I. Minis, G. Dikas

Click to access DeOPSys_Lab_Report_SSCND_2016-5.pdf

 

 

Sequential versus Integrated Optimization: Lot Sizing, Inventory Control and Distribution

Maryam Darvish*, Leandro C. Coelho

Click to access CIRRELT-2017-39.pdf

 

 

A MANUFACTURING ENGINEERING PERSPECTIVE ON SUPPLY CHAIN INTEGRATION

Samuel H. Huang, Ge Wang

John P. Dismukes

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.41.1852&rep=rep1&type=pdf

 

 

A review and critique on integrated production–distribution planning models and techniques

Trends in Intra Firm Trade of USA

Trends in Intra Firm Trade of USA

 

 

Intra Firm Trade

Intra-firm trade consist of trade between parent companies of a compiling country with their affiliates abroad and trade of affiliates under foreign control in this compiling country with their foreign parent group.

Intra Industry Trade

Different types of trade are captured in measurements of intra-industry trade:

a) Trade in similar products (“horizontal trade”) with differentiated varieties (e.g. cars of a similar class and price range).

b) Trade in “vertically differentiated” products distinguished by quality and price (e.g. exports of high-quality clothing and imports of lower-quality clothing).

 

From GLOBALISATION AND INTRA-FIRM TRADE: AN EMPIRICAL NOTE

 

Products which are traded internationally, but which stay within the ambit of a multinational enterprise (MNE), represent a significant portion of foreign trade for several OECD countries. This type of trade is called intra-firm trade as opposed to international trade among unrelated parties, also called arm’s length trade. Intra-firm trade is an important part of the process of globalisation, by which is meant the increasing interdependence of markets and production in different countries through trade in goods and services, cross-border flows of capital, and exchanges of technology.

The phenomenon of intra-firm trade is of interest to trade policy makers, as well as to competition and tax authorities. The use of transfer pricing in intra-firm trade may introduce an element of uncertainty into the value of a fairly large part of international trade and into customs valuation needed for the application of tariffs or similar measures. Competition and tax issues may also arise from intra-firm trade to the extent that the latter may facilitate the dissimulation of real transaction prices between the parent company and its affiliates.

A surge in foreign direct investment (FDI) during the 1980s’ has been cited as evidence in favour of globalisation; it is argued that MNEs have played a central role in globalisation by extending their corporate networks beyond national boundaries through the establishment of foreign branches and subsidiaries. It is often assumed that intra-firm trade reflects these foreign production activities by MNEs, as they trans- fer their factors of production from one country to another.

Little attention has been paid so far to the phenomenon of intra-firm trade. The literature on the subject is still relatively limited and recent. This is partly because most international trade statistics do not distinguish between intra-firm trade and arm’s length trade.

 

From GLOBALISATION AND INTRA-FIRM TRADE: AN EMPIRICAL NOTE

In considering the interrelationship between globalisation and international trade, it is conceptually useful to distinguish between four types of international trade:

(A) intra industry, intra-firm trade;

(B) intra-industry, arm’s-length trade;

(C) inter-industry, intra firm trade;

(D) inter-industry, arm’s-length trade.

Intra-industry trade is defined as the mutual exchange of similar goods within the same product category (Grubel and Lloyd, 1975, and Greenaway and Milner, 1986).

Intra-industry trade is generally a function of product differentiation and may or may not involve intra-firm trade. If motor vehicles produced in France are exported to the United States and U.S.-built motor vehicles are exported to France, the two countries are said to be involved in intra-industry trade even though such trade is not necessarily intra-firm trade. Intra-industry trade can be readily calculated for any given product category, as only the traditional bilateral trade statistics for that product category are needed.

Intra firm trade is harder to quantify, since knowledge of the relationship between the firms involved in the transactions is necessary. Data on intra-firm trade are available only. through firm surveys, involving the preparation of questionnaires by national authorities.

Most trade in manufactured goods among OECD countries is of the intra-industry type.  Intra-industry trade is particularly important within Europe, and to a lesser extent, in North America, accounting for roughly 60 to 70 per cent of total trade in manufacture.  This trade generally concerns differentiated products exchanged between countries that are similar in terms of per capita income and relative factor endowments. It has also been argued that economies of scale play an important role in explaining the industry pattern of intra-industry trade.

On the other hand, trade between developed and developing countries (“North-South”) is mostly of the inter-industry type, reflecting large differences in relative factor endowments between the two groups of countries. Inter-industry trade among unrelated parties (type D) – e.g. international exchange of cotton cloth produced by northern manufacturers for wine produced by southern farmers .- is the type of trade which international trade textbooks traditionally deal with.

Trade in manufactured goods between developed countries is predominantly of the intra-industry type and often takes the form of intra-firm trade. An important example of intra-industry, intra-firm trade (Type A) is United States-Canada-Mexico automobile trade. Intra-firm trade is also the dominant pattern of U.S. exports to Canada and Europe in the case of non-electrical machinery and chemicals. Another example is trade in manufactured goods between Pacific Asian economies. These economies have seen a rapid increase in intra-industry trade as a proportion of their total trade over the last decade. Such increase in intra-industry trade in Pacific Asian economies can be primarily attributed to the globalisation of corporate activities by U.S. and Japanese firms and, more recently, by other Asian firms. This involves assembly-line production based on imported parts and components in different countries in East and South East Asia (Fukasaku, 1992; Gross, 1986).

 

 

IFT

 

From An Overview of U.S. Intrafirm-trade Data Sources

 

ift2

There are large differences in BEA data and Census data particularly for Imports.  There are some measurement issues.  Import data from Mexico and China show big errors.

 

From An Overview of U.S. Intrafirm-trade Data Sources

IFT3

 

From An Overview of U.S. Intrafirm-trade Data Sources

IFT4

 

Data sources of Intra Firm Trade

  • BEA (Intra Firm Trade Data)
  • US Census Bureau (Related party trade data)

 

From Intrafirm Trade and Vertical Fragmentation in U.S. Multinational Corporations

First, we show that, although intra-MNC trade represents an important fraction of aggregate U.S. exports and imports, the median manufacturing foreign affiliate ships nothing to — and receives nothing from — its parent in the United States. Intra-MNC trade is concentrated in a small group of large affiliates and large corporations: The largest five percent of affiliates accounts for around half of the total trade to and from the parent, while the largest five percent of corporations accounts for almost two thirds of total intra- MNC trade. This skewness is also observed within the corporation: Intra-MNC trade tends to be concentrated in a small number of an MNC’s largest foreign affiliates.

The lack of intra-MNC cross-border trade that we find for foreign affiliates of U.S. multinationals is more surprising than the similar finding in Atalay et al. (2014) for intrafirm trade within the United States. Factor price differences — the theoretical motivation for vertical fragmentation and the intrafirm trade that accompanies it — are much larger across countries than across U.S. cities. In this regard, Brainard (1993) first documented the weak relationship between factor endowments and intra-MNC trade across borders.

The skewness of intra-MNC trade towards large affiliates and corporations in our first finding is reminiscent of the skewness in the distributions of other international activities. Manufacturing exports are concentrated in large firms (Bernard and Jensen, 1995), and even larger firms own foreign affiliates (Helpman et al., 2004). These patterns are consistent with theories of the firm that are based on economies of scale in production. In Grossman et al. (2006), for example, the production of inputs for the entire multinational corporation is concentrated into a few large affiliates, which exploit the strong economies of scale in production. Affiliates created to supply a foreign market — as an alternative to exporting, in order to avoid transportation costs — are relatively small. The model predicts that a small number of large affiliates ship goods within the corporation, while numerous smaller affiliates serve local markets. The concentration of intra-MNC trade in the largest firms is also consistent with the contract theory of the multinational firm proposed by Antras and Helpman (2004): In their framework with heterogeneous firms, only the largest firms choose to integrate offshore activities.

Our second set of facts relates intra-MNC trade to the upstream and downstream links between the industries of the parent and affiliate, as defined by the U.S. input-output table. As previously shown in Alfaro and Charlton (2009), we find that multinational corporations own affiliates in industries that are vertically linked to the parent’s industry. The input-output coefficient between the affiliate’s and the parent’s industries of operation, however, is not related to the existence and the magnitude of the trade in goods between the two. These findings are similar to those in Atalay et al. (2014), who study multi-establishment firms within the United States: The ownership of vertically linked affiliates is not related to the transfer of goods within the boundaries of the firm.

 

 

 

Key Sources of Research:

 

GLOBALISATION AND INTRA-FIRM TRADE: AN EMPIRICAL NOTE

Marcos Bonturi and Kiichiro Fukasaku

1993

Click to access 33948827.pdf

 

 

U.S. Direct Investment Abroad: Trends and Current Issues

James K. Jackson
Specialist in International Trade and Finance

June 29, 2017

Click to access RS21118.pdf

 

Foreign Direct Investment in the United States (FDIUS): Final Results from the 2012 Benchmark Survey

 

https://www.bea.gov/international/fdius2012_final.htm

 

 

U.S. Direct Investment Abroad (USDIA): Revised 2009 Benchmark Data

https://www.bea.gov/international/usdia2009r.htm

 

U.S. Intrafirm Trade in Goods

By William J. Zeile

1997

Click to access 0297iid.pdf

 

Global Production: Firms, Contracts, and Trade Structure

Pol Antràs
Harvard University
June, 2015

Click to access global_production_slides.pdf

 

 

Trade in Goods Within Multinational Companies:
Survey-Based Data and Findings for the United States of America

William J. Zeile
U.S. Bureau of Economic Analysis
Washington, DC 20230
2003

Click to access IFT_OECD_Zeile.pdf

 

 

An Overview of U.S. Intrafirm-trade Data Sources

Kim J. Ruhl
New York University Stern School of Business
May 2013

Click to access Ruhl_USIntrafirm-tradeData_May2013.pdf

 

 

How Well is U.S. Intrafirm Trade Measured?

By KIM J. RUHL

20015

Click to access How_Well_March_2015.pdf

 

 

 

An Overview of U.S. Intrafirm-trade Data Sources

Kim J. Ruhl
New York University Stern School of Business
May 2013

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.343.7532&rep=rep1&type=pdf

 

 

THE DETERMINANTS OF INTRAFIRM TRADE

Gregory Corcos

Delphine M. Irac

Giordano Miony

Thierry Verdier

First draft: January 26, 2008. This draft : December 9, 2010.

Click to access coirmive.pdf

 

 

MULTINATIONAL FIRMS AND THE STRUCTURE OF INTERNATIONAL TRADE

Pol Antràs
Stephen R.Yeaple

Working Paper 18775

February 2013

Click to access w18775.pdf

 

 

INTRA-FIRM TRADE AND PRODUCT CONTRACTIBILITY (LONG VERSION)

Andrew B. Bernard
J. Bradford Jensen
Stephen J. Redding
Peter K. Schott

April 2010

Click to access w15881.pdf

 

 

FIRMS, CONTRACTS, AND TRADE STRUCTURE

POL ANTRAS

Click to access fcts.pdf

 

 

On Intra-firm Trade and Multinationals: Offshoring and Foreign Outsourcing in Manufacturing

  • Ashok Deo Bardhan
  • Dwight Jaffee

https://link.springer.com/chapter/10.1057%2F9780230522954_2

 

 

INTRAFIRM TRADE AND VERTICAL FRAGMENTATION IN U.S. MULTINATIONAL
CORPORATIONS

Natalia Ramondo
Veronica Rappoport
Kim J. Ruhl
August 2015

Click to access w21472.pdf

 

 

 

INTRA-FIRM TRADE: PATTERNS, DETERMINANTS AND POLICY IMPLICATIONS

Rainer Lanz,
Sébastien Miroudot,

OECD

Click to access 5kg9p39lrwnn.pdf

 

 

Intrafirm Trade and Product Contractibility

By Andrew B. Bernard, J. Bradford Jensen, Stephen J. Redding,
and Peter K. Schott

Click to access Intrafirm_trade_and_product_compatibility_(lsero).pdf

 

Vertical Specialization in Multinational Firms

Gordon H. Hanson

Raymond J. Mataloni, Jr.

Matthew J. Slaughter

Initial Draft: September 2002

Click to access VertSpec.pdf

 

 

GLOBAL VALUE CHAINS SURVEYING DRIVERS AND MEASURES

João Amador and Sónia Cabral

2014

https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1739.en.pdf?13f6d86f40a3c60325f27cbc08a18742

Click to access wp20143.pdf

 

 

EU-US ECONOMIC LINKAGES:
THE ROLE OF MULTINATIONALS AND INTRA-FIRM TRADE

C. Lakatos and T. Fukui

2013

Click to access tradoc_151922.%202_November%202013.pdf

 

 

THREE ESSAYS ON INTRAFIRM TRADE

Sooyoung Lee

2015

http://scholar.colorado.edu/cgi/viewcontent.cgi?article=1061&context=econ_gradetds

 

 

 

On Intra-Firm Trade and Multinationals: Foreign Outsourcing and Offshoring in Manufacturing

Ashok Deo Bardhan

Dwight Jaffee

2004

Click to access d993275ddc9ba520060c9022fb84435a4d6a.pdf

 

International Fragmentation of Production and the Intrafirm Trade
of U.S. Multinational Companies

Maria Borga and William J. Zeile

January 22, 2004

Click to access intrafirmtradejanuary04.pdf

 

 

 

Globalization and trade flows: what you see is not what you get!

Andreas Maurer and Christophe Degain

Click to access ersd201012_e.pdf

 

 

How US corporations structure their international production chains

Natalia Ramondo, Veronica Rappoport, Kim Ruhl

07 October 2015

http://voxeu.org/article/international-production-networks-and-intra-firm-trade-new-evidence

 

 

 

WHY DO FIRMS OWN PRODUCTION CHAINS?

Enghin Atalay
Ali Hortacsu
Chad Syverson

April 2012

Click to access w18020.pdf

 

 

 

Vertical Integration and Input Flows

Enghin Atalay

Ali Hortaçsu

Chad Syverson

August, 2013

Click to access verticalownership.pdf

Click to access viplantevidence.pdf

 

 

Outsourcing versus Vertical Integration: A Dynamic Model of Industry Equilibrium.

Román Fossati

March 2014

Click to access 1March2014-RomanFossati.pdf

 

 

Production Networks, Geography and Firm Performance

Andrew B. Bernardy

Andreas Moxnesz

Yukiko U. Saitox

This Version: May 2014 –

Click to access MOXNES%20-%20j_network_ERWIT4.pdf

 

 

 

 

Vertical Integration and Firm Boundaries: The Evidence

FRANCINE LAFONTAINE AND MARGARET SLADE

2007

Click to access Lafontaine_Slade%20-%20Vertical%20integration%20and%20firm%20boundaries.pdf

 

 

 

 

Foreign affiliates with and without intra-firm trade:
Evidence from sub-Saharan Africa

Sotiris Blanas

Adnan Seric

Click to access WP_13.pdf

 

 

 

Outsourcing, Vertical Integration, and Cost Reduction

Simon Loertscher†

Michael H. Riordan‡

September 8, 2014

Click to access Loertscher_Outsourcing.pdf

 

 

 

VERTICAL PRODUCTION NETWORKS IN MULTINATIONAL FIRMS

Gordon H. Hanson
Raymond J. Mataloni, Jr.
Matthew J. Slaughter

May 2003

Click to access w9723.pdf

 

 

Network structure of production

Enghin Atalaya, Ali Hortaçsua,1, James Robertsb, and Chad Syversonc

Edited by Lars Peter Hansen, University of Chicago, Chicago, IL, and approved February 2, 2011 (received for review October 15, 2010)

Click to access pnas.201015564.pdf

 

 

 

Cross-border Vertical Integration and Intra-firm Trade:
New evidence from Korean and Japanese firm-level data

Hyunbae CHUN

Jung HUR

Young Gak KIM

Hyeog Ug KWON

Click to access 17e049.pdf

Click to access chun_aep_2017.pdf

 

 

 

Offshoring in the Global Economy
Lecture 1: Microeconomic Structure
Lecture 2: Macroeconomic Implications

Robert C. Feenstra

September 2008
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.294.715&rep=rep1&type=pdf

 

 

 

THE NETWORK STRUCTURE OF INTERNATIONAL TRADE

Thomas Chaney

January 2011

Click to access w16753.pdf

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

FDI vs Outsourcing: Extending Boundaries or Extending Network Chains of Firms

 

Foreign Direct Investments of Firms can have three objectives:

  • Vertical Integration (Control of Supply Chain)
  • Horizontal Integration (Seeking Market Share)
  • Diversification ( Market Seeking)

In this post, Focus is on Sourcing of Goods and Services in FDI and Outsourcing Decisions of Firms.  That means focusing on supply chain related issues.

 

From GLOBAL SOURCING

A fi…rm that chooses to keep the production of an intermediate input within its boundaries can produce it at home or in a foreign country. When it keeps it at home, it engages in standard vertical integration. And when it makes it abroad, it engages in foreign direct investment (FDI) and intra-…firm trade. Alternatively, a …firm may choose to outsource an input in the home country or in a foreign country. When it buys the input at home, it engages in domestic outsourcing. And when it buys it abroad, it engages in foreign outsourcing, or arm’s-length trade.

Intel Corporation provides an example of the FDI strategy; it assembles most of its microchips in wholly-owned subsidiaries in China, Costa Rica, Malaysia, and the Philippines. On the other hand, Nike provides an example of the arm’s-length import strategy; it subcontracts most of its manufacturing to independent producers in Thailand, Indonesia, Cambodia, and Vietnam.

 

 

Intermediate Goods – Make vs.  Buy Decisions of Firms

 

Outsourcing2

 

From Integration of Trade and Disintegration of Production in the Global Economy

 

The rising integration of world markets has brought with it a disintegration of the production process, in which manufacturing or services activities done abroad are combined with those performed at home. Companies are now finding it profitable to outsource increasing amounts of the production process, a process which can happen either domestically or abroad. This represents a breakdown in the vertically-integrated mode of production – the so-called “Fordist” production, exemplified by the automobile industry – on which American manufacturing was built. A number of prominent researchers have referred to the importance of the idea that production occurs internationally: Bhagwati and Dehejia (1994) call this “kaleidoscope comparative advantage,” as firms shift location quickly; Krugman (1996) uses the phrase “slicing the value chain”; Leamer (1996) prefers “delocalization;” while Antweiler and Trefler (1997) introduce “intra-mediate trade.” There is no single measure that captures the full range of these activities, but I shall compare several different measures of foreign outsourcing, and argue that they have all increased since the 1970s.

 

Types of Supply Chain Relations:

  • Intra-firm Trade of MNCs
  • Foreign Outsourcing
  • Domestic Outsourcing
  • Vertical Integration

 

Key Terms:

  • Production Sharing
  • Vertical Integration
  • Fragmentation of Production
  • Global Value Chains
  • Outsourcing
  • Delocalization
  • Intermediate Goods Trade
  • FDI
  • Domestic Outsourcing
  • Production Offshoring
  • Onshoring
  • Economic Globalization
  • Value Added Tasks
  • Intra-firm Trade
  • Multinational Firms
  • Vertical Specialization
  • Vertical Disintegration
  • Transaction Cost Economics
  • Trade in Value Added Tasks
  • Vertical Production Networks
  • Production Unbundling

 

Key Sources of Research:

PHYSICAL CAPITAL, KNOWLEDGE CAPITAL AND THE CHOICE BETWEEN FDI AND OUTSOURCING

Yongmin Chen
Ignatius J. Horstmann
James R. Markusen

Working Paper 14515
http://www.nber.org/papers/w14515

December 2008

Click to access w14515.pdf

 

 

OUTSOURCING VERSUS FDI IN INDUSTRY EQUILIBRIUM

Gene M.Grossman
Elhanan Helpman

Working Paper 9300
http://www.nber.org/papers/w9300

October 2002

Click to access w9300.pdf

 

 

GLOBAL SOURCING

Pol Antràs
Elhanan Helpman

Working Paper 10082
http://www.nber.org/papers/w10082

November 2003

Click to access w10082.pdf

 

 

OUTSOURCING IN A GLOBAL ECONOMY

Gene M. Grossman
Elhanan Helpman

Working Paper 8728
http://www.nber.org/papers/w8728

January 2002

Click to access w8728.pdf

 

 

 

Globalization, Outsourcing, and Wage Inequality

Robert C. Feenstra

Gordon H. Hanson

January 1996

Click to access w5424.pdf

 

Global Production Sharing and Rising Inequality:  A Survey of Trade and wages

Robert C. Feenstra

Gordon H. Hanson

2001

Click to access w8372.pdf

 

 

TRADE, FDI, AND THE ORGANIZATION OF FIRMS

Elhanan Helpman

Working Paper 12091
http://www.nber.org/papers/w12091

March 2006

Click to access w12091.pdf

 

 

 

HOME AND HOST COUNTRY EFFECTS OF FDI

Robert E. Lipsey

Working Paper 9293
http://www.nber.org/papers/w9293

October 2002

Click to access w9293.pdf

 

 

Chapter Title: Introduction to “Foreign Direct Investment”

Chapter Author: Kenneth A. Froot
Chapter URL: http://www.nber.org/chapters/c6531

1992

Click to access c6531.pdf

 

Chapter Title: Where Are the Multinationals Headed?

Chapter Author: Raymond Vernon
Chapter URL: http://www.nber.org/chapters/c6534

1992

Click to access c6534.pdf

 

 

 

Determinants of Foreign Direct Investment: A Sectoral and Institutional
Approach

James P. Walsh and Jiangyan Yu

2010

Click to access wp10187.pdf

 

 

 

DETERMINANTS OF FOREIGN DIRECT INVESTMENT

Bruce A. Blonigen
Jeremy Piger

Working Paper 16704
http://www.nber.org/papers/w16704

January 2011

Click to access w16704.pdf

 

 

 

Determinants of Foreign Direct Investment in Developing Countries: A Comparative Analysis

Khondoker Abdul Mottaleba
Kaliappa Kalirajanb

2010

Click to access WP2010_13.pdf

 

 

 

Determinants of Foreign Direct Investment

Bruce A. Blonigen

Jeremy Piger

 

2014

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2535582

 

Trends and Determinants of Foreign Direct Investment in South Asia

World Bank

2013

Click to access ACS48460WP0P13055B00PUBLIC00A9RBBB1.pdf

 

 

Determinants of Foreign Direct Investment (FDI)

Yi Feng
Publication Date: Jun 2017

http://politics.oxfordre.com/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-559

http://politics.oxfordre.com/view/10.1093/acrefore/9780190228637.001.0001/acrefore-9780190228637-e-559?print=pdf

 

 

 

Foreign direct investment (FDI)

Click to access s4IP1_8736.pdf

 

 

 

Foreign Direct Investment and the Multinational Enterprise: An Introduction

Steven Brakman and Harry Garretsen

2008

Click to access 9780262026451_sch_0001.pdf

 

 

 

AN EXTENSIVE EXPLORATION OF THEORIES OF FOREIGN DIRECT INVESTMENT

Patricia Lindelwa Makoni

Click to access 10-22495_rgcv5i2c1art1.pdf

 

 

 

A selective review of foreign direct investment theories.

Nayak, Dinkar and Rahul N. Choudhury (2014).

ARTNeT Working Paper Series No. 143, March 2014,

Click to access 782793517.pdf

 

 

Integration of Trade and Disintegration of Production in the Global Economy

Robert C. Feenstra

Revised, April 1998

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.39.7178&rep=rep1&type=pdf

 

 

 

The Distributional Effects of International Fragmentation,

Kohler, Wilhelm (2002)

Working Paper, Department of Economics, Johannes Kepler University of Linz, No. 0201

 

Click to access wp0201.pdf

 

 

 

International Fragmentation of Production and the Intrafirm Trade of U.S. Multinational Companies

Maria Borga and William J. Zeile
WP2004-02
January 22, 2004

Paper presented at:

The National Bureau of Economic Research/Conference on Research in Income and Wealth meeting on Firm-level Data, Trade, and Foreign Direct Investment, Cambridge, Massachusetts
August 7-8, 2003,
and
The OECD Committee on Industry and Business Environment/Working Party on Statistics
Session on Globalization,
Paris, France
November 3-4, 2003.

Click to access intrafirmtradejanuary04.pdf

 

 

The governance of global value chains

Gary Gereffi
John Humphrey
Timothy Sturgeon
2005

Click to access GVC_Governance.pdf

 

The economic consequences of increased protectionism

Riksbank of Sweden

2017

Click to access ppr_fordjupning_3_170427_eng.pdf

 

 

 

Deep integration and production networks: an empirical analysis

Gianluca Orefice
Nadia Rocha
World Trade Organization
Manuscript date: July 2011

Click to access ersd201111_e.pdf

 

 

 

Measuring success in the global economy: international trade, industrial
upgrading, and business function outsourcing in global value chains

Timothy J. Sturgeon and Gary Gereffi

Click to access diaeiia200910a1_en.pdf

 

 

 

Topics in International Trade

Reading list

Click to access readings-topics09.pdf

 

 

 

FOREIGN DIRECT INVESTMENT, TRADE, AND GLOBAL PRODUCTION NETWORKS
IN ASIA AND EUROPE

GPN Working Paper 2
October 2002

Click to access gpnwp2.pdf

 

 

Why has world trade grown faster than world output?

Mark Dean

Maria Sebastia-Barriel

Click to access Other_Paper_1.pdf

 

 

Vertical Specialization, Global Value Chains and the changing Geography of Trade: the Portuguese Rubber and Plastics Industry Case

João Carlos Lopes and Ana Santos

Click to access wp122015.pdf

 

 

The changing structure of trade linked to global production systems: What are the policy implications?

William MILBERG

 

Click to access Changing-Structure-of-Trade-Linked-to-Global-Production-Systems.pdf

 

 

WHO PRODUCES FOR WHOM IN THE WORLD ECONOMY?

Guillaume Daudin (Lille-I (EQUIPPE) & Sciences Po (OFCE), Christine Rifflart, Danielle
Schweisguth (Sciences Po (OFCE))1

This version: July 2009

Click to access WP2009-18.pdf

 

THE NATURE AND GROWTH OF VERTICAL SPECIALIZATION IN WORLD TRADE

David Hummels
Jun Ishii
Kei-Mu Yi
March 1999

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.475.3874&rep=rep1&type=pdf

 

Click to access sr72.pdf

 

 

Expansion Strategies of U.S. Multinational Firms

Gordon H. Hanson, Raymond J. Mataloni, and Matthew J. Slaughter

WP2001-01
May 10-11, 2001

Paper presented at:

The Brookings Trade Forum 2001, Washington, D.C.
May 10-11, 2001

Click to access HMS1.PDF

 

 

INTERNATIONAL JOINT VENTURES AND THE BOUNDARIES OF THE FIRM

Mihir A. Desai C. Fritz Foley James R. Hines Jr.

Working Paper 9115 http://www.nber.org/papers/w9115
August 2002

 

Click to access 000000005694_01.PDF

 

 

 

The Globalization of Production

Gordon H. Hanson

 

http://www.nber.org/reporter/spring01/hanson.html

 

 

 

The Politics of Transnational Production Systems A Political Economy Perspective

Helge Hveem
Department of Political Science
University of Oslo

Click to access hveem.pdf

 

 The Architecture of Globalization: A Network Approach to International Economic Integration.

Raja Kali and Javier Reyes

Second Revision: October 9, 2006

Click to access TradeNetwork.pdf

 

 

 

 

 

Paris School of Economics – Summer School on Trade

2017

Click to access trade-sumschool-pse-2017.pdf

 

 

Spain in the global value chains

2017

Click to access beaa1703-art20e.pdf

 

 

 An Outsourcing Bibliography

Foreign Policy magazine

2004

An outsourcing bibliography

 

 

 

OFFSHORING, FOREIGN DIRECT INVESTMENT, AND THE STRUCTURE OF U.S. TRADE

2006

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.564.6639&rep=rep1&type=pdf

 

 

 A Survey of Literature on Research of Intra-firm Trade

WANG Li, SHEN Rui

Click to access 2013jrgjgc311b13.pdf

 

 

Global Value Chains

OECD, WTO and World Bank Group
Report prepared for submission to the G20 Trade Ministers Meeting Sydney, Australia, 19 July 2014

Click to access gvc_report_g20_july_2014.pdf

 

 

 

TRADE IN INTERMEDIATE GOODS AND SERVICES

OECD Trade Policy Working Paper No. 93
by Sébastien Miroudot, Rainer Lanz and Alexandros Ragoussis

Click to access 44056524.pdf

 

 

The Boundaries of Multinational Enterprises and the Theory of International Trade

James R. Markusen

 

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.551.4665&rep=rep1&type=pdf

 

 

Incomplete Contracts and the Boundaries of the Multinational Firm

Nathan Nunn

Daniel Trefler

June 2008

Click to access NunnTreflerPaper.pdf

 

 

The Theory of the Firm goes Global

Dalia Marin

2008

Click to access 370.pdf