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New paper from Alvaro Espitia, Aaditya Mattoo, Nadia Rocha, Michele Ruta & Deborah Winkler @WorldBank looking at COVID-19 & TRADE
Did global value chains leave sectors VULNERABLE to shocks, or PROTECT from them?
...it depends
http://documents1.worldbank.org/curated/en/843301610630752625/pdf/Pandemic-Trade-Covid-19-Remote-Work-and-Global-Value-Chains.pdf
New paper from Alvaro Espitia, Aaditya Mattoo, Nadia Rocha, Michele Ruta & Deborah Winkler @WorldBank looking at COVID-19 & TRADE
Did global value chains leave sectors VULNERABLE to shocks, or PROTECT from them?
...it depends
http://documents1.worldbank.org/curated/en/843301610630752625/pdf/Pandemic-Trade-Covid-19-Remote-Work-and-Global-Value-Chains.pdf
Turns out, pandemics are nooooooot great for trade
They correlate changes in mobility with export growth
As lockdowns spread, exports fell too
In the LHS column, blue dots (Feb)=>orange (March)=>red (April)
Then things recovered: red dots (April)=>green (May)=>yellow (June)
They correlate changes in mobility with export growth
As lockdowns spread, exports fell too
In the LHS column, blue dots (Feb)=>orange (March)=>red (April)
Then things recovered: red dots (April)=>green (May)=>yellow (June)
Similar story here with imports...
BUT. The pandemic was generally bad. Did exporters dependent on GVCs do WORSE?
They compare sectors that were more/less reliant on imported inputs
And they also look at different kinds of SHOCKS. Was the problem with overseas SUPPLIERS, or with ones at HOME?
They compare sectors that were more/less reliant on imported inputs
And they also look at different kinds of SHOCKS. Was the problem with overseas SUPPLIERS, or with ones at HOME?
They find that YES. Being dependent on foreign inputs means that your exports are relatively vulnerable to shocks from abroad. (That's the RHS bars.)
BUT it means you are relatively INSULATED from domestic shocks. (The LHS bars.)
BUT it means you are relatively INSULATED from domestic shocks. (The LHS bars.)
And they conclude,
"Nationalization of production is not a solution: it would result in lower exposure to foreign shocks at the cost of higher exposure to domestic shocks." (/end)
"Nationalization of production is not a solution: it would result in lower exposure to foreign shocks at the cost of higher exposure to domestic shocks." (/end)
