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Trade Disruptions and Reshoring

Author

Listed:
  • Anindya S. Chakrabarti
  • Kanika Mahajan
  • Shekhar Tomar

Abstract

Firms are increasingly concerned about the resilience of their sales and sourcing decisions. Using administrative data, we show that a temporary disruption in trade due to state border closures in India led to a persistent trade collapse within the country—interstate trade relative to intrastate remains five percent lower even six months after all restrictions were lifted. Reshoring explains this phenomenon as plants more dependent on interstate sales (input-sourcing) shift from inter- to intrastate sales (input-sourcing). State borders rather than distance are salient in explaining the observed substitution. We propose a novel product-level measure that determines the extent of reshoring.

Suggested Citation

  • Anindya S. Chakrabarti & Kanika Mahajan & Shekhar Tomar, 2025. "Trade Disruptions and Reshoring," American Economic Journal: Applied Economics, American Economic Association, vol. 17(1), pages 239-270, January.
    • Handle: RePEc:aea:aejapp:v:17:y:2025:i:1:p:239-70
    DOI: 10.1257/app.20230270
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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