Others Structure of global buyer-supplier networks and its implications for conflict minerals regulations

Mizuno, Takayuki  ,  Ohnishi, Takaaki  ,  Watanabe, Tsutomu

0712015-05 , UTokyo Price Project , National Institute of Informatics , Department of Informatics, SOKENDAI (The Graduate University for AdvancedStudies) , PRESTO, Japan Science and Technology Agency , Graduate School of Information Science and Technology, University of Tokyo , Graduate School of Economics, University of Tokyo , The Canon Institute for Global Studies
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2012~2016年度科学研究費補助金[基盤研究(S)]「長期デフレの解明」(研究代表者 東京大学経済学研究科・渡辺努, 課題番号:24223003)
We investigate the structure of global inter-firm linkages using a dataset that contains information on business partners for about 400; 000 firms worldwide, including all the firms listed on the major stock exchanges. Among the firms, we examine three networks, which are based on customer-supplier, licensee-licensor, and strategic alliance relationships. First, we show that these networks all have scale-free topology and that the degree distribution for each follows a power law with an exponent of 1:5. The shortest path length is around six for all three networks. Second, we show through community structure analysis that the firms comprise a community with those firms that belong to the same industry but different home countries, indicating the globalization of firms’ production activities. Finally, we discuss what such production globalization implies for the proliferation of conflict minerals (i.e., minerals extracted from conflict zones and sold to firms in other countries to perpetuate fighting) through global buyer-supplier linkages. We show that a limited number of firms belonging to some specific industries and countries plays an important role in the global proliferation of conflict minerals. Our numerical simulation shows that regulations on the purchases of conflict minerals by those firms would substantially reduce their worldwide use.
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