Trade Disruptions and Reshoring

Chakrabati, A S and Mahajan, K and Tomar, S (2023) Trade Disruptions and Reshoring. Working Paper. SSRN.

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Firms are increasingly concerned about the resilience of their sales and sourcing decisions as conflicts, natural disasters, and labor disputes frequently disrupt trade. Using administrative tax 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 -- inter-state trade relative to intra-state remains 4% lower even six months after all the restrictions were lifted. We show that reshoring explains this phenomenon as plants more dependent on inter-state sales (input-sourcing) shift from inter- to intra-state sales (input-sourcing). We find that state borders rather than distance are salient in explaining the observed reshoring. Finally, we propose a novel product-level measure, incorporating demand and supply characteristics, that determines the extent of reshoring.

Item Type: Monograph (Working Paper)
Subjects: Economics
Date Deposited: 03 Sep 2023 10:41
Last Modified: 03 Sep 2023 10:41

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