1. Supply Shocks in Supply Chains: Evidence from the Early Lockdown in China
- Author
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Lafrogne-Joussier, Raphael, Martin, Julien, and Mejean, Isabelle
- Subjects
Epidemics -- Case studies -- China -- France ,Exports -- Case studies ,Logistics -- Case studies ,Banking, finance and accounting industries ,Business ,Business, international ,European Union - Abstract
How do firms in global value chains react to input shortages? We examine microlevel adjustments to supply chain shocks, building on the Covid-19 pandemic as a case study. French firms sourcing inputs from China just before the early lockdown in the country experienced a relative drop in imports that increases from February to April 2020. This shock on input purchases transmits to the rest of the supply chain through exposed firm's domestic and export sales. Between February and June, firms exposed to the Chinese early lockdown experienced a 5.5% drop in domestic sales and a 5% drop in exports, in relative terms with respect to comparable nonexposed firms. The drop in foreign sales is entirely attributable to a lower volume of exports driven by a temporary withdrawal from occasional markets. We then dig into the heterogeneity of the transmission across treated firms. Whereas the ex-ante geographic diversification of inputs does not seem to mitigate the impact of the shock, firms with relatively high inventories have been able to absorb the supply shock better. Keywords Covid-19 pandemic * Supply chain disruptions * Transmission of shocks * Global value chains JEL Classification F1 * F6, 1 Introduction International flows of intermediate inputs constitute as much as two-thirds of international trade and half of global trade is embodied in global value chains (GVCs) (Johnson 2014; Antras [...]
- Published
- 2023
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