The diversification and trade duration: the case of Norwegian seafood and Russian grain and oilseed exporting firms

The increased uncertainties in the international political landscape have led to a greater perceived danger of disruption in the global food value chain, leading to a stronger emphasis on the resilience of food supply chains. Two measures under examination are the reduction of risk impact through diversification of trade relations on one side and stability of trade relations on the other side. There are doubts about the possibility of having both elements in the food supply chains, as they look to be mutually exclusive. Diversification aims to reduce the impact of shocks in the value chain, while stronger trade relations with stable partners and stronger connectedness with the trade partners reduce the probability for one of the partners breaking the relation, but may simultaneously reduce the potential for diversification. In this study, we test the correlation between diversification and trade duration as an indicator of stability using two micro datasets of the whole Norwegian seafood export for the period 2004-2021 and whole Russian grain and oilseed export for the period of 2008-2023 at the firm-level. Applying the Kaplan-Meier estimator at the firm level, we extracted restricted mean survival time and analysed its correlation with various firm-level diversification indices such as the number of partners, the number of commodities, the partner-commodity index, and the Herfindahl– Hirschman index of the firm-exporter concentration. At the aggregated level, results indicate a weak positive correlation between the stability and diversification indices. Nevertheless, there is limited evidence of exporting firm clusters with a negative correlation between trade stability and diversification.