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Do economic effects of the anti-COVID-19 lockdowns in different regions interact through supply chains?

Author

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  • Hiroyasu Inoue
  • Yohsuke Murase
  • Yasuyuki Todo
Abstract
To prevent the spread of COVID-19, many cities, states, and countries have ‘locked down’, restricting economic activities in non-essential sectors. Such lockdowns have substantially shrunk production in most countries. This study examines how the economic effects of lockdowns in different regions interact through supply chains, which are a network of firms for production, by simulating an agent-based model of production using supply-chain data for 1.6 million firms in Japan. We further investigate how the complex network structure affects the interactions between lockdown regions, emphasising the role of upstreamness and loops by decomposing supply-chain flows into potential and circular flow components. We find that a region’s upstreamness, intensity of loops, and supplier substitutability in supply chains with other regions largely determine the economic effect of the lockdown in the region. In particular, when a region lifts its lockdown, its economic recovery substantially varies depending on whether it lifts the lockdown alone or together with another region closely linked through supply chains. These results indicate that the economic effect produced by exogenous shocks in a region can affect other regions and therefore this study proposes the need for inter-region policy coordination to reduce economic loss due to lockdowns.

Suggested Citation

  • Hiroyasu Inoue & Yohsuke Murase & Yasuyuki Todo, 2021. "Do economic effects of the anti-COVID-19 lockdowns in different regions interact through supply chains?," PLOS ONE, Public Library of Science, vol. 16(7), pages 1-19, July.
    • Handle: RePEc:plo:pone00:0255031
    DOI: 10.1371/journal.pone.0255031
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    4. Wang, Richard & Ye, Zhongnan & Lu, Miaojia & Hsu, Shu-Chien, 2022. "Understanding post-pandemic work-from-home behaviours and community level energy reduction via agent-based modelling," Applied Energy, Elsevier, vol. 322(C).
    5. Yasuyuki Todo & Keita Oikawa & Masahito Ambashi & Fukunari Kimura & Shujiro Urata, 2021. "Robustness and Resilience of Supply Chains During the COVID-19 Pandemic: Findings from a Questionnaire Survey on the Supply Chain Links of Firms in ASEAN and India," Working Papers DP-2021-40, Economic Research Institute for ASEAN and East Asia (ERIA).
    6. Eiji Yamamura & Youki Kosaka & Yoshiro Tsutsui & Fumio Ohtake, 2022. "Gender differences of the effect of vaccination on perceptions of COVID-19 and mental health in Japan," Papers 2203.07663, arXiv.org.
    7. Nan Li & Muzi Chen & Difang Huang, 2022. "How Do Logistics Disruptions Affect Rural Households? Evidence from COVID-19 in China," Sustainability, MDPI, vol. 15(1), pages 1-17, December.
    8. Snellman, Jan E. & Barrio, Rafael A. & Kaski, Kimmo K. & Käpylä, Maarit J., 2022. "Modelling the interplay between epidemics and regional socio-economics," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 604(C).
    9. Weili Yin & Wenxue Ran, 2023. "Explaining Firm Performance During the COVID-19 With fsQCA: The Role of Supply Network Complexity, Inventory Turns, and Geographic Dispersion," SAGE Open, , vol. 13(2), pages 21582440231, June.
    10. Ceriotti, C. & Della Torre, M. & Grassetti, F. & Marazzina, D., 2023. "Should I have closed? A multiplex network approach for the short-term economic effect of Covid-19 containment measures in the EU," Socio-Economic Planning Sciences, Elsevier, vol. 90(C).

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