The Economic Impact of Supply Chain Disruptions from the Great East Japan Earthquake

Author Name TOKUI Joji (Faculty Fellow, RIETI) / KAWASAKI Kazuyasu (Toyo University) / MIYAGAWA Tsutomu (Faculty Fellow, RIETI)
Creation Date/NO. July 2015 15-E-094
Research Project Regional-Level Japan Industrial Productivity Database: Database Refinement and Its Analysis
Download / Links


The Great East Japan Earthquake of March 11, 2011 had a serious negative economic impact on the Japanese economy. The earthquake substantially reduced production not only in regions directly hit by the earthquake but also in other parts of Japan through supply chain disruptions. We examine the economic impact of the supply chain disruptions immediately following the earthquake using regional input-output (IO) tables, the Japan Industrial Productivity (JIP) database, and other regional statistics. To conduct our analysis, we modify the forward linkage methodology to take into account the first-stage bottleneck effect in the intermediate input of manufacturing production. We also create our own interregional input-output table by combining two different regional IO tables. Our estimates show that the production loss caused by the supply chain disruptions would be a maximum of 0.41% of the country's gross domestic product (GDP). We also analyzed the possible damage mitigating effects of establishing multiple supply chains to cope with potential natural disasters in the future. However, as multiple supply chains may lose production efficiency at the firm level, we need some policies that give incentives to firms which diversify supply chains.

Published: Tokui, Joji, Kazuyasu Kawasaki, and Tsutomu Miyagawa, 2017. "The economic impact of supply chain disruptions from the Great East-Japan Earthquake," Japan and the World Economy, Vol. 41, pp. 59-70.