Trade Disruption Research Articles

Can large trade shocks cause crises? The case of the Finnish–Soviet trade collapse

We study the macroeconomic consequences of a major trade disruption using the example of the Finnish–Soviet trade collapse in 1991. This is a rare case of a well–identified large trade shock in a developed economy. We find that the shock significantly affected Finnish output. Even so, the trade collapse was insufficient to generate an all–out crisis, and accounts for only a part of the Finnish Great Depression (1990–1993). We show that shocks originating domestically played a major role throughout the depression.

Trade Potential and UN Peacekeeping Participation

ABSTRACT The determinants of a country's UN peacekeeping troop contribution have been persistently studied. Trade, as a crucial self-interest motivation, is one of the important explanatory variables in the extant literature. However, the existing literature presents mixed results on the influence of trade on peacekeeping troop contributions. To capture the effect of trade on contributions precisely, we need to model expectations about future trade volume in a better way. Countries are pressured by the economic and political risks caused by the trade disruption and lobby groups to send peacekeeping troops to enable future trade or secure future investments. Therefore, trade potential, rather than realized trade, drives peacekeeping troop contributions. A gravity model is used to measure the trade potential between the UN peacekeeping mission countries and contributors, and test its relationship with the UN peacekeeping participation. Based on this measurement and a dyadic troop contribution dataset covering the period from 1990 to 2012, this article demonstrates that the counter-factual predictive trade volume is a relevant predictor of UN peacekeeping troop contributions.

Sierra Leone

Sierra Leone continues to grapple with the serious and persistent economic and social effects of the pandemic. Containment measures and trade disruptions in 2020 weakened domestic demand and exports and caused domestic revenues to fall. Moreover, food insecurity has risen from its already-high pre-COVID-19 level. 2021 is set to be another challenging year, with the ‘second wave’ of infections and vaccine-related uncertainties posing further risks to the recovery. As import growth picks up and development partner support returns to pre-2020 levels, Sierra Leone faces urgent external and fiscal financing needs (both around about 2 percent of GDP). Uncertainty about the outlook and larger near-term financing gaps have impeded the immediate resumption of the program under the Extended Credit Facility (ECF). The authorities are therefore requesting a disbursement under the Rapid Credit Facility (RCF) of 17 percent of quota (SDR 35.26 million). This follows the June 2020 RCF (50 percent of quota or SDR 103.7 million) and would bring total access for the past 12-month period to 82 percent of quota (or 5½ percent of GDP), well within the 150 percent of quota annual PRGT access limit. The authorities also received debt relief under the Catastrophe Containment and Response Trust (CCRT) and are participating in the Debt Service Suspension Initiative (DSSI).

The Trade Disruption Hypothesis Fails for State-Sponsored Genocides and Mass Atrocities: Why It Matters

Abstract Our research question is: Do state-sponsored genocides and mass atrocities disrupt trade? In the “conflict disrupts trade” literature there is substantial research on how interstate and intrastate conflict and terrorism affect trade, but very little research on the possible trade disruption effects of genocides and mass atrocities. Our work helps fill this research gap. We bring a suite of estimation methodologies and robustness checks to the question for a pooled sample of 175 countries for the time period 1970–2017. We also test for trade disruption individually for 26 countries that experienced genocide or mass atrocity. Unlike much of the “conflict disrupts trade” literature, we find little empirical support that genocide disrupts trade and at best weak evidence that mass atrocity disrupts trade. Our results have important implications for atrocity prevention policy; when potential atrocity architects evaluate the expected benefits and costs of carrying out atrocity, it seems that, in most cases, they need not worry about trade disruption costs. Our results also matter for empirical research on risk factors for genocides and mass atrocities, particularly for studies that hypothesize risk reduction properties associated with trade.

Genome-Edited Plants: Opportunities and Challenges for an Anticipatory Detection and Identification Framework.

It is difficult to trace and identify genome-edited food and feed products if relevant information is not made available to competent authorities. This results in major challenges, as genetically modified organism (GMO) regulatory frameworks for food and feed that apply to countries such as the member states of the European Union (EU) require enforcement based on detection. An international anticipatory detection and identification framework for voluntary collaboration and collation of disclosed information on genome-edited plants could be a valuable tool to address these challenges caused by data gaps. Scrutinizing different information sources and establishing a level of information that is sufficient to unambiguously conclude on the application of genome editing in the plant breeding process can support the identification of genome-edited products by complementing the results of analytical detection. International coordination to set up an appropriate state-of-the-art database is recommended to overcome the difficulty caused by the non-harmonized bio-safety regulation requirements of genome-edited food and feed products in various countries. This approach helps to avoid trade disruptions and to facilitate GMO/non-GMO labeling schemes. Implementation of the legal requirements for genome-edited food and feed products in the EU and elsewhere would substantially benefit from such an anticipatory framework.

Linkages Between Trade Facilitation and Governance: Relevance for Post-COVID-19 Trade Strategy

The devastating effect of COVID-19 on the economy, health and the financial system is well known now. The pandemic has distorted trade as well. In such a situation, trade facilitation (TF) has emerged as an effective tool to mitigate the devastating effect of COVID-19 on trade. Several countries have initiated policy responses to take necessary steps towards TF measures. However, a relevant question arises: Are all these countries prepared for the effective and efficient implementation of the TF measures? This study attempts to answer this question by identifying the major institutional determinants of TF measures (mainly included in the World Trade Organization [WTO] Trade Facilitation Agreement) based on existing theories, such as the ‘theory of institutions’ and the ‘political economy of trade policy’ approach. It utilizes data of many countries for the years 2012, 2015, 2017 and 2019. The findings of this study suggest that the quality of governance has a significant positive impact on all TF measures. Moreover, the study finds that developing and small-sized countries are more responsive to the impact of an institutional factor on their TF performance than developed and large-sized countries. Therefore, it proposes measures to improve TF performance, which is crucial to minimize further disruptions in trade caused by COVID-19.

Combining household and price data to target food marketing interventions in Nigeria

This study investigates the potential for policymakers in resource-constrained developing countries in Sub-Saharan Africa to combine household and food price data to design spatially targeted food marketing interventions. The focus country is Nigeria. Specifically, the empirical analysis for Kebbi state includes an investigation of production and consumption patterns among farm households to determine the extent to which production and consumption behavior varies across regions. Market-specific price data for crops commonly grown and consumed by these households were then used to identify whether and how prices have varied across spatially disparate markets over time. The results show that there are substantial differences in production and consumption behavior across households within Kebbi state. Additionally, price behavior for rice and millet, varied greatly for one market that had substantial regional production of these crops and is located outside of a main trade corridor. Hence, marketing interventions can be targeted to the more isolated market where households may face more risk of food insecurity due to production shortfalls or trade disruptions. These results show that household and price data can be combined to target food marketing interventions where they are needed most. Additionally, the analysis approach is useful for determining if general or market-specific interventions are more justifiable based on commonalities or differences across markets.

Mali

The COVID-19 pandemic and the August 2020 coup d’état have disrupted more than half a decade of strong economic performance, during which growth averaged 5 percent.1 Growth is projected to decline from 5 percent to -2 percent in 2020 both on account of the pandemic (reflecting a slowdown in external demand, travel, and FDI, as well as the impact of uncertainty and reduced mobility on domestic demand) and of post-coup disruptions in trade, transport, economic and financial flows following the sanctions imposed by the Economic Community of West African States (ECOWAS). Inflation accelerated slightly in recent months but is expected to remain below 2 percent, while the current account deficit is projected to narrow due to higher gold prices (main export) and lower oil prices (main import). Risks around the outlook are exceptionally high in light of the uncertainty surrounding the political transition, the impact of the sanctions on trade and overall activity, and continued deterioration in the security situation. Weak social safety nets amid high informality, food insecurity and a fragile healthcare system exacerbate challenges.

Stacked Trait Products Are As Safe As Non-Genetically Modified (GM) Products Developed By Conventional Breeding Practices

International safety assessments and independent publications conclude that stacking genetically modified (GM) traits (events) through conventional breeding poses no greater risk to food or feed safety than stacking multiple non-GM traits by conventional breeding. Stacked trait products are not substantially different from their conventional comparator or their GM parent plants. Additional safety assessment of a stacked trait product produced by conventional breeding should not be required unless there is a plausible and testable hypothesis for interaction of the traits. However, the different approaches employed for the regulation of stacked trait products between countries results in asynchronous approvals, increasing the potential for trade flow disruptions, and adds to the regulatory burden for product developers. Considering their proven safety and benefit over the past 20+ years, regulatory authorities in some countries do not regulate stacked trait products, while others have simplified the approval process based on experience and sound science, reducing or eliminating the need for additional regulatory oversight. Countries that choose to regulate stacked trait products should consider integrating the more than 20 years of safety assessment experience, history of safe use, and global regulatory experience, in their approach to reduce redundancy, simplify regulations, and minimize the likelihood for trade disruption.
 doi: 10.21423/jrs-v09i1goodwin

Will Seasonality Patterns for Beef Export Sales and Commitments Hold in 2021?

First two paragraphs: Trade occurs when price differences between the two locations are large enough after accounting for transportation cost, exchange rates, tariffs, etc. Exports vary throughout the year since prices reflect current and future supply and demand situations. Seasonality in cattle production, meat demand, and market disruptions are some examples of why wholesale beef prices increase and decrease within a year. The inability to market cattle in the second quarter of 2020 and increased demand for retail beef products due to government gathering restrictions in restaurants caused wholesale beef prices to rise to historical levels. Beef wholesalers can choose to market beef to the domestic market (retail or food service) or the export market. So how did higher domestic wholesale beef prices impact beef export sales and commitments in 2020? Likewise, knowing how the market worked through supply and demand disruptions in 2020, what can we reasonably expect from export sales and commitments in 2021? These questions can be partially answered by looking at historical seasonal export sales and commitment patterns and comparing 2020 to years with large trade disruptions.

POLICY RESPONSE OF ASIAN ECONOMIES TO COVID-2019 PANDEMIC: CHINA, THE REPUBLIC OF KOREA, JAPAN

The countries of Northeast Asia were the first countries in the world, which faced the threat of the COVID-19 pandemic, the epicenter of which was the city of Wuhan in the Chinese province of Hubei. As of the end of March, the spread of the pandemic has been brought under control. Compared to other sub-regions in Asia and the Pacific, Northeast Asia was relatively well prepared for COVID-19 in terms of health systems, access to basic services and connectivity. The national response to COVID-19 was quick and varied. The governments have adopted numerous policies to contain the spread of the virus, as well as to address growing socio-economic challenges and mitigate the impact of the COVID-19 pandemic. To respond to the COVID-19 pandemic, the governments of China, the Republic of Korea and Japan have leveraged an existing memorandum of cooperation and a joint action plan to implement joint responses to pandemic influenza and new and re-emerging infectious diseases. However, the COVID-19 pandemic and the necessary containment measures have resulted in a sharp decline in economic activity, widespread loss of jobs and livelihoods and disruptions in the provision of basic services. In 2020, the countries in the region experienced a marked economic decline. After a significant drop in domestic demand and trade disruptions in the first half of 2020, the second half of 2020 was characterized by a gradual recovery in exports, there are currently signs of a recovery. The aim of current research was to investigate the practices of the three Asian countries – China, the Republic of Korea and Japan – in supporting businesses and citizens who found themselves in a difficult life situation due to the coronavirus, in order to identify optimal examples of economic policy during pandemic. The most effective measures to support the economy of China during the COVID-19 pandemic were food supply; control over the increase in the production; online services launched by the government. The most effective measures to support the economy of the Republic of Korea were: the Bank of Korea has cut its key rate to a record low benchmark; the Bank of Korea has provided the loans to the country’s commercial banks; the country’s government has allocated considerable funds to support South Korean SMEs; Korea Trade and Investment Promotion Agency has actively developed a global online trading platform; consumption taxes in case of car purchases have been reduced significantly to support the market; the enterprises with an annual turnover of less than Korean WON 60 million won have been provided with VAT exemptions. The most effective measures which have been taken by the government of Japan to were: there have been allocated USD 4.1 billion to support Japanese SMEs; there has been announced the development of a package of large-scale measures to support the country’s economy; there have been introduced special conditions for lending to SMEs; the activities of the companies involved in the fight against the pandemic have been subsidized; there has been introduced a simplified license renewal procedure for import/export and tariff quota certificates; the Bank of Japan has doubled up to USD 112 billion the exchange-traded fund (ETF) buyback program; a payment has been provided for the citizens who cannot work; a consulting service has been organized to support SMEs; for SMEs which were forced to send part of their employees on vacation or training, the state would cover the costs of forced leave in the amount of 4/5 during 100 days.

Влияние COVID-19 на экономику и внешнеэкономические связи Республики Корея

The COVID-19 pandemic has negatively impacted global trade in goods and services and has exposed weaknesses in the existing structures for international interaction within the global value chains in the Asia-Pacific region, including the United States of America, Japan and the Republic of Korea. The dependence of these economies on the People's Republic of China negatively affected the production processes of the largest industrial companies. To minimize the existing risks, countries are actively participating in and developing free trade agreements, which helps to diversify the geography of participants in global value chains and sales markets. The Government of the Republic of Korea has demonstrated its ability to effectively combat the COVID-19 pandemic by implementing its own strategy of preventive measures and economic stimulus measures. In addition, two new foreign economic initiatives were launched: the New Southern Policy and the New Northern Policy, which could be based on existing and new free trade agreements. Active involvement in global value chains and participation in free trade agreements allowed the Republic of Korea to increase its competitive advantages in the world market and develop its economic potential. The diversification of trading partners under free trade agreements had a positive impact on the country's economic performance during the pandemic and helped to minimize the negative impact of disruptions in foreign trade. The Russian Federation has the opportunity to integrate into new foreign economic trends in South Korea, and there are opportunities to increase the volume of mutual trade between the countries. One of the ways to achieve this goal may be the signing of a bilateral agreement of a free trade zone between the Republic of Korea and the Eurasian Economic Union.

Technological Import Dependence of the Russian Economy: An Assessment Using Input-Output Tables.

—The article analyzes the level of import dependence of Russian industry in relation to the supply of intermediate consumption products from China and in general from all countries of the world. The study was carried out during the period of the increasing spread of coronavirus infection in order to determine the industries that are potentially the most vulnerable to possible disruption of foreign trade. The information base for calculations is the official data on the volume and structure of Russia’s foreign trade and the input–output tables of the WIOD. As a result of calculations using several alternative models, it was found that Russian industry, even with significant integration into the world production chains, remains sufficiently resistant to local supply shocks. The analysis of import dependence in terms of imported raw materials and components can be used in the study of any shocks in foreign trade, it makes it possible to more accurately assess the effects of trade agreements or sanctions, as well as the effect of the devaluation of the national currency.

Effects of COVID-19 and Other Shocks on Papua New Guinea's Food Economy: A Multi-Market Simulation Analysis

Understanding how the Papua New Guinea (PNG) agricultural economy and associated household consumption is affected by climate, market and other shocks requires attention to linkages and substitution effects across various products and the markets in which they are traded. In this study, we use a multi-market simulation model of the PNG food economy that explicitly includes production, consumption, external trade and prices of key agricultural commodities to quantify the likely impacts of a set of potential shocks on household welfare and food security in PNG. In this study, we use a multi-market simulation model of the PNG food economy that explicitly includes production, consumption, external trade and prices of key agricultural commodities to quantify the likely impacts of a set of potential shocks on household welfare and food security in PNG. We have built the model to be flexible in order to explore different potential scenarios and then identify where and how households are most affected by an unexpected shock. The model is designed using region and country-level data sources that inform the structure of the PNG food economy, allowing for a data-driven evaluation of potential impacts on agricultural production, food prices, and food consumption. Thus, as PNG confronts different unexpected challenges within its agricultural economy, the model presented in this paper can be adapted to evaluate the potential impact and necessary response by geographic region of an unexpected economic shock on the food economy of the country. We present ten simulations modeling the effects of various shocks on PNG’s economy. The first group of scenarios consider the effects of shocks to production of specific agricultural commodities including: 1) a decrease on maize and sorghum output due to Fall Armyworm; 2) reduction in pig production due to a potential outbreak of African Swine Fever; 3) decline in sweet potato production similar to the 2015/16 El Niño Southern Oscillation (ENSO) climate shock; and 4) a decline in poultry production due to COVID-19 restrictions on domestic mobility and trade. A synopsis of this report, which focuses on the COVID-19 related shocks on the PNG economy is also available online (Diao et al., 2020).The second group of simulations focus on COVID-19-related changes in international prices, increased marketing costs in international and domestic trade, and reductions in urban incomes. We simulate a 1) 30 percent increase in the price of imported rice, 2) a 30 percent decrease in world prices for major PNG agricultural exports, 3) higher trade transaction costs due to restrictions on the movement of people (traders) and goods given social distancing measures of COVID-19, and 4) potential economic recession causing urban household income to fall by 10 percent. Finally, the last simulation considers the combined effect of all COVID-19 related shocks combining the above scenarios into a single simulation. A key result of the analysis is that urban households, especially the urban poor, are particularly vulnerable to shocks related to the COVID-19 pandemic. Lower economic activity in urban areas (assumed to reduce urban non-agricultural incomes by 10 percent), increases in marketing costs due to domestic trade disruptions, and 30 percent higher imported rice prices combine to lower urban incomes by almost 15 percent for both poor and non-poor urban households. Urban poor households, however, suffer the largest drop in calorie consumption - 19.8 percent, compared to a 15.8 percent decline for urban non-poor households. Rural households are much less affected by the COVID-19 related shocks modeled in these simulations. Rural household incomes, affected mainly by reduced urban demand and market disruptions, fall by only about four percent. Nonetheless, calorie consumption for the rural poor and non-poor falls by 5.5 and 4.2 percent, respectively.

Is the Global Food Supply Chain during the COVID-19 Pandemic Resilient? <br/>A Review Paper

The Coronavirus outbreak has brought a global health emergency with a newfound domestic and international trade disruption such as restrictions on imports and exports of major food commodities, loss of lives, closure of various essential institutions, and the likes. With the spread of COVID-19 around the world, the food and agricultural sector have experienced a negative downturn with an immense labor loss, inadequate distribution of food inputs around the world. Thus, the question arises that to what extent can the food supply chain remain resilient to the effects of the pandemic? And, what are the immediate and lasting resolutions? Importantly, the resilience of the food supply chain is critical to mankind’s survival. In this paper, we highlighted the main challenges faced by the resilience of the global food supply chain. We also present policies and suggestions that focus on mitigating the impact of the pandemic on food production and distribution systems.

Impact of the coronavirus pandemic on the international supply chain of Swedish firms and measures to reduce vulnerability. A survey in collaboration with the Confederation of Swedish Enterprise

This paper reports on the results of a survey of 3441 Swedish companies soliciting information on supply chain disruptions and responses in the first phase of the COVID-19 pandemic. The findings reveal that 69.5% of Swedish companies that use foreign suppliers experienced supply disruptions during the pandemic. In more than two-thirds of these cases problems persisted at the time the survey was implemented (November 2020). Planned measures to reduce vulnerability to future disruptions include increased inventories, spreading purchases over more suppliers and countries, and increasing domestic or regional sourcing. Only a small share of firms planned to re-shore production. Companies have heterogeneous views on desired state action to reduce vulnerability to future trade disruptions, ranging from calls to keep markets open, to doing more at EU level to coordinate crisis measures, strengthening crisis preparedness, and support for domestic producers through public procurement and finance.

Great Water Wall in South China Sea: Maritime Designs of China under Mahan’s Theory of Sea Power

Seas play a vital role in shaping and reshaping the course of global politics, from developing empires to new global orders. Virtually 80 percent of China’s trade resources passes through the Seas and mostly by South China Sea, so it has initiated developments in South China Sea, from building artificial island, light houses to air strips to secure its trade routes. The aim of the study is to clarify the assumptions that China is building a ‘sand wall’ or ‘water wall’ like great wall to secure its maritime trade. Descriptive, analytical approach has been adopted to study the marvel; Mahan’s theory of Sea power has been applied to quantify the developments made by China. It concludes that China is striving for naval supremacy as per Mahan’s theory along with synthesis of Mao’s ‘Active Defence’. Hence Peaceful and integrated strategies are required to minimize the implications of disruption of seaborne trade.

Port Efficiency and Supply Chain: Implication for Bangladesh

Port and supply chains are closely connected to each other as a port is considered as an important node of the global supply chain. Sothe efficiency level of port has an impact on the performance of supply chain operations. Chittagong port is the principal seaport of Bangladesh and it provides a major gateway to the outside world. The cost of doing business is increasing as a result of the inefficiency in the main seaport of the country. In this paper, an effort has been taken to examine the efficiency of Chittagong Port and the causal factors of inefficiency. The impact of inefficiency at Chittagong port on the supply chain of Bangladesh has also been identified. To do this, at first a relationship has been built between port efficiency and supply chain in respect of Bangladesh.
 Relevant data has been gathered through extensive review of the literature, field surveys, interacting with top management of different business entities such as shipping agency, freight forwarder, logistics companies, exporter, importer as well as Government regulatory and monitoring bodies using both the structured and unstructured questionnaires.
 The study has revealed that theinefficiency at Chittagong port causes serious consequences on the supply chain of exporter and importer and lead to loss and disruption of trade and ultimately incur extra costs and time. This paper, therefore, recommends a substantial infrastructure improvement to Chittagong port along with other related measures in order to facilitate the supply chain of exporter and importer.

Pandemics and Multiple Crises in Latin America.

The crisis caused by the Covid-19 pandemic is certainly one of the worst in recent Latin American history. Forecasts for 2020 show a drop in the exports sector of approximately 23%, and a 9% reduct ...

Chinese whispers: COVID-19, global supply chains in essential goods, and public policy

If taken at their word, senior policymakers in the major economic powers have drawn adverse conclusions concerning the performance of cross-border supply chains during the first 6 months of the COVID-19 pandemic. That such supply chains often implicate China, the origin of the pandemic, has also led to claims that trading partners have become too dependent on Chinese supplies. This in turn has led to policy interventions designed to reconfigure supply chains, which if adopted broadly could revise the terms upon which international business operates. A critical evaluation of this policymaker assessment is presented, based on near-time monitoring of medical and food trade disruption induced by government policy, on fine-grained trade data on the pre-pandemic international sourcing patterns of medical goods and medicines by France, Germany, the United Kingdom, and the United States, on statements from U.S. government health experts before and during the pandemic on the frequency and sources of medicine shortages, and on the U.S. Food and Drug Administration’s latest evidence on the causes of medicine shortages in 2020. Such evidence vitiates the adverse conclusions mentioned above, but raises important questions about the factors that determine policy towards international business during a time of intensifying geopolitical rivalry.