Final Product Demand Research Articles

From a Spoke to a Hub: The Case of South Korea

A few East Asian newly industrialized countries that used to belong to the Global South not only have joined the Global North but also have organized their own production chains in specific industries. Given the imperialist and exploitative nature of global production chains established by the Global North, it should be questioned whether the production chains organized by the East Asian newly industrialized countries are free from the innate nature of production chains. This article adopts a multiregional input-output analysis to examine the bilateral trade relationship between Korea and Vietnam. It finds that the Korean economy has unequally captured the benefits from the bilateral trade with Vietnam in terms of the domestic value-added share and the spillover effect derived from the final demand for Vietnamese products in the textile and electronics industries. JEL Classification: F62, F63

Sectoral impacts of climate change in Iran: A dynamic analysis with emphasis on agriculture

Iranian agriculture, the largest consumer of water, is highly vulnerable to sever climate change-induced droughts. This study aimed to analyze the impact of climate change on various sectors, with a focus on agricultural output and gross domestic product (GDP). To achieve this, a dynamic Computable General Equilibrium (CGE) model incorporating a climate damage function was utilized to project the consequences of climate change on various sectors of Iran's economy. The damage function is based on the temperature anomaly. This study simulated the impact of shocks caused by climate scenarios by 2060. The modified Social Accounting Matrix served as the primary dataset for CGE modeling. By simulating climate scenarios up to 2060, the findings indicated that certain agricultural products, such as cereals and livestock, have the potential for an annual output expansion of 2–3.5 % under the most severe climatic scenarios. This expansion is attributed to their lower reliance on capital inputs and their increased final demand for agricultural commodities. Conversely, the growth rates of output expansion and final demand for services products are lower than those for agricultural products. With climate change options, there may be a shift in output composition, favoring crops, agricultural industries, and energy products, while the growth of services output remains comparatively lower. The GDP growth path also deviates from the current path of 1.8 %, reaching rates of 1.5–1.7 %. In the most restrictive scenario, the GDP is projected to decline in the mid-2050s. Similarly, the range for consumption growth is estimated to be 1.8–2.1 %. Climate change does not significantly alter the income distribution within rural and urban income groups. However, it exacerbates rural-urban inequality by favoring urban households with higher consumption levels. The current state of the Iranian economy, especially the agricultural sector, faces increased vulnerability due to climate change. Nevertheless, certain agricultural activities may experience a relatively greater increase in output because of the growing demand for these products.

Forced labour in the fashion industry: a hypothetical EU-driven reorganisation of textile value chains

Given recent breakdowns in global value chains, like the COVID-19 crisis or the conflict in Ukraine, developed economies are trying to develop resilience to address future drawbacks. Backshoring and nearshoring arise as attractive solutions to reduce exposure to global disruptions and undesirable practices such as forced labour. This study analyses the labour impacts of a hypothetical EU-driven reconfiguration of value chains of the fashion industry through a multi-regional input-output model. Using the Structural Path Analysis methodology, how forced labour is transmitted within Europe is explored. Once the forced labour hotspots are determined, we explore the socioeconomic consequences of a trade-restructuring strategy simulated through the source-shifting technique. Our results show that the forced labour embodied in the European final demand for fashion products could fall by up to 34.2%. This strategy could generate more than 190,000 jobs in Europe, while China and India could lose more than 1.5 million jobs each.

Supplier encroachment and pricing scheme choice in a supply chain with two-sided uncertainties

ABSTRACT This paper examines supplier encroachment in a scenario where the supplier procures an input in spot and processes it into a final product, while the retailer chooses between contingent and committed pricing schemes for the contract price. We find that when the correlation between the input spot price and final product demand is relatively small, it is optimal for the retailer to adopt the contingent pricing scheme regardless of the supplier's encroachment decision. This is because this scheme enables the supplier to share the input price risk, resulting in a lower contract price. Furthermore, the likelihood of the retailer adopting the contingent pricing scheme increases as demand variability decreases or spot price volatility increases. However, supplier encroachment reduces the retailer's inclination to use the contingent pricing scheme. We further demonstrate that the supplier should encroach when the correlation is sufficiently small, because encroachment alleviates double marginalisation in the retail channel and brings the additional responsiveness in the direct channel. By contrast, a large correlation compels the supplier to encroach even with a sufficiently small market size. In this case, encroachment improves the responsiveness of both retail and direct selling quantities and enables the quantities to match the demand better.

Tracing the multiregional evolution of the global dysprosium demand-supply chain

Dysprosium (Dy) is a critical rare earth element, indispensable for realizing low-carbon technologies. A holistic understanding of global Dy supply-demand chains is essential for ensuring its future sustainable supply and use. This study conducts the first multiregional analysis of Dy flows and stocks to comprehensively trace the global Dy cycle from 1988 to 2021. Results show a rising demand for Dy-comprising intermediate and final products with complex trade fluctuations since 2000. In total, 22,009 tons of intermediate products, primarily as neodymium-based permanent magnets (NdFeB), accumulatively entered the global manufacturing phase, of which China accounted for approximately 55%. Dy use was notable in the United States and Japan for internal combustion engine (ICE) vehicles manufacturing and for industrial machinery production in the European Union. Less than 3% of globally mined Dy was recycled. Considering the growing global demand for Dy, alternate supply sources, and regional efforts to promote recycling and circular economy strategies are required.

A two-stage stochastic model for an industrial symbiosis network under uncertain demand

Industrial Symbiosis (IS) networks are structures built by volunteer companies with the aim of exchanging unused or residual resources, benefiting all participating companies. The profitability of these volunteer companies is critical as it affects the sustainability of these networks. Fluctuations in a participating company's production level can potentially disrupt its network by altering the quantity and availability of wastes and by-products. In light of these considerations, we analyse the impact of fluctuations in demand for final products of the companies on company profitability, and waste and by-product usage. For this purpose, we formulated a two-stage stochastic programming model and solved it using the Sample Average Approximation (SAA) method. We tested our model on a theoretical IS network comprising companies in the forest products industry. The results demonstrate that companies in the network keep exchanging by-products and remain profitable despite uncertainties in demand. Consequently, we conclude that the established network exhibits resilience to demand fluctuations, which is an important aspect of its sustainability.

Chipping in: Critical minerals for semiconductor manufacturing in the U.S.

In recent light of strained supply chains and global geopolitical tension, the U.S. is making significant investments to establish semiconductor manufacturing capacity and domestic supply chains for critical mineral resources to reduce dependence on other countries. Semiconductor-related critical minerals have become increasingly important considering the rise in demand for final products using semiconductor chips. The CHIPS and Science Act, passed in 2022, serves as the largest U.S. policy mechanism to expand investment in this field and enhance domestic semiconductor manufacturing capacity. This review outlines the critical mineral resources required for semiconductors, their origin, and the degree of dependency the U.S. faces across semiconductor supply chains and manufacturing. In the long term, more comprehensive policy, coupled with significant investment to ramp up domestic critical mineral mining and recovery, could enable the U.S. to establish a stable domestic supply to better support semiconductor manufacturing.

The impact of Japanese nuclear wastewater discharge into the sea on the global economy: Input-output model approach

As the division of work within the world economic system becomes increasingly complex, the impact of disturbing events on the economic system is expanding. Recently, Japan proposed to discharge nuclear wastewater into the Pacific Ocean, which will cause damage to marine fisheries, thereby seriously affecting fisheries and other industries in Japan and other countries and regions around the world. Considering different scenarios of final and intermediate demand shifting, this paper uses the Inoperability Input-Output Model (IIM) and Multi-Region Input-Output Model (MRIO) to simulate the economic consequences of nuclear wastewater discharge in Japan and calculate the economic changes of each industry and country (region). The results show that: In the short term, when only the final demand for Japanese fishery products decreases. (1) The ten countries (regions) with significant economic losses are Japan, the United States, Chinese Taipei, Canada, Chile, South Africa, Mexico, Peru, the United Kingdom, and Ireland. (2) The ten countries (regions) with a significant increase in total output due to demand shift are China (People's Republic of), the Rest of the World, India, Indonesia, Viet Nam, the Philippines, Brazil, Myanmar, the Russian Federation, and Malaysia. (3) A ranking of changes in the total output of different industries. In the long term, when both intermediate and final demand for Japanese fishery products decrease. (4) The change in value added in Japan. (5) The change in value added of 67 countries (regions) worldwide. The ten countries (regions) with the most significant increase in value-added are the Russian Federation, China (People's Republic of), the Rest of the World, the United States, Indonesia, Australia, Norway, Korea, Viet Nam, and Myanmar. The ten countries (regions) with the most significant decrease in value-added are Japan, Chinese Taipei, Chile, South Africa, Peru, Thailand, Mexico, Cambodia, Costa Rica, and Morocco. Changes in value added of 45 industrial sectors worldwide.

OVERVIEW OF THE GLOBAL TUNGSTEN MARKET. PART 2. COMMODITY FLOWS OF RAW TUNGSTEN PRODUCTS

Link for citation: Boyarko G.Yu. Overview of the global tungsten market. Part 2. Commodity flows of raw tungsten products. Bulletin of the Tomsk Polytechnic University. Geo Аssets Engineering, 2023, vol. 334, no. 5, рр.37-53. In Rus. The relevance of the work is caused by the need to study the problems of quite volatile world market of tungsten raw materials. Objective: to study the dynamics of global commodity flows (production, import, export, consumption) of raw tungsten products (tungsten ores and concentrates, ammonium paratungstate, tungsten waste and scrap); to assess the criticality of the world market of raw tungsten products. Methods: statistical, graphical, logical. Results. The raw tungsten product global market is very complex. The world production of primary tungsten raw materials increased from 4 to 7 kt 100 % W/year in 1913–1915, from 75 to 90 kt 100 % W/year in 2011–2020 with a growth rate of +2,9 %/year. Utilization of secondary tungsten raw materials in the world increased from 2–3 kt 100 % W/year in 1970s to 14–23 kt 100 % W/year in 2008–2020 with an increase rate of +4,3 %/year. The share of global utilization of tungsten waste from the amount of primary and secondary tungsten raw materials increased from 5–6 % in 1970s to 21 % in 2019. In 1970–1980, there was a period of usual low-growth global consumption of tungsten products with the growth rate of tungsten raw materials demand for +3,4 %/year. There was a strong decrease in demand for tungsten products (–6,9 %/year) in the military sphere (the end of the Cold War) and priority shift in the trade of tungsten raw material comodities (increase in the role of ammonium paravolframate trade), reducing the role of Russia in the tungsten market (the consequences of the stagnation of the Russian economy, primarily metalworking) in the 1990s. In the 2000–2010s, there was a rapid growth in global demand for final tungsten commodity products and, accordingly, global demand and supply of tungsten raw materials, with an increase in demand of +6,4 %/year. At the same time, there is a trend of decreasing share in world trade in tungsten raw materials from the amount of extracted primary and recycled secondary raw materials by volume and cost, respectively, 39 and 47 % in 1970 to 21 and 27 % in 2020. The share of raw materials in world trade in tungsten products decreased from 70–80 % by volume and 60–70 % of the cost in 1970–1980s, respectively, up to 42–55 and 15–20 % in the 2010s. China dominates in the global production, processing and consumption of raw tungsten products, therefore, its trade policy to restrain (quota) exports of these goods determines the dynamics of the world market of tungsten raw materials. In international trade, China has changed the strategy of exporting raw materials to importing them, while becoming the leader in importing tungsten concentrates. Other industrialized countries – consumers of tungsten raw materials – the USA, Germany, Britain, France, Japan and South Korea – have become critically dependent on tungsten raw material imports (the share of imports is over 50 % of consumption) and will remain so in the foreseeable future.

Quality competition and worker training

AbstractWe examine the relationship between firm‐sponsored training and product quality competition within a model of worker–firm bargaining. We develop a quality‐adjusted monopolistically competitive setting in which firms invest in training to an extent that reflects: (i) the costs of training, (ii) the extent to which training increases product quality, and (iii) the extent to which product quality increases final product demand. We identify the conditions under which greater sensitivity between product demand and quality results in greater firm‐sponsored training.

Регионализация элементов национальных таблиц «затраты – выпуск»: сравнительная апробация подходов (на примере Хабаровского края)

Using the non-survey regionalization methods of national input-output tables (the method of location quotients of Flegg – Webber and the Kronenberg’s Cross-Hauling Adjusted Regionalization Method), a quantitative analysis of the multipliers of intersectoral interactions in the economy of the Khabarovsk Territory was carried out. In particular, estimates of total cost coefficients in the intersectoral balance model of the region, quantitatively identifying the impact of intersectoral relations in case of changes in demand for final products on gross outputs of types of economic activity in 2014, were obtained. It is revealed that all the values of the multipliers for the region are less than the corresponding values in the whole of the Russian Federation. At the same time, the estimates obtained using the Kronenberg’s method are close to the national ones, while the values of the multipliers calculated using the Flegg – Webber method (for non-specialized activities) are close to the unit value, which means that there are no multiplier effects. Structural differences between the national and regional economies necessitated the refinement of the estimates obtained for the subject of the Russian Federation. In connection with the latter circumstance, the authors performed a hybridization of the Kronenberg’s method, involving the use of actual statistical data on the total (interregional and international) import and export of the Khabarovsk Territory. Expert verification of the final estimates showed their relatively greater realism

Оценка мультипликативных эффектов в экономике Дальневосточного федерального округа: межотраслевое моделирование

For the Far Eastern constituent entities of the Russian Federation, using the Kronenberg’s Cross-Hauling Adjusted Regionalization Method (CHARM) and its subsequent hybridization, which consists of taking into account the available actual statistical data on foreign trade of the regions, regionalization of national input-output tables for 2019, 2020 was carried out. Estimates were obtained and a decrease in the values of output multipliers was identified for all Far Eastern constituent entities of the Russian Federation in 2020, generated by changes in the aggregate final demand for products of specialized industries (with the exception of the production of vehicles and equipment in the Khabarovsk Territory). The largest reductions in multipliers were recorded for the production of coke and petroleum products (Khabarovsk Territory) and fishing and fish farming (Khabarovsk and Primorsky Territories, Sakhalin Region) and were determined by a decrease in consumer demand for fuel and shifts in the structure of intermediate consumption in the fishing industry. Comparable estimates of the dynamics of multiplier effects generated by changes in the volume of final demand for products of specialized industries in the Far Eastern regions were obtained. It is shown that the maximum increase in output in 2019 and 2020 was provided by the food industry of the Primorsky Territory

Online peer-to-peer lending platform and supply chain finance decisions and strategies

Online peer-to-peer (P2P) lending platform is an emerging FinTech business model that establishes a link between investors and recipients of capital in supply chains (SCs). Businesses face capital constraints impacting directly on their final product price and demand. This article studies optimal decisions and operational strategies in a logistics network considering two capital-constrained manufacturers who produce products of different qualities and sell them to a retailer having deterministic demand over a specific period. The high quality product manufacturer borrows capital through an online P2P lending platform with a service fee, while the low quality product manufacturer pre-sells products for competing with the high quality product manufacturer. In this study, we find optimal prices of the SC participants, service rate of the online P2P platform and percentage of the pre-ordering quantity of the retailer. We analyse optimal Stackelberg and Nash equilibrium of the SC participants. We find that an increase in the amount of opportunity cost will cause a decrease in the pre-ordering quantity of the retailer affecting the SC profit in numerous ways. The online P2P lending platform should consider the amount of the retailer’s target profit in determining the platform’s service rate. We posit some practical insights based on our numerical study and observations for SC managers enabling them to take appropriate measures about their optimal strategies according to the networks’ existing economic conditions.

Embodied Carbon Emissions and Regional Transfer Characteristics—Evidence from China

China has a considerable impact on climate change, as it is the world’s largest developing country. Its carbon emissions are also a global concern. This research employed a multi-region input–output model to estimate the local emission effect and the regional spillover effect caused by the demand for intermediate and final products, to analyze the interregional flow of carbon emissions, and to identify the main industries causing domestic carbon emissions in China from 2007 to 2012. A structural path analysis model was used to evaluate the contribution of different factors and demand types to changes in carbon emissions. The following findings were obtained in this study: (1) The regional spillover effect of carbon emissions driven by domestic demand is characterized by inland provinces’ demand leading to emissions in coastal provinces. (2) Electricity, nonmetallic minerals, and metals are the key industries for carbon emissions. (3) The results of the SDA indicate that the scale effect is the main driving force for the growth in carbon emissions caused by domestic demand in China. Fixed capital formation is the most critical demand factor influencing carbon emissions. This study provides new insights into the characteristics of regional emission transfer in China. The conclusion of this paper is helpful to China in achieving carbon peak and carbon neutrality.

Digital plant: methods of discrete-event modeling and optimization of production characteristics

This article presents a new approach to the development of a ‘digital twin’ of a manufacturing enterprise, using a television manufacturing plant as the case study. The feature of the proposed approach is the use of hybrid methods of agent-based modeling and discrete-event simulation in order to implement a simulation model of a complex production process for assembling final products from supplied components. The most important requirement for such a system is the integration of all key chains of a digital plant: conveyor lines, warehouses with components and final products (TVs), sorting and conveyor system, assembly unit, technical control department, packing unit, etc. The proposed simulation model is implemented in the AnyLogic system, which supports the possibility of using agent-based and discrete-event modeling methods within one model. The system also supports using the built-in genetic algorithm to optimize the main parameters of the model: the most important production characteristics (for example, assembly time of a product, the number of employees involved in assembly, quality control and packaging processes). Optimization experiments were completed with the help of the developed model at various intensities of loading conveyor lines with components, various restrictions on labor resources, etc. Three scenarios of the production system behavior are investigated: the absence of the components deficit with the possibility of significantly increasing the labor resource involved, a components deficit while demand for final products is maintained, and the presence of hard restrictions on the number of employees who can be involved in the processes under conditions of components deficit.

Global environmental and socio‐economic impacts of a transition to a circular economy in metal and electrical products: A Dutch case study

Shifting from a linear to a circular economy could decouple environmental footprints from an ever growing global GDP. As footprints are increasingly driven by international trade, such a shift in a national economy would have global implications. In this study, we explore the global environmental and socio‐economic impacts of hypothetical circular policy interventions affecting the consumption of metal and electrical products in the Netherlands. We use environmentally extended multi regional input‐output analysis and use repair activities as a proxy to model other circularity activities. Compared with a business‐as‐usual scenario of final demand for metal and electrical products in the Netherlands, we find that the considered interventions yield a decrease in global environmental and socio‐economic impacts (average change −7%), and an increase in domestic employment (+13%) and value added (+2%), as well as a modest increase in most domestic environmental impacts (+1% on average). We explore whether these interventions would lead to resource decoupling (i.e., both economic activity and its associated environmental impacts grow, but the former more strongly than the latter) and/or impact decoupling (i.e., economic activity grows and impacts decrease). Domestically we observe resource decoupling while globally both environmental impacts and economic activity are reduced. Our findings thus challenge the assumption that the implantation of circular economy policies will lead to global resource decoupling, instead suggesting that the social and economic benefits of a circular transition are unequally distributed across regions. This article met the requirements for a gold‐gold JIE data openness badge described at http://jie.click/badges.

Trade decomposition of CO2 emissions of global construction industries

PurposeThis paper aims to clarify the CO2 emissions of global construction industries under the consideration of different patterns of international trade and thus to draw a comprehensive picture for understanding the international paths of CO2 transfer to global construction industries.Design/methodology/approachThis research inventories the CO2 emissions induced by the final demand of 15 economies for construction products and explores the CO2 intensities of these economies based on a multi-regional input–output model. This paper further decomposes CO2 emissions into four components based on different patterns of international trade to estimate the roles of four patterns of international trade in shaping the environmental pressures from global construction industries.FindingsThe results indicate that the CO2 intensities of the construction industries in Russia, India and China were higher than those in other economies, and the CO2 intensities of global construction industries experienced a decline over the years 2000–2014. The decomposition analysis demonstrates that domestic and foreign CO2 emissions accounted for 42.67 and 54.23%, respectively, of the CO2 emissions of the construction industries in the 15 economies during the period 2000–2007. Although the major part of the CO2 emissions of the construction industries come from domestic production systems, the final demand for construction products in the 15 economies caused substantial emissions in other economies. Further decomposition by upstream industrial production source indicates that 58.65% of domestic emissions and 66.53% of foreign emissions can be traced back to the electricity industry.Research limitations/implicationsAlthough the major patterns of CO2 emissions of the construction industry have been identified in this paper, the difficulty of understanding the relationship between upstream production industries or countries and the construction industry deserves more attention in the future research.Originality/valuePrevious research on inventorying CO2 emissions has generally been limited to evaluating the impact of industrial consumption activities on national or global emission accounting, tending to ignore the effects of different international trade patterns on the change in industrial CO2 emissions. This research is the first attempt to account for and decompose the CO2 emissions of global construction industries under consideration of the effects of different patterns of international trade on environmental pressures. The decomposition and upstream industrial distributions of different patterns of CO2 emission provide a comprehensive picture for better understanding of the emission pattern and source of the CO2 emissions of global construction industries. The research outcomes reveal how the final demand of a country for construction products induces CO2 emissions in both domestic and foreign systems, thus providing basic information and references for policy adjustment and strategy design in relation to mitigation of climate change and sustainable development.

Globalisation Impacts on Timber Consumption in Slovakia

Research background: Globalisation is nowadays phenomenon which affects all economic sectors. The pros and cons of globalisation can also be observed in the case of forestry and forest-based complex in Slovakia. Timber trade and market follows the theory of derived demand, which means that demand for wood depends on the demand for final products. We can observe a significant impact of globalisation on changes in the use of wood from traditional to new ecological and sustainable use. Since 1993 the consumption of industrial roundwood in Slovakia has increased by almost 185%. Purpose of the article: The aim of this study is to examine the impact of globalisation on the consumption of coniferous and non-coniferous industrial roundwood in Slovakia, and to determine the relationship between the consumption of industrial roundwood and trends of globalisation trends in Slovakia. Methods: The development of KOF globalization index was analysed in the period 2003 to 2018. In addition, the development of the consumption of coniferous and non-coniferous industrial roundwood was examined. The correlation analysis and linear regression were used to analyse the relationship between the KOF globalisation index and development of consumption of coniferous and non-coniferous industrial roundwood in Slovakia. Findings & Value added: The results of correlation analysis show statistically significant relationship between globalisation and the development of consumption of industrial roundwood in Slovakia. We can conclude that the development of globalisation has more significant impact on consumption of non-coniferous industrial roundwood than on consumption of coniferous industrial roundwood.

The integrated lot sizing and cutting stock problem in an automotive spring factory

In this paper, a manufacturer of automotive springs is studied in order to reduce inventory costs and losses in the steel bar cutting process. For that, a mathematical model is proposed considering parallel machines and operational constraints, besides the demand, inventory costs and limits for items and final products. This one-dimensional integrated lot sizing and cutting stock problem is solved by a price-and-branch approach, using column generation and a method for obtaining integer solutions. Results using real data show that the proposed method achieved, in reasonable computational time, considerably better solutions than current practice at the company. Furthermore, focused on managerial insights, tests with random data were performed to analyze the influence that different parameters have in the solution, as well as the overall performance of the method.

An Input–Output Analysis of Sectoral Specialization and Trade Integration of the Western Balkans Economies

The contribution of this paper is twofold. First, it uses the available official Input–Output data for the Western Balkans economies to estimate the output and value added multipliers of the sectors identified as being either current or emerging strengths within the context of Smart Specialisation. These multipliers indicate the potential impact of changes in final demand for certain products and sectors. This permits the identification of the industries associated with high indirect and induced effects, and to form ideas about the sectoral interdependencies of the economies. For instance, it appears that many sectors related to construction are promising in terms of economic potential related to demand-side monetary injections in Albania. Second, a Multi-Regional dataset is used to investigate the international integration of the Western Balkans economies in terms of participation in the Global Value Chains. The latter has increased over time in the region, but it appears that some economies are benefitting relatively more than others from it.