Quantifying the macroeconomics impacts of satellite failure on global supply chains
Year: 2024
Type: article
Abstract: Global supply chains have grown hand-in-hand with modern telecommunication systems, particularly satellite communication services which can provide connectivity anywhere in the world. Satellite communication services have thus become indispensable to the functioning of modern economies. However, the potential macroeconomic impacts of satellite failures on these supply chains remain underexplored. This research addresses the knowledge gap by examining how satellite disruptions influence global trade, production, and economic stability. Recent studies have underscored the critical role of satellites in tracking shipments, managing inventories, and facilitating financial transactions. Yet, comprehensive analyses on the economic ripple effects stemming from satellite malfunctions are scarce. To fill this gap, a Multi Regional Input-Output (MRIO) model is used, combining econometric modeling with case studies of past satellite failures. The methodology integrates satellite data interruption scenarios with global trade models to simulate potential outcomes on supply chain efficiency and economic indicators. The study reveals that satellite failures can cause significant delays in shipping, increased costs due to rerouting and manual tracking, and disruptions in communication channels critical for just-in-time production systems. For instance, a one-week satellite outage risks an estimated global trade loss of $50 billion, highlighting the vulnerability of interconnected economies. Additionally, industries heavily reliant on real-time data exhibited the most pronounced disruptions. The findings suggest that satellite failures can cause significant congestion in global supply chains. This research underscores the interconnectedness of modern supply systems and the propagating effects of one point of failure.
Authors: Im, Grace, Oughton, Edward J.
Institution: George Mason University
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7092418194
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