Import Diversification and Trade Resilience

This paper examines how diversification in import sourcing increases resilience to upstream shocks. Using annual global trade data and weekly firm-level import data, we assess how diversification prior to an upstream shock affects the growth rate of imports. Guided by a theoretical framework that introduces risk aversion into global sourcing, we estimate a structural gravity model and report two sets of empirical findings regarding the 2020 pandemic and the 2022 Russian invasion of Ukraine as exogenous shocks. First, we establish that both shocks significantly reduce the growth rate of imports. Second, using various diversification measures defined at the importer-product level as proxies for risk aversion, we show that more diversified importers, reflecting greater risk aversion, exhibit greater resilience to these disruptions. Specifically, importers with higher pre-shock source diversity show lower declines in import growth during a shock. The results align at both the macro and micro levels, enhancing the external validity of our findings and positioning diversification as a scalable resilience strategy.

The seminar series is organized by the Section Economics of Wageningen University (consisting of the groups Agricultural Economics and Rural Policy, Development Economics, Urban Economics, Environmental Economics and Natural Resources, and Economic and Environmental History).

The seminar is aiming to foster the exchange on recent topics in the field of economics. We consider contributions from all fields of economic research and invite speakers from Wageningen, the Netherlands and abroad.

The seminar is organized as a weekly lunch seminar taking place on campus. Meetings are between 12:00 and 13:00 hours. Lunch is served. 

All staff and students are welcome!