RESEARCH AND ANALYSIS: WORKING PAPERS
Assessing the Supply Chain Effect of Natural Disasters
Evidence from Chinese Manufacturers
This paper uses Chinese firm level data to detect the international propagation of adverse shocks triggered by the US hurricane season in 2005. We provide evidence that Chinese processing manufacturers with tight trade linkages to the United States reduced their intermediate imports from the United States between July and October 2005.
We further show that the direct exposure to US supply shocks led to a temporary decline of firm exports between September and November 2005, although we do not find consistent evidence of international propagation of supply shocks along global value chains. Moreover, the paper finds that firms with more diversified suppliers tend to be less affected by the US hurricane disaster, pointing to firm sourcing diversification as a way to increase resilience to adverse shocks.
No: ERSD-2021-13
Authors: Katharina Längle, Ankai Xu, Ruijie Tian
Manuscript date: July 2021
Key Words:
production networks; resilience; diversification; shock transmission; supply chains; natural disasters
JEL classification numbers:
F12, F14, F15, F61, D57, L14, E23
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This is a working paper, and hence it represents research in progress. The opinions expressed in this paper are those of its author. They are not intended to represent the positions or opinions of the WTO or its members and are without prejudice to members' rights and obligations under the WTO. Any errors are attributable to the author.
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