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International Supply Chains and Trade Elasticity in Times of Global Crisis

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  • Escaith, Hubert
  • Lindenberg, Nannette
  • Miroudot, Sébastien

Abstract

The paper investigates the role of global supply chains in explaining the trade collapse of 2008-2009 and the long-term variations observed in trade elasticity. Building on the empirical results obtained from a subset of input-output matrices and the exploratory analysis of a large and diversified sample of countries, a formal model is specified to measure the respective short-term and long-term dynamics of trade elasticity. The model is then used to formally probe the role of vertical integration in explaining changes in trade elasticity. Aggregated results on long-term trade elasticity tend to support the hypothesis that world economy has undertaken in the late 1980s a "traverse" between two underlying economic models. During this transition, the expansion of international supply chains determined an apparent increase in trade elasticity. Two supply chains related effects (the composition and the bullwhip effects) explain also the overshooting of trade elasticity that occurred during the 2008-2009 trade collapse. But vertical specialization is unable to explain the heterogeneity observed on a country and sectoral level, indicating that other contributive factors may also have been at work to explain the diversity of the observed results.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20478.

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Date of creation: 01 Feb 2010
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Handle: RePEc:pra:mprapa:20478

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Related research

Keywords: international supply chain; trade elasticity; global crisis; trade collapse; input-output analysis; error-correction-model;

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References

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Citations

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Cited by:
  1. Sturgeon, Timothy J. & Kawakami, Momoko, 2010. "Global value chains in the electronics industry : was the crisis a window of opportunity for developing countries ?," Policy Research Working Paper Series 5417, The World Bank.
  2. Bornali Bhandari, 2013. "Cross-Price Effects and US Trade Elasticities," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 7(3), pages 273-313, August.
  3. Xiao Jiang & William Milberg, 2013. "Capturing the jobs from globalization: trade and employment in global value chains," Brooks World Poverty Institute Working Paper Series ctg-2013-30, BWPI, The University of Manchester.
  4. Ines Buono & Filippo Vergara Caffarelli, 2013. "Trade elasticity and vertical specialisation," Temi di discussione (Economic working papers) 924, Bank of Italy, Economic Research and International Relations Area.
  5. Fukunari Kimura & Ayako Obashi, 2011. "Production Networks in East Asia : What We Know So Far," Microeconomics Working Papers 23216, East Asian Bureau of Economic Research.
  6. Escaith, Hubert, 2009. "Trade Collapse, Trade Relapse and Global Production Networks: Supply Chains in the Great Recession," MPRA Paper 18433, University Library of Munich, Germany.
  7. Georgescu, George, 2012. "Impactul crizei globale asupra structurii comerţului exterior al României
    [The Global Crisis Impact on Romanian Trade Structure]
    ," MPRA Paper 36339, University Library of Munich, Germany.
  8. Yücer, Aycil & Siroën, Jean-Marc & GUILHOTO, Joaquim, 2013. "Internal and International Vertical Specialization of Brazilian states– An Input-Output analysis," Economics Papers from University Paris Dauphine 123456789/11720, Paris Dauphine University.
  9. Veronika Zavacka, 2012. "The bullwhip effect and the Great Trade Collapse," Working Papers 148, European Bank for Reconstruction and Development, Office of the Chief Economist.
  10. Guilhoto, Joaquim José Martins & Siroën, Jean-Marc & Yucer, Ayçil, 2013. "Internal and International Vertical Specialization– Estimations For Brazil and new Approach to Gravity Models," MPRA Paper 46897, University Library of Munich, Germany.
  11. Xiao Jiang & William Milberg, 2012. "Vertical specialization and industrial upgrading: a preliminary note," Brooks World Poverty Institute Working Paper Series ctg-2012-10, BWPI, The University of Manchester.

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