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The role of global supply chains in the transmission of weather induced production shocks

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  • Stefan Borsky

    (University of Graz, Austria)

  • Martin Jury

    (University of Graz, Austria)

Abstract

In this paper we combine sectoral input-output linkages based on the production network of 172 countries and 12 sectors from 1990 to 2015 and information on extreme weather events to construct an index measuring the intensity of shocks in the supply chain for each sector and country. This index is then used in an econometric model to determine the impact of supply chain disruptions on a sector's export performance. Our results suggest that a one standard deviation increase in our supply chain shock measure reduces a sector's export value by around 11 percent. Finally, we project that, if no additional adaptation were to occur, climate change will additionally reduce a sector's export value by up to 16 percent with a considerable heterogeneity in strength of the effect between the countries and sectors. Knowledge on the role of input-output linkages in the propagation of extreme weather shocks is important to design more resilient supply chains in future.

Suggested Citation

  • Stefan Borsky & Martin Jury, 2020. "The role of global supply chains in the transmission of weather induced production shocks," Graz Economics Papers 2020-13, University of Graz, Department of Economics.
  • Handle: RePEc:grz:wpaper:2020-13
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    More about this item

    Keywords

    Supply chain shock propagation; climate change; natural disasters; export.;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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