Production Network Structure, Specialization and Unemployment : Measuring the Structural Resilience of Economies

Specialization leads to efficient production structures generating welfare gains, while the resulting interconnectedness of countries spread shocks more rapidly rendering the global economic system more volatile. This paper applies the framework of Ecological Network Analysis on global input-output data to capture resilient economic structures between self-sufficiency (redundancy) and extreme specialization. The results show that economies are more redundant than ecological systems and that economies moved slightly towards more efficient structures, approaching ecological systems. By regressing structural characteristics on economic openness, we find that economically more open economies on the export side are more efficient and less redundant in structural terms. This reflects specialization and integration in global supply chains going hand-in-hand. Also, a significant empirical relationship is established between structural resilience and changes in unemployment. This result indicates that measuring resilience based on the structure of production networks is a meaningful approach to capturing the robustness of economic systems