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

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.

Mapping potentially risky import products in Africa

“…Machines, electronics, and chemicals were the second (12.2%) and third (10.9%) highest categories of risky imports in Africa (by volume), respectively. Similar to related literature(Korniyenko, Pinat and Dew, 2017;Reiter and Stehrer, 2023…”

“…As a fraction of all imported products in Africa, the results imply that between 10% and 15% of Africa's imported commodities are risky. Examples of risky products include soybean, wheat, rare earth, nickel, aluminum, lithium, and semiconductor-related goods, which have also been identi ed in related studies, such asReiter and Stehrer (2023). A list of 100 of the 537 products consistently featured as potentially risky imports in four out of ve years between 2017 and 2021 is shown in TableA.1 in the Appendix.…”

Ending COVID-19 vaccine apartheid through vaccine donations: the influence of supply chains

“…In all this, supply chain issues have specially come to the forefront during the pandemic due to widespread infections, layoffs, and lockdowns (Arvis et al (2023), also see Arvis et al (2018), Ranney et al (2020), Reiter and Stehrer (2023), Rowan and Laffey (2020)). 4 One of the focuses of this paper is to investigate what role that supply chain constraints played in channeling vaccine donations worldwide (beyond the political, economic, and social considerations).…”