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- Title
Inequality in economic shock exposures across the global firm-level supply network.
- Authors
Chakraborty, Abhijit; Reisch, Tobias; Diem, Christian; Astudillo-Estévez, Pablo; Thurner, Stefan
- Abstract
For centuries, national economies have been engaging in international trade and production. The resulting international supply networks not only increase wealth for countries, but also allow for economic shocks to propagate across borders. Using global, firm-level supply network data, we estimate a country's exposure to direct and indirect economic losses caused by the failure of a company in another country. We show the network of international systemic risk-flows. We find that rich countries expose poor countries stronger to systemic risk than vice-versa. The risk is highly concentrated, however, higher risk levels are not compensated with a risk premium in GDP levels, nor higher GDP growth. Our findings put the often praised benefits for developing countries from globalized production in a new light, by relating them to risks involved in the production processes. Exposure risks present a new dimension of global inequality that most affects the poor in supply shock crises. Thurner and colleagues explore how economic shocks spread risk through the globalized economy. They find that rich countries expose poor countries stronger to systemic risk than vice-versa. The risk is highly concentrated, however higher risk levels are not compensated with a risk premium in GDP levels, nor higher GDP growth. The findings put the often-praised benefits for developing countries from globalized production in a new light, by relating them to risks involved in the production processes
- Subjects
INCOME inequality; WEALTH inequality; ECONOMIC shock; RISK premiums; ECONOMIC forecasting; SYSTEMIC risk (Finance)
- Publication
Nature Communications, 2024, Vol 15, Issue 1, p1
- ISSN
2041-1723
- Publication type
Article
- DOI
10.1038/s41467-024-46126-w