AI-Generated Production Networks: Measurement and Applications to Global Trade

Thiemo Fetzer (), Peter John Lambert (), Bennet Feld () and Prashant Garg
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Thiemo Fetzer: University of Bonn & University of Warwick
Peter John Lambert: London School of Economics and Political Science
Bennet Feld: London School of Economics and Political Science

No 346, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: This paper leverages generative AI to build a network structure over 5,000 product nodes, where directed edges represent input-output relationships in production. We layout a two-step `build-prune' approach using an ensemble of prompt-tuned generative AI classifications. The 'build' step provides an initial distribution of edge-predictions, the `prune' step then re-evaluates all edges. With our AI-generated Production Network (AIPNET) in toe, we document a host of shifts in the network position of products and countries during the 21st century. Finally, we study production network spillovers using the natural experiment presented by the 2017 blockade of Qatar. We find strong evidence of such spill-overs, suggestive of on-shoring of critical production. This descriptive and causal evidence demonstrates some of the many research possibilities opened up by our granular measurement of product linkages, including studies of on-shoring, industrial policy, and other recent shifts in global trade.

Keywords: Supply-Chain Network Analysis; Large Language Models; On-shoring; Industrial Policy; Trade wars; Econometrics-of-LLMs (search for similar items in EconPapers)
JEL-codes: C81 F14 F23 F52 L16 N74 O25 (search for similar items in EconPapers)
Pages: 106 pages
Date: 2024-11
New Economics Papers: this item is included in nep-net and nep-tid
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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_346_2024.pdf First version, 2024 (application/pdf)

Related works:
Working Paper: AI-Generated Production Networks: Measurement and Applications to Global Trade (2024)
Working Paper: AI-Generated Production Networks: Measurement and Applications to Global Trade (2024)
Working Paper: AI-Generated Production Networks: Measurement and Applications to Global Trade (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:346

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