{
  "title": "Supply Chain Diversification and Resilience",
  "publication": "IMF Working Papers, May 23, 2025",
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  "summary": "This paper develops a new multi-country and multi-sector general equilibrium trade model to analyze extent to which the diversification of sources of imports mitigates the impact of adverse trade shocks.",
  "sections": [
    {
      "heading": "Model and approach",
      "content": "- Develops a new multi-country and multi-sector general equilibrium trade model to analyze the extent to which the diversification of sources of imports mitigates the impact of adverse trade shocks.\n- Model incorporates trade network rigidities arising from frictions in goods, labor, and local factor markets.\n- Emphasizes that countries cannot immediately reconfigure supply chains in response to shocks, creating a trade-off between resilience and efficiency."
    },
    {
      "heading": "Key findings",
      "content": "- Supply chain diversification can potentially improve resilience, at the cost of efficiency.\n- Quantifying the resilience-efficiency trade-off suggests that diversifying the sources of targeted imports can enhance expected welfare when the probability of a large trade shock is sufficiently high.\n- Targeted imports are characterized as:\n  - those more exposed to shocks,\n  - positioned upstream in the supply chain,\n  - and subject to greater rigidities."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Diversification policies should focus on targeted imports that are upstream, more exposed to shocks, and face greater market rigidities to maximize welfare gains relative to efficiency losses.\n- The welfare benefits of diversification depend on the probability of large trade shocks; higher probabilities increase the attractiveness of diversification despite efficiency costs."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Authors: JaeBin Ahn, Brandon Joel Tan\n- Date: May 23, 2025\n- Series: IMF Working Papers\n- Working Paper No.: 2025/102\n- Pages: 60\n- Volume: 2025\n- Issue: 102\n- DOI: https://doi.org/10.5089/9798229011419.001\n- Stock No: WPIEA2025102\n- ISBN: 9798229011419\n- ISSN: 1018-5941\n- Subjects: Economic theory, Imports, International trade, Labor, Labor mobility, Supply shocks, Tariffs, Taxes\n- Keywords: Caribbean, Diversification, diversification of source, equilibrium trade model, Global, Imports, Labor mobility, resilience-efficiency trade-off, supply chain diversification, Supply Chains, Supply shocks, Tariffs, Trade, trade network rigidity\n\nIMF Working Paper — \"Supply Chain Diversification and Resilience\" (Working Paper No. 2025/102) by JaeBin Ahn and Brandon Joel Tan, May 23, 2025.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/05/23/supply-chain-diversification-and-resilience-567065"
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    "Authors: JaeBin Ahn, Brandon Joel Tan",
    "Published: May 23, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229011419.001",
    "Develops a new multi-country and multi-sector general equilibrium trade model to analyze the extent to which the diversification of sources of imports mitigates the impact of adverse trade shocks.",
    "Model incorporates trade network rigidities arising from frictions in goods, labor, and local factor markets.",
    "Emphasizes that countries cannot immediately reconfigure supply chains in response to shocks, creating a trade-off between resilience and efficiency.",
    "Supply chain diversification can potentially improve resilience, at the cost of efficiency.",
    "Quantifying the resilience-efficiency trade-off suggests that diversifying the sources of targeted imports can enhance expected welfare when the probability of a large trade shock is sufficiently high.",
    "Targeted imports are characterized as:",
    "Diversification policies should focus on targeted imports that are upstream, more exposed to shocks, and face greater market rigidities to maximize welfare gains relative to efficiency losses.",
    "The welfare benefits of diversification depend on the probability of large trade shocks; higher probabilities increase the attractiveness of diversification despite efficiency costs.",
    "Authors: JaeBin Ahn, Brandon Joel Tan",
    "Date: May 23, 2025",
    "Series: IMF Working Papers",
    "Working Paper No.: 2025/102",
    "Pages: 60",
    "Volume: 2025",
    "Issue: 102",
    "DOI: https://doi.org/10.5089/9798229011419.001",
    "Stock No: WPIEA2025102",
    "ISBN: 9798229011419",
    "ISSN: 1018-5941",
    "Subjects: Economic theory, Imports, International trade, Labor, Labor mobility, Supply shocks, Tariffs, Taxes",
    "Keywords: Caribbean, Diversification, diversification of source, equilibrium trade model, Global, Imports, Labor mobility, resilience-efficiency trade-off, supply chain diversification, Supply Chains, Supply shocks, Tariffs, Trade, trade network rigidity",
    "**Working Paper**"
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