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Global value chains during the great trade collapse: a bullwhip effect?

Listed author(s):
  • Altomonte, Carlo
  • di Mauro, Filippo
  • Ottaviano, Gianmarco
  • Rungi, Armando
  • Vicard, Vincent

This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions matched with data on worldwide intrafirm linkages as defined by property rights (multinational business groups, hierarchies of firms). This newly assembled dataset allows us to distinguish firm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intragroup trade/trade among related parties) or establishment of supply contracts (arm's length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm's length trade. Amplified fluctuations in terms of trade elasticities by value chains have been referred to as the "bullwhip effect" and have been attributed to the adjustment of inventories within supply chains. In this paper we first confirm the existence of such an effect due to trade in intermediates, and we underline the role that different organizational modes can play in driving this adjustment. JEL Classification: F23, F15, L22

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Paper provided by European Central Bank in its series Working Paper Series with number 1412.

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Date of creation: Jan 2012
Handle: RePEc:ecb:ecbwps:20121412
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  1. Sébastien Miroudot & Rainer Lanz & Alexandros Ragoussis, 2009. "Trade in Intermediate Goods and Services," OECD Trade Policy Papers 93, OECD Publishing.
  2. Grossman, Gene M. & Helpman, Elhanan, 2005. "Outsourcing in a Global Economy," Scholarly Articles 25586654, Harvard University Department of Economics.
  3. Ines Buono & Harald Fadinger & Stefan Berger, 2008. "The Micro Dynamic of Exporting-Evidence from French Firms," Vienna Economics Papers 0901, University of Vienna, Department of Economics.
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  5. Jean-Charles Bricongne & Lionel Fontagné & Guillaume Gaulier & Daria Taglioni & Vincent Vicard, 2012. "Firms and the global crisis: French exports in the turmoil," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01299846, HAL.
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  9. Pol Antràs, 2005. "Property Rights and the International Organization of Production," American Economic Review, American Economic Association, vol. 95(2), pages 25-32, May.
  10. Escaith, Hubert & Lindenberg, Nannette & Miroudot, Sébastien, 2010. "International Supply Chains and Trade Elasticity in Times of Global Crisis," MPRA Paper 20478, University Library of Munich, Germany.
  11. Andrew B. Bernard & Marco Grazzi & Chiara Tomasi, 2010. "Intermediaries in International Trade: direct versus indirect modes of export," LEM Papers Series 2010/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  12. Raphael Bergoeing & Timothy J. Kehoe & Vanessa Strauss-Kahn & Kei-Mu Yi, 2004. "Why Is Manufacturing Trade Rising Even as Manufacturing Output is Falling?," American Economic Review, American Economic Association, vol. 94(2), pages 134-138, May.
  13. Ingo Borchert & Aaditya Mattoo, 2009. "The Crisis Resilience of Services Trade," World Bank Other Operational Studies 11123, The World Bank.
  14. Maria Bas & Juan Carluccio, 2010. "Wage Bargaining and the Boundaries of the Multinational Firm," Working Papers 2010-03, CEPII research center.
  15. Olivier Cattaneo & Gary Gereffi & Cornelia Staritz, 2010. "Global Value Chains in a Postcrisis World : A Development Perspective," World Bank Publications, The World Bank, number 2509.
  16. repec:trn:utwpde:1016 is not listed on IDEAS
  17. Rainer Lanz & Sébastien Miroudot, 2011. "Intra-Firm Trade: Patterns, Determinants and Policy Implications," OECD Trade Policy Papers 114, OECD Publishing.
  18. Freund, Caroline, 2009. "The trade response to global downturns : historical evidence," Policy Research Working Paper Series 5015, The World Bank.
  19. Kaplinsky, Raphael & Farooki, Masuma, 2010. "What are the implications for global value chains when the market shifts from the north to the south ?," Policy Research Working Paper Series 5205, The World Bank.
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