Who Supplied My Cheese? Supply Chain Management in the Global Economy
Innovations Have Profound Macroeconomic Effects
By Thomas F. Siems
Today, with an Internet connection and some specialized skills, individuals and companies located in the remotest ends of the earth can compete and collaborate globally. This paradigm shift has occurred as technological forces, the fracturing of political barriers, and a relentless drive for greater efficiencies changed how we work and where we work, ushering in the age of globalization in ways never imagined previously. While many factors can influence macroeconomic variables—including better monetary and fiscal policies, freer trade, and fewer economic shocks—evidence is presented here that better global supply chain management and a more global economy should not be overlooked. On the one hand, these new practices have likely helped to keep inflation lower, reduce economic volatility, strengthen productivity growth, and improve living standards. On the other hand, these new practices cause greater uncertainties and calls for protectionist policies, as outsourcing and offshoring move work to lower cost providers with little regard for geopolitical boundaries.
This paper won the Edmund A. Mennis Contributed Paper Award, presented at the NABE Annual Meeting, September 26, 2005. The award was sponsored by Standard & Poor’s. The views expressed in this paper are not necessarily those of the Federal Reserve Bank of Dallas or the Federal Reserve System. The usual disclaimer regarding errors and omissions applies.