Uncovering the Complexities of Global Value Chains

Abstract

Global value chains (GVCs) underpin production and trade with direct implications for the real economy and financial system, yet they remain poorly understood at the granular level. Limited visibility into these complex, firm‑level supply chain networks can obscure vulnerabilities, with risks remaining undetected until they materialise and shape macroeconomic outcomes such as growth, inflation and financial stability. Recent shocks such as the Covid-19 pandemic have highlighted the risks of this lack of transparency. For central banks and policymakers, the challenge is clear – aggregate statistics cannot capture the intricate firm‑to‑firm relationships or the early structural shifts that shape GVC dynamics well before they appear in headline data. This lack of visibility matters because shocks propagate through these networks in ways that can amplify inflationary pressures, mask concentration risks and create correlated balance sheet exposures with spillovers to credit markets and asset prices. In an increasingly interconnected global economy, understanding and monitoring GVC dependencies can therefore support central banks in their core mandate to safeguard monetary and financial stability. Project Insight attempts to address this gap by developing a proof of concept (PoC) dashboard to enhance the monitoring of GVC developments. The project was conducted in collaboration with project partners – the Hong Kong Monetary Authority (HKMA), the Organisation for Economic Co-operation and Development (OECD) and DIW Berlin. It also brought together a global observing-member stakeholder group of supply chain experts across central banks, international organisations, academia and the private sector. The development was grounded in user needs, drawing on continuous feedback from this international expert group to identify concrete monitoring challenges and data gaps faced by central banks and other policymaking institutions. Leveraging a snapshot of historical, granular supply chain data from 2018 to 2024, Project Insight integrates various detailed, commercial data sets on firm-to-firm activity with publicly available macroeconomic information. These inputs were transformed into a harmonised suite of foundational GVC metrics, covering crosssectional and time series trends, trade exposure and concentration risks, resilience and bottlenecks, and network centralities. These metrics spanned multiple layers of granularity of the supply chain network, from entity-to-entity up to economy-toeconomy levels.