Summary: The pandemic exposed weaknesses in America’s supply chains, highlighting the need for better resilience and adaptability. Businesses should map their supply networks to identify vulnerabilities and strategize against risks, while governments can support these efforts by improving infrastructure and policies. By fostering diverse sourcing networks and encouraging transparency, both businesses and policymakers can help secure supply chains against future disruptions.
Economies are far more adaptable than individual companies—they have more substitution possibilities (View Highlight)
Think of the economy as a forest ecosystem: while a single tree species might struggle with changing conditions, the forest as a whole can adapt and thrive. (View Highlight)
Despite the vulnerabilities in modern supply networks, these networks can turn out to be strikingly adaptable in the medium run. (View Highlight)
A strong trade link between two firms doesn’t just involve well-oiled logistics, good telecommunications, and interoperable technical standards. It also involves trust and a good understanding of one’s trading partner. (View Highlight)
Relationships and understandings among executives, managers, and workers are a vitally important dimension of the tissue of the world economy that makes this kind of adaptation possible (View Highlight)
All the ingredients of the tissue connecting the economy are underpinned by what economists and political scientists have come to call institutions—the rules of the game in a society. (View Highlight)
Good institutions also include things like common understandings in a place or industry about business agreements; courts that hear cases promptly and resolve them consistently; and a political environment in which the powerful do not meddle arbitrarily with exchange. (View Highlight)
In the absence of secure property rights, individuals have poor incentives to invest in land, capital and technology—e.g., due to fears of expropriation. This ultimately results in fewer productive enterprises and lower income levels. (View Highlight)
When businesses can trust that their contracts will be honored, that disputes can be resolved fairly, and that the laws governing their trade are predictable, they are more likely to engage in transactions and invest in long-term partnerships. (View Highlight)
The takeaway is that when courts work efficiently, they don’t just resolve disputes—they create an environment where businesses can confidently forge partnerships, specialize, and innovate. (View Highlight)
The ultimate goal of supply network intelligence at the level of national policy is to know where macroeconomically significant fragility may be building. (View Highlight)
Queues of ships at ports have no mechanism for priority service: a ship holding up ten million dollars of delayed production has the same priority as one delivering low-value souvenirs that will sit in a warehouse for months. (View Highlight)
The world economy is so interconnected that even major conflicts are unlikely to cut off indirect sourcing. (View Highlight)