Template-Type: ReDIF-Paper 1.0
Author-Name: Se-Jik Kim
Author-X-Name-First: Se-Jik
Author-X-Name-Last: Kim
Author-Name: Hyun Song Shin
Author-X-Name-First: Hyun Song
Author-X-Name-Last: Shin
Title: Theory of supply chains: a working capital approach
Abstract: This paper presents a time-to-build theory of supply chains which implies a key role for the financing of working capital as a determinant of supply chain length. We apply our theory to global value chains (GVCs) and trade, where firms strike a balance between the productivity gain from longer GVCs against the greater financial cost due to longer supply chains. In equilibrium, we show the duality between GVC length and financial conditions, where more accommodative financial conditions are associated with longer GVCs.
Creation-Date: 2023-01
File-URL: https://www.bis.org/publ/work1070.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1070.htm
File-Format: text/html
Number: 1070
Keywords: global value chains, offshoring, trade finance
Classification-JEL: F23, F36, G15, G21, L23
Handle: RePEc:bis:biswps:1070