Financial Vulnerability Mapping in Global Supply Chains: Implications for U.S. Trade Stability and Investment Risk

Abstract

Financial vulnerability embedded within global supply chains represents a significant source of trade instability and investment risk in highly interconnected economies. This study quantitatively examined how exposure-weighted financial vulnerability across global supply chain networks was associated with U.S. trade stability and sector-level investment risk. The study was informed by a comprehensive review of more than 120 peer-reviewed articles and empirical studies, which guided construct development and analytical design. The empirical analysis utilized 1,000 sector-level panel observations, of which 61.2% were drawn from manufacturing sectors and 38.8% from non-manufacturing sectors, spanning multiple consecutive years. Descriptive results showed a mean financial vulnerability index of 0.47 (SD = 0.18), a mean trade stability index of 0.62 (SD = 0.21), and a mean investment risk index of 0.53 (SD = 0.24), indicating substantial dispersion across sectors. Correlation analysis revealed a negative association between financial vulnerability and trade stability (r = −0.41) and a positive association between financial vulnerability and investment risk (r = 0.48). Panel regression results demonstrated that exposure-weighted financial vulnerability was significantly associated with lower trade stability (β = −0.372, p < 0.001) and higher investment risk (β = 0.418, p < 0.001), controlling for industry size, trade intensity, and time effects. The trade stability model explained 46% of the variance in trade flow variability, while the investment risk model explained 49% of performance variability. Reliability analysis confirmed strong internal consistency for all composite constructs, with Cronbach’s alpha values ranging from 0.81 to 0.86. Overall, the findings quantitatively demonstrated that financial vulnerability embedded within global supply chains is a measurable and influential determinant of U.S. trade stability and investment risk.