IDEAS home Printed from https://ideas.repec.org/a/kap/empiri/v50y2023i1d10.1007_s10663-022-09560-x.html
   My bibliography  Save this article

Assessing the importance of risky products in international trade and global value chains

Author

Listed:
  • Oliver Reiter

    (Vienna Institute for International Economic Studies (Wiiw))

  • Robert Stehrer

    (Vienna Institute for International Economic Studies (Wiiw))

Abstract

The COVID-19 pandemic has thrown the world's economy and trade into disarray, putting international reliance in the limelight. This sparked debate on the durability and resilience of global value chains. In this paper, we construct a ‘product riskiness indicator’ for 4700 globally traded products based on components such as market concentration, clustering tendencies, network centrality of players, or international substitutability to determine which products are vulnerable to trade shocks at the global level – referred to as ‘risky’ products. In a second step, bilateral risky product imports are matched to multi-country input–output tables, allowing for an examination of the importance of globally supplied risky products by country and industry. Due to the high percentage of dangerous products in high-tech product categories, higher-tech industries are more vulnerable to supply-chain vulnerabilities. Third, we analyse the GDP impact of reshoring using a “partial global extraction method.” Assuming that risky product imports from non-EU27 nations are re-shored to EU27 countries, the EU27 GDP might rise by up to 0.5 percent. Non-EU27 countries suffer as a result of such reshoring activity. This implies that ensuring robust or at least resilient supply networks is also in the interest of the supplier countries and sectors.

Suggested Citation

  • Oliver Reiter & Robert Stehrer, 2023. "Assessing the importance of risky products in international trade and global value chains," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 50(1), pages 7-33, February.
  • Handle: RePEc:kap:empiri:v:50:y:2023:i:1:d:10.1007_s10663-022-09560-x
    DOI: 10.1007/s10663-022-09560-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10663-022-09560-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s10663-022-09560-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    2. Emmanuel Dhyne & Ayumu Ken Kikkawa & Magne Mogstad & Felix Tintelnot, 2021. "Trade and Domestic Production Networks," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(2), pages 643-668.
    3. Andrew B. Bernard & Emmanuel Dhyne & Glenn Magerman & Kalina Manova & Andreas Moxnes, 2022. "The Origins of Firm Heterogeneity: A Production Network Approach," Journal of Political Economy, University of Chicago Press, vol. 130(7), pages 1765-1804.
    4. Rebecca Freeman & Richard Baldwin, 2022. "Risks and Global Supply Chains: What We Know and What We Need to Know," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 153-180, August.
    5. João Amador & Sónia Cabral & Rossana Mastrandrea & Franco Ruzzenenti, 2018. "Who’s Who in Global Value Chains? A Weighted Network Approach," Open Economies Review, Springer, vol. 29(5), pages 1039-1059, November.
    6. Andrew B. Bernard & Andreas Moxnes, 2018. "Networks and Trade," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 65-85, August.
    7. Carlo Piccardi & Lucia Tajoli, 2018. "Complexity, centralization, and fragility in economic networks," PLOS ONE, Public Library of Science, vol. 13(11), pages 1-13, November.
    8. Luca De Benedictis & Lucia Tajoli, 2011. "The World Trade Network," The World Economy, Wiley Blackwell, vol. 34(8), pages 1417-1454, August.
    9. Gaulier, Guillaume & Zignago, Soledad, 2004. "Notes on BACI (analytical database of international trade). 1989-2002 version," MPRA Paper 32401, University Library of Munich, Germany.
    10. repec:wsr:ecbook:2015:i:vi-002 is not listed on IDEAS
    11. C. T. Vidya & K. P. Prabheesh, 2020. "Implications of COVID-19 Pandemic on the Global Trade Networks," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(10), pages 2408-2421, August.
    12. Grübler, Julia & Reiter, Oliver, 2021. "Non-Tariff Trade Policy in the Context of Deep Trade Integration: An Ex-Post Gravity Model Application to the EU-South Korea Agreement," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 25(1), pages 33-71, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rajeev K. Goel & Michael A. Nelson, 2024. "Ending COVID-19 vaccine apartheid through vaccine donations: the influence of supply chains," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(3), pages 592-613, September.
    2. Francesca Guadagno & Robert Stehrer, 2024. "Assessing the International Interlinkages and Dependencies of the EU27 ‘Energy-renewables’ Ecosystem," wiiw Research Reports 473, The Vienna Institute for International Economic Studies, wiiw.
    3. de Lucio, Juan & Díaz-Mora, Carmen & Mínguez, Raúl & Minondo, Asier & Requena, Francisco, 2023. "Do firms react to supply chain disruptions?," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 902-916.
    4. Francesca Guadagno & Oliver Reiter & Robert Stehrer, 2024. "The Impact of Green Technologies on GDP and Employment in the EU," wiiw Policy Notes 80, The Vienna Institute for International Economic Studies, wiiw.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vasco M. Carvalho & Alireza Tahbaz-Salehi, 2019. "Production Networks: A Primer," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 635-663, August.
    2. Erik Braun & Emese Braun & András Gyimesi & Zita Iloskics & Tamás Sebestyén, 2023. "Exposure to trade disruptions in case of the Russia–Ukraine conflict: A product network approach," The World Economy, Wiley Blackwell, vol. 46(10), pages 2950-2982, October.
    3. Mundt, Philipp, 2021. "The formation of input–output architecture: Evidence from the European Union," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 89-104.
    4. Brian Cevallos Fujiy & Gaurav Khanna & Hiroshi Toma, 2022. "Cultural Proximity and Production Networks," Working Papers 686, Research Seminar in International Economics, University of Michigan.
    5. Gadenne, Lucie & Nandi, Tushar K. & Rathelot, Roland, 2019. "Taxation and Supplier Networks : Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1208, University of Warwick, Department of Economics.
    6. Peter R. Herman, 2022. "Modeling complex network patterns in international trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 127-179, February.
    7. Kong, Dongmin & Pan, Yue & Tian, Gary Gang & Zhang, Pengdong, 2020. "CEOs' hometown connections and access to trade credit: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 62(C).
    8. Christopher Hansman & Jonas Hjort & Gianmarco León-Ciliotta & Matthieu Teachout, 2020. "Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3570-3625.
    9. Matteo Bugamelli & Silvia Fabiani & Stefano Federico & Alberto Felettigh & Claire Giordano & Andrea Linarello, 2018. "Back on Track? A Macro–Micro Narrative of Italian Exports," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(1), pages 1-31, March.
    10. Beniamino Quintieri & Giovanni Stamato, 2023. "Are preferential agreements beneficial to EU trade? New evidence from the EU–South Korea treaty," The World Economy, Wiley Blackwell, vol. 46(12), pages 3511-3541, December.
    11. Chessa, Michela & Persenda, Arnaud & Torre, Dominique, 2023. "Brexit and Canadadvent: An application of graphs and hypergraphs to recent international trade agreements," International Economics, Elsevier, vol. 175(C), pages 1-12.
    12. Eivind Lekve Bjelle & Johannes Többen & Konstantin Stadler & Thomas Kastner & Michaela C. Theurl & Karl-Heinz Erb & Kjartan-Steen Olsen & Kirsten S. Wiebe & Richard Wood, 2020. "Adding country resolution to EXIOBASE: impacts on land use embodied in trade," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-25, December.
    13. Jonathan EATON & Samuel KORTUM & Francis KRAMARZ, 2016. "Firm-to-Firm Trade: Imports, exports, and the labor market," Discussion papers 16048, Research Institute of Economy, Trade and Industry (RIETI).
    14. Andrew B. Bernard & Andreas Moxnes, 2018. "Networks and Trade," Annual Review of Economics, Annual Reviews, vol. 10(1), pages 65-85, August.
    15. Cyrielle Gaglio & Sarah Guillou, 2018. "Le tissu productif numérique en France," SciencePo Working papers Main hal-03471590, HAL.
    16. Bartesaghi, Paolo & Clemente, Gian Paolo & Grassi, Rosanna & Luu, Duc Thi, 2022. "The multilayer architecture of the global input-output network and its properties," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 304-341.
    17. Demir, Banu & Cosar, Kerem & Ghose, Devaki & Young, Nathaniel, 2021. "Road Capacity, Domestic Trade and Regional Outcomes," CEPR Discussion Papers 16512, C.E.P.R. Discussion Papers.
    18. João Amador & Sónia Cabral, 2017. "Networks of Value-added Trade," The World Economy, Wiley Blackwell, vol. 40(7), pages 1291-1313, July.
    19. Rachel Griffith & Peter Levell & Agnes Norris Keiller, 2021. "Potential Consequences of Post‐Brexit Trade Barriers for Earnings Inequality in the UK," Economica, London School of Economics and Political Science, vol. 88(352), pages 839-862, October.
    20. Johannes Boehm & Jan Sonntag, 2023. "Vertical Integration and Foreclosure: Evidence from Production Network Data," Management Science, INFORMS, vol. 69(1), pages 141-161, January.

    More about this item

    Keywords

    Supply chains; Vulnerability; Resilience; Robustness; Global extraction method;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:empiri:v:50:y:2023:i:1:d:10.1007_s10663-022-09560-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.