Global value chains during the great trade collapse: a bullwhip effect?

Altomonte, Carlo, Di Mauro, Filippo, Ottaviano, Gianmarco Ireo Paolo, Rungi, Armando and Vicard, Vincent (2012) Global value chains during the great trade collapse: a bullwhip effect? CEP Discussion Papers (CEPDP1131). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions matched with data on worldwide intra-.rm linkages as defined by property rights (multinational business groups, hierarchies of firms). This newly assembled dataset allows us to distinguish firm-level transactions among two alternative organizational modes of global value chains: internalization of activities (intra- group trade/trade among related parties) or establishment of supply contracts (arm’s length trade/trade among unrelated parties). After an overall assessment of the role of global value chains during the trade collapse, we document that intra-group trade in intermediates was characterized by a faster drop followed by a faster recovery than arm’s length trade. Amplified fluctuations in terms of trade elasticities by value chains have been referred to as the 'bullwhip effect' and have been attributed to the adjustment of inventories within supply chains. In this paper we first con.rm the existence of such an effect due to trade in inter- mediates, and we underline the role that different organizational modes can play in driving this adjustment.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2012 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business F - International Economics > F1 - Trade > F15 - Economic Integration L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
Date Deposited:	26 Feb 2024 15:12
Last Modified:	14 Sep 2024 04:45
URI:	http://eprints.lse.ac.uk/id/eprint/121765

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