International Trade Risk Research Articles

Establishing the robustness of chip trade networks by dynamically considering topology and risk cascading propagation

Risk cascading propagation research mostly focuses on complex theoretical networks. Recently, the vulnerability of international chip supply has increased notably, and it is strategically important to explore how shortage risk affects the emergence dynamics of the real chip trade systems. This study abstracts the global chip trade relationship data for 2009–2021 into multiple asymmetrically weighted networks. Using macro-network and micro-node indicators, we explore the topological traits of international chip trade networks and their evolutionary laws. Accordingly, we propose risk cascading propagation models driven by node failure and edge restraint and further innovate to open up the research paradigm of focused-edge networks. Furthermore, a community infection-driven risk cascading propagation mechanism that incorporates community risk absorption capacity is introduced, considering both the propagation attenuation effects and the trade dependency degree. A multi-dimensional dynamic perspective reveals the hidden systemic risks in international chip trade. The main results are as follows: first, international chip trade networks are highly connected and cohesive, consistent with small-world characteristics. Second, the proportion of economies that collapse because of supply shortage risk shocks increases with the impact coefficient α/β\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$\\alpha /\\beta$$\\end{document}. The dominant power in chip crisis propagation has shifted from Europe and America to Asia, and mainland China’s risk penetration capacity has enhanced significantly. Third, focused-edge networks conform to a multi-hub radiation pattern. Before the COVID-19 pandemic, the degree of control and spillover effects of chip supply shortages in hub economies on the international trade was increasing progressively. Fourth, an increase in absorption capacity λ\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$\\lambda$$\\end{document} or attenuation factor γ\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$\\gamma$$\\end{document} consistently leads to a decline in avalanche scale, with λ\\documentclass[12pt]{minimal} \\usepackage{amsmath} \\usepackage{wasysym} \\usepackage{amsfonts} \\usepackage{amssymb} \\usepackage{amsbsy} \\usepackage{mathrsfs} \\usepackage{upgreek} \\setlength{\\oddsidemargin}{-69pt} \\begin{document}$$\\lambda$$\\end{document} exhibiting critical thresholds. These findings will help policymakers pursue efficient management strategies for chip trade, thereby improving supply stability and security.

From isolation to revival: trade recovery amid global health crises

BackgroundThe COVID-19 pandemic has highlighted the importance of designing effective trade recovery measures in response to global health events (GHEs). This study combines international trade risk management theory and multi-case comparative analysis of past GHEs to present a theoretical framework for designing national trade recovery measures for future events.ResultsThe research finds that during GHEs, trade risks shift to fundamental uncertainty, requiring spatial–temporal-subject dimension recovery measures. The study suggests changing the focus of trade recovery policy design from emergency-oriented and single-dimension measures to reserve-oriented and enduring-effect measures of comprehensive dimensions at micro- and macroeconomic levels.ConclusionThe study contributes to the debate on managing trade risks in times of crisis, where there is a need to develop effective trade recovery measures that account for the complexities of global trade and the unique challenges of GHEs. The findings provide practical guidance for trade officials and policymakers to design measures in response to GHEs to improve a country’s overall trade recovery.

Risk Management of International Trade in the Context of BRI: A Case study of DF Company in China

The study explores the intricate landscape of global commerce, focusing on the evolving challenges and opportunities in international business. The study centers on DF Company, a prominent Chinese engineering contracting firm, and analyzes its risk management practices in the context of the Belt and Road initiative. The Belt and Road strategy, with its goals of policy coordination, infrastructure connectivity, trade facilitation, currency circulation, and people-to-people bonds, presents both historical continuity and new opportunities for international trade. The research adopts a qualitative case study design, delving into DF Company's operations through interviews, document analysis, and direct observation. The findings reveal that DF Company faces multifaceted challenges in managing international trade risks, particularly in the areas of political, policy, social, technological, and cultural risks. The paper concludes with comprehensive recommendations for DF Company, emphasizing proactive risk management, political risk mitigation, adaptation to policy changes, addressing social risks, technological capability enhancement, cultural risk management, and safety measures in conflict-prone areas. These recommendations aim to strengthen DF Company's international trade risk management framework within the Belt and Road initiative.

The Future Role of International Trade Risk Elimination and Investment Promotion in the Development of Economic Relations Between Azerbaijan and Latvia

Abstract After regaining its state independence, Azerbaijan got a favorable opportunity to enter the world market. The income from the country’s rich oil and gas resources served to rapidly increase the gross domestic product. Today, the government of Azerbaijan is preparing an action plan for the development of the non-oil sector in order to reduce the country’s dependence on oil and gas exports. In particular, there are some economic spheres that have a great need to be revived and have the main share in budget revenues. Although Azerbaijan has left behind most of its competitors in the viticulture and winemaking sector for many years, in the current conditions this sector relies on foreign investments for its development. Although tourism opportunities in Azerbaijan are very wide, the level of service in hotels and recreation centers is very low. Expensive prices in return for the level of service provided have a negative impact on the growth of Azerbaijan’s tourism revenues. Unfortunately, there are also serious problems in the development of the forestry and machine-building industries and wheat production in the country. Latvia has already specialized and has some experience in exporting in the listed economic sectors in Eastern Europe. The entry of Latvian investment into Azerbaijan will serve to strengthen economic relations between the two countries and maximize mutual income. In the research work, these issues will be considered and analyzed separately by economic spheres.

From Large to Powerful: International Comparison, Challenges and Strategic Choices for China’s Livestock Industry

Accelerating the construction of a strong livestock industry is of great significance to better guarantee the supply of livestock products and improve the quality, efficiency and competitiveness of the industry. This study constructed an evaluation index system including supply security, scientific and technological support, industrial resilience and international trade to evaluate the strength of China’s livestock industry, and then conducted an in-depth analysis of the issues and challenges of the construction of a livestock powerhouse. The research results showed that China’s livestock industry ranked 5th in the world, such that China was transitioning from being a large-producing livestock country to being a livestock powerhouse, although improvement was still needed to reach the goal. There were significant differences across species. China’s layer industry was a world leader; the pig, sheep and goat, and broiler industries were strong; and the beef cattle and dairy industries were weaker. There are still many challenges, such as the fact that the domestic supply security capacity needs to be strengthened, the level of scientific and technological support needs to be improved, the modern operation system needs to be sound, the industry and supply chain are not highly resilient, the international trade risks are increasing, and the policy support system needs to be improved. It is recommended to improve the institutional mechanism for the construction of the livestock industry, promote a high level of self-reliance and self-improvement in science and technology, build a modern livestock operation system, enhance the resilience and security level of the industry and supply chain, and consolidate and expand international trade and cooperation.

Risk propagation and mitigation mechanisms of disruption and trade risks for a global production network

Owing to the uncertainties of international trade and economic environment, the supply chain risks of global production networks have substantially increased in recent years. In this study, we investigate the supply disruption and international trade risks of an offshoring-based global production network using system dynamics simulation and game theory. The production network is formed by two contract manufacturers (CMs) and one original equipment manufacturer (OEM) located in different countries. First, a system dynamics simulation model considering supply disruption risk is established to evaluate the impacts of different supply disruption modes on the profit of OEM. To counteract the supply disruption risk, dynamic and static penalty mechanisms are proposed. By applying game analysis, we theoretically and numerically demonstrate why and how the dynamic penalty mechanism is superior to the static penalty mechanism. Second, we apply system dynamics and game theory to analyze the international trade risks (tariffs and exchange rates) for the offshoring-based global production network, and a cost-sharing mechanism for mitigating the trade risks is proposed. Finally, based on the study, we summarize some important managerial implications that may be helpful for practitioners.

СУЧАСНА ТЕОРІЯ МІЖНАРОДНОЇ ТОРГІВЛІ

International trade is a system of international commodity-monetary and economic relations, consisting of foreign trade of all countries of the world. International trade is the central link of the link of global economic relations, mediating almost all types of international division of labor and connecting all countries of the world into a single international economic system. The purpose of the article is to highlight the problematic aspects of the modern theory of international trade. Methods used in the research: comparison, comparative analysis, systematization and logic, etc. The hypothesis of the study was the assumption that trade is a means by which countries can develop specialization, increase the productivity of their resources and, in general, increase the total volume of production (develop as a whole). Presenting main material. Economic and political risks in international trade are determined by geographic, political, and demographic factors. Modern international trade is dynamic. The structure and volumes of exports and imports of the turnover of various countries and regions of the world are rapidly and continuously changing. Originality and practical significance of the research. Modern theories of international trade either develop the principles of classical theories, extending them to a larger number of goods, countries and factors of production, or study certain aspects of international trade that for some reason remained unexplained by classical theory. Conclusions. The competitiveness of large national firms is certainly oriented towards national ones. To analyze their activities, Porter's concept of the value chain (value chain, production chain) is used, i.e. the set of business operations of the firm during which it creates added value. Concentration on the company's most expensive links of this chain (for example, R&D and sales) and the transfer of other operations to partner firms (foreign or domestic small and medium-sized enterprises) allows TNCs to maximize the production of added value. For example, the American company Nike dominates the world market of sportswear and shoes, but it almost does not produce them itself, because it distributes orders mainly to foreign partner companies and specializes in design and logistics.

Research on Stress Test of Bank Credit Risk in International Trade Based on DEA Model

International trade financing refers to the sum of all kinds of services provided by banks to meet the capital needs of traders around the capital needs and the laws of capital flow, combined with all aspects of international settlement. As an important part of finance, banking has played a great role in promoting economic and social development. Similarly, economic and social development will also promote the progress and development of banking. With the continuous development of the international economic and financial situation, the potential risks of international trade financing are also growing and changing. Studying the application of stress testing in commercial banks can effectively find the shortcomings of stress testing in commercial banks, which has positive theoretical and practical significance for the docking of management concepts and corporate culture and the construction of a comprehensive risk management system. According to the theory of credit portfolio, this paper puts forward a stress test scheme of bank credit risk in international trade based on DEA, so as to strengthen the management and control of credit risk and ensure the long-term healthy and stable development of banks.

FOREIGN EXCHANGE RATE RISK AND HEDGING INSTRUMENTS IN INTERNATIONAL TRADE

Aim: The aim of this article is to examine the exchange rate risk in international trade and the methods of hedging this risk in detail. Currency risk is when companies are faced with uncertainties arising from fluctuations in exchange rates, which can severely affect companies' operations, profitability and cash flow. The article aims to contribute to the development of effective strategies for companies against exchange rate risk. Method: This article is based on a basic and applied literature review on exchange rate risk and hedging instruments. Academic resources, research articles, and current financial literature have been used to compile information and data on exchange rate risk management. The advantages and disadvantages of prevention tools are discussed based on the analysis of the studies in the literature. Results: The results presented in the article confirm that exchange rate risk is an important risk factor for companies doing business in international trade. Currency fluctuations can affect the profitability of companies, adversely affect their cash flows and threaten their financial stability. However, when correct and effective hedging strategies are used, companies can manage this risk and minimize its negative effects and become more financially secure. Conclusion: The article highlights the importance for companies of managing exchange rate risk in international trade. Derivative products, which are hedging instruments that companies can use against exchange rate risk, have an important role in risk management. By properly assessing exchange rate risk and implementing appropriate hedging strategies, companies can create a more stable international trading environment and achieve long-term success.

Identification of economic risks in international trade based on RF-Gini coefficients Research

The rapid development of economic globalization objectively promotes the prosperity of international trade, which brings challenges and opportunities for China's economic construction. Based on China's macroeconomic data and foreign trade data, this paper uses the random forest (RF) regression algorithm for training and optimizes iterations for different step sizes by adjusting the number of decision trees to obtain the model with the best fit, and later investigates the strength of each factor's influence on international trade through the Gini coefficient. The results show that the exchange rate (0.128), the Engel coefficient of residential households (0.128), and the consumer price index (0.128) have a greater impact on the international trade economy. Thus, to maximize the stability of international trade risks, the state needs to control the inflation rate, focus on the efficient and coordinated development of the country's internal economy, and work to ensure that the nation has the basic consumption capacity, consumption needs, and create a favorable consumption environment.

Designing the Novel Imported Pork Producer Declaration Price Index Using Chinese Customs Import Declarations

Pork accounts for a high proportion of the Chinese population’s meat consumption, and imported pork is heavily traded, reducing supply of domestic pork in the face of continued demand. Global pork markets are becoming more competitive, riding the wind of the bilateral free trade agreement. The World Food and Agriculture Organization (FAO) compiles prices for other major food categories but does not track changes in the imported pork prices in China. This study has filled this gap by designing the Imported Pork Producer Declaration Price Index (PPI_IPD). Using the well-known Producer Price Index (PPI) model, PPI_IPD is based on the data from Chinese customs import declarations, which has high reliability and reasonableness. For this reason, the index can help governments, enterprises, analysts, and others to conduct analysis for imported pork prices in China and avoid international trade risks. The findings show that proposed PPI_IPD is highly correlated with the Chinese domestic pork market and the pork price industry stock market. The index helps monitor changes in international pork prices and is an effective tool for analyzing and controlling trade risks.

Analysis of influencing factors of regional import and export trade based on an artificial neural network

In the post-epidemic era, the global political and economic pattern has accelerated the evolution, and regional imports and export tr[ade has become an important way of political and economic communication between countries. As the research area, this paper selects Shanghai, China, establishes a comprehensive evaluation index system of influencing factors of regional import and export trade, and constructs a high-precision artificial neural network (ANN) model to quantitatively evaluate import factors and export trade in Shanghai, China. The results show that freight capacity, science, technology level, and exchange rate change have a greater impact on the import and export trade in the region. Improving the level of transportation, science, and technology in Shanghai is significant to the sustainable development of Shanghai's foreign trade. The Chinese government can appropriately expand the geographical distribution of import and export business, establish a particular currency portfolio, and disperse foreign exchange risks in international trade and investment, and financing. The Chinese government can consider providing cash flow support for enterprises, which promotes consumption investment and vigorously improves the VAT retention and rebate system. It can focus on solving the problem of tax retention and rebate in scientific research, technical services, and transportation industries to improve market confidence and promote the development of China's import and export trade.

How can net petroleum importers achieve risk aversion in a globalized world: a multi-regional input-output perspective.

Net embodied petroleum importers face greater petroleum security risks in international trade due to their high foreign dependence. Therefore, paying better attention to the national flows and drivers of embodied petroleum consumption can effectively serve net embodied petroleum importers to avoid petroleum security risks and formulate environmental protection policy. This study utilized the multi-regional input-output model to determine the top five embodied petroleum net importers (i.e., the USA, Japan, Germany, the UK, and France) under the economic globalization, and traced the flows of embodied petroleum consumption through international trade. Combined with the logarithmic mean Divisia index method, this study also deeply investigated the drivers of changes embodied petroleum in net imports. The results show that from the perspective of international trade, the USA was not only the largest importer but also the largest exporter of embodied petroleum. Among the trade flows of embodied petroleum, the largest trade flow was from China to the USA, which indicated that China was the world factory and the USA was the consumer power. The embodied petroleum trade markets of Germany, the UK, and France was mainly distributed in Europe & Eurasia resulted from European economic integration. The largest contributor to the decrease of embodied petroleum imports in the top 4 net importers was the petroleum intensity effect. Meanwhile, the import dependence effect was the largest contributor to the increase of France's embodied petroleum net imports. In order to further avoid the risk of petroleum security, it is an effective path worth exploring to construct the diversified petroleum product import strategy and improve energy efficiency.

Prediction Model of International Trade Risk Based on Stochastic Time-Series Neural Network.

With the extreme deterioration of domestic and foreign trade environment, international competition is becoming increasingly fierce. At the same time, many enterprises have loopholes in industrial structure and finance, resulting in many risks in their international trade. Therefore, we must take corresponding measures to effectively manage and avoid risks and realize the healthy and sustainable development of foreign trade enterprises and enterprise economy. This paper designs and proposes a risk prediction model combining ARIMA and BP neural network. The model can get good prediction in different time series and effectively avoid the risk. The model proposed in this paper optimizes the structure of the design model with the support of ARIMA algorithm and BP neural network algorithm and has good accuracy and error control for different time series. The purpose of establishing time series prediction model is to improve the prediction accuracy of the model, and it is also an effective way to enhance the practicability of the prediction model. Applying intersequence analysis method to financial risk prediction can greatly improve efficiency and save cost and has broad application prospects.

Trade conflicts and energy firms' market values: Evidence from China

Using the Sino-U.S. trade conflict on March 22, 2018 as an exogenous shock, this study shows that Chinese energy firms engaged with overseas business experienced statistically significant negative decline in their stock return. We further document that non-state-owned enterprises, firms faced with higher degree of marketization, high-tech firms, firms with a larger proportion of skilled labor and firms under moderate financial constraints suffer more from the Sino-U.S. trade conflict. This study suggests that firms with larger overseas revenue and the upstream sector should be especially careful about the possible risks in international trade.

Import Risks of Agricultural Products in Foreign Trade

This paper aims to identify the main risk groups according to their significance on imports of agricultural products. After analysis of the scientific literature, eight groups of risks associated with agricultural products import were determined: supply risks, demand risks, production risks, management plus operational risks, logistical plus infrastructural risks, political risks, policy plus regulatory risks and financial risks. In order to assess the importance of all import risk groups, three Multicriteria decision support methods (MCDM)—SAW, TOPSIS and Geometric means—for expert evaluation are used. The article introduces a new import risks assessment framework CIRA (Country’s Imports Risk Assessment) contributing to the systematic approach of a country’s international trade risks management. The results order risk groups according to their importance in the following order: production (the most crucial risk group), logistical plus infrastructural, financial, management plus operational, political, supply, policy plus regulatory and demand risks.

Identification of Lithuanian International Trade Risk in Beverages

Abstract Research purpose. The article aims to identify the risk groups arising in foreign trade in the four main groups of processed beverages at a national level. Design / Methodology / Approach. Processed agricultural drinks do not fall into the category of essential food. The article examines four main drink groups: waters (including mineral waters and aerated waters, with additive), beer, wine, and other alcoholic (e.g., spirits, liqueurs, whiskies, rums, gins, vodkas, etc.) beverages. The case of Lithuania is presented. Analysis and assumption of scientific literature and TOPSIS method are used. The study does not aim to assess all risk factors but to identify the groups of risk factors and to rank them according to their importance for each processed beverage sectors supply chains. Findings. Based on the scientific literature analysis, the eight risk groups were identified and were evaluated according to their importance for the beverages supply chain. Experts ranked risk groups taking into account their importance for international processed beverages trade for each product group. The results show that the most important is the Demand risks group for all processed beverages, and the least important is Political risk. The significance of other risk groups for a particular beverage supply chains differs. Supply risks were second in the ‘water with add’ group, while in the ‘other alcohol’ group, it is in fourth place. For the ‘other alcohol’ group, supply risks are less significant. Production risks are one of the most important in the wine trade. Financial risks are one of the most important in the ‘other alcohol’ group. Management and operational risks play an essential role in the beer supply chains. The least significant is three risk groups: Logistical and infrastructural risks, Policy and regulatory risks, Political risks. Originality / Value / Practical implications. The identified risks groups in the four main groups of processed beverages can help shape the country’s trade policy, mitigate trade risks, and effectively manage the agricultural trade beverage subsector. Research results can be practically used both for government or business decisions and for the public sector (trade associations).

International trade risk management under the impact of globalization

Doing business in condition of international trade, a stable and competitive business environment is vital to operate efficiently and attract inward investment. Businesses can assess these factors alongside challenges such as corruption, political instability and terrorism to understand the strengths and weaknesses of an operating environment and for strategic investment decisions. In terms of open economy and globalization trends, business faced a lot of different challenges with their specific risks, hence an effective risk assessment approach and management is extremely vital for economic security of business and especially for all country doing business with other countries trying to succeed. The article presents risk management plan content that helps to structure business risk management process and provide with the measures how to deal with risks.

China’s Export Slowdown and Employment Adjustment in Local Labor Market

Under the dual background of prominent external environmental risks of international trade and China’s promotion of an all-round opening-up pattern and high-quality economic development, stabilizing the development of foreign trade and ensuring priority employment of labor is of great significance to the smooth operation of the national economy. Facing the negative impact of declining foreign trade demand, what is the employment performance of China’s labor market? How does the labor force adjust? What role do the firms play in it?To answer these questions, this paper builds a “Bartik Instrument” for regional export slowdown based on the fact that the decline of global overall trade demand, and examines its impact on employment adjustment in China’s local labor market, using data of China’s General Administration of Customs from 2010 to 2015 and China’s Labor-force Dynamics Survey in 2012, 2014 and 2016. The study finds that: First, export slowdown has significantly inhibited the probability of the local labor force aged 15-64 to participate in the work. For each $1, 000 decrease in the growth of export per capita, the probability the people participating in work decreases by 3.7%. Second, local workers are re-allocated between different employment sectors and different employment statuses. Specifically, the employment probability of manufacturing declines, and the employment probability of service industries rises. It is mainly reflected in the young workers and the workers with lower education. In addition, export slowdown has caused the labor force to adjust from an employee’s employment status to a self-employed status, which reflects the fact that people participate in informal forms of employment in response to negative trade shocks. Third, the analysis of the mechanism shows that export slowdown has a negative impact on the performance of local manufacturing firms, which will pass on negative trade shocks to workers in the form of reduced labor demand, while the performance of service firms has cushioned this shock to some extent. The reasons for the unemployment mainly coming from firm-level factors and the more difficult job hunting further provide indirect evidence for this mechanism.The conclusions of this paper provide theoretical support and empirical evidence for China’s dual strategic goals of effectively resolving trade risks and further promoting employment priority. We need to formulate scientific trade policies to resolve external environmental risks and promote the stability of China’s trade and high-quality development of economy. In addition, we also need to improve the development of new types of employment and build a smoother labor employment security mechanism to enhance the people’s ability to withstand the external uncertain risks.

Research on the Application of Blockchain Technology in International Trade Risk Management

In International Trade, due to the Heterogeneity of language, culture, legal system, etc., the trade payment and settlement process is complicated, and there are many risks. With the wide application of Internet technology in the field of international trade, especially the emergence of blockchain technology, it provides a new way to solve the above-mentioned complicated risk management. Based on the concept and characteristics of blockchain technology, this paper probes into its value and application mode in risk management and control in international trade, in order to promote international trade facilitation and scientific risk management and control.