Assessing the Fragility of Global Trade: The Impact of Localized Supply Shocks Using Network Analysis
IMF Working Papers, February 13, 2017
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Bibliographic details
- Authors: Yevgeniya Korniyenko, Magali Pinat, Brian Dew
- Published: February 13, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475578515.001
Overview
- Authors: Yevgeniya Korniyenko, Magali Pinat, Brian Dew
- Publication date: February 13, 2017
- Purpose: Identify inherent vulnerabilities arising from the composition of a country’s import basket and propose effective mitigation policies by assessing spillover effects of supply shocks from the import of specific goods.
Methodology
- Use of a highly disaggregated international trade database to analyze trade linkages.
- Application of network analysis tools to:
- Develop a methodology for evaluating and ranking the supply fragility of individual traded goods.
- Create a country-level measure to determine each country’s supply shock vulnerability based on the composition of their import baskets.
- The country-level measure evaluates potential negative supply shock spillovers from the import of each good.
Key Findings
- Anecdotal evidence supports the existence of specific choke points in the global trade network, revealed after natural disasters (examples cited: hard drive components and Thailand flooding; Japanese auto components post-Fukushima).
- Supply fragility can be ranked at the individual-good level using network analysis.
- Country vulnerability to supply shocks depends on the composition of its import basket and the fragility ranking of those imported goods.
- The analysis focuses on spillover effects from localized supply disruptions through trade linkages.
Policy Recommendations
- Design mitigation policies that account for:
- The ranking of fragility of individual traded goods.
- The composition of country import baskets and their exposure to fragile products.
- Prioritize resilience strategies toward goods and suppliers identified as choke points in the trade network.
Subjects and Keywords
- Subjects: Economic theory, Environment, Export performance, Exports, Imports, International trade, Natural disasters, Supply shocks
- Keywords: Export performance, Exports, Global, Imports, international trade, Natural disasters, network analysis, network products, ofragile products, product exporter, product fragility, product network, product vulnerability, products description, risky product, spillovers, standard deviation, supply shocks, WP
IMF Working Paper by Yevgeniya Korniyenko, Magali Pinat, and Brian Dew, February 13, 2017.