1. Natural Disasters and the Reshaping of Global Value Chains
- Author
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Freund, Caroline, Mattoo, Aaditya, Mulabdic, Alen, and Ruta, Michele
- Subjects
Sendai Earthquake and Tsunami, 2011 ,Natural disasters -- Economic aspects -- Japan ,Value chain -- Evaluation ,Supply chains -- International aspects -- Management ,Company business management ,Banking, finance and accounting industries ,Business ,Business, international - Abstract
To understand the longer-term consequences of natural disasters for global value chains, this paper examines trade in the automobile and electronic sectors after the 2011 earthquake in Japan. Contrary to widespread expectations, we find that the shock did not lead to reshoring, nearshoring, or diversification across non-Japanese suppliers; and trade in intermediate products was disrupted less than trade in final goods. Imports did shift to new suppliers, especially where dependence on Japan was greater. But production relocated to developing countries rather than to other top exporters, and to larger countries. The results, showing relative inertia in intermediate goods and the dominance of economic fundamentals (cost and scale) in determining sourcing decisions, may help us understand supply chain adjustment after other natural disasters, like the COVID-19 pandemic. JEL Classification F14 * F23 * F63, 1 Introduction Natural disasters impact human lives both directly and through their long-lasting economic consequences. With climate change, the frequency of disasters is expected to increase, and their likelihood will [...]
- Published
- 2022
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