Trade Disruptions and Reshoring

72 Pages Posted: 29 Jun 2021 Last revised: 21 Oct 2022

See all articles by Anindya S. Chakrabati

Anindya S. Chakrabati

Indian Institute of Management (IIM), Ahmedabad

Kanika Mahajan

Ashoka University

Shekhar Tomar

Indian School of Business

Date Written: June 17, 2021

Abstract

Can temporary trade disruptions lead to a persistent change in plant sales and input sourcing locations? Using plant level administrative data, we show that COVID-19 induced shutdown in March 2020 led to a collapse in domestic trade across states in India, which strikingly continued even after the movement restrictions across state borders were removed. We show that the reshoring channel explains this phenomenon as plants more dependent on inter-state sales (inputs) shift from inter- to intra-state sales (input-sourcing). The extent of reshoring is captured by a novel measure, Scope for Home Expansion, that combines both demand and supply side constraints for a given product at the state level. This channel quantitatively accounts for 7.6 percent of the sales growth in the last quarter of 2020.

Keywords: Domestic trade, Reshoring, Scope for Home Expansion, Trade collapse

JEL Classification: F14, E32, L23, L6

Suggested Citation

Chakrabati, Anindya S. and Mahajan, Kanika and Tomar, Shekhar, Trade Disruptions and Reshoring (June 17, 2021). Available at SSRN: https://ssrn.com/abstract=3869005 or http://dx.doi.org/10.2139/ssrn.3869005

Anindya S. Chakrabati

Indian Institute of Management (IIM), Ahmedabad ( email )

Vastrapur
Ahmedabad, Gujarat 380 015
India

Kanika Mahajan

Ashoka University ( email )

University Campus, Plot #2,
Rajiv Gandhi Education City
Kundli, Haryana 131028
India

Shekhar Tomar (Contact Author)

Indian School of Business ( email )

Hyderabad, Gachibowli 500 019
India

HOME PAGE: http://shekhartomar.com

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