Enhanced Resiliency of Cross-Border Value Chains: Impact Evaluation for the Asia-Pacific

This report presents results from the fourth and final phase of PSU’s project on Value Chain Resilience (VCR). The first three phases examined particular components of VCR, namely Risk, Strength, and Connectedness. This report deals with the economic impacts of VCR using a global Computable General Equilibrium (CGE) model. Impacts are assessed using counterfactual simulation scenarios: three scenarios involve VCR improvements by APEC economies, and the fourth is based on a negative external shock. APEC economies stand to experience substantial gains in GDP from improvements in VCR, as demonstrated by the results of Scenarios 1, 2, and 3. In percentage terms, the gains range between 0.9% (Scenario 2) and 1.5% (Scenario 3). Scenario 4 impacts are quite modest, probably due to APEC’s stronger engagement with other parts of the world. Results show that APEC economies are on the whole quite resilient to negative events elsewhere in the world economy and that improving VCR in the region could have major economic gains.