Geographical spread of interfirm transaction networks and the great east Japan earthquake

This chapter examines how the impact of the Great East Japan Earthquake spread geographically to unaffected areas through interfirm transaction networks. Previous studies on transaction networks revealed small-world structure and geographical proximity, which have conflicting implications for the geographical impact of the earthquake. Using interfirm transaction data from approximately 800,000 firms, it is examined how firms in physically unaffected areas are linked with those in the affected areas. It is found that only 3 % of firms in unaffected areas have direct transaction links with those in the affected areas. On the other hand, the share increases to 40–60 % if indirectly linked transaction partners (i.e. partners of partners) are taken into account. Further, it is shown that it is a small number hub firms with interfirm links spanning larger distances that are responsible for linking more local networks in different regions and hence for geographically spreading the economic impact of the earthquake.