Trade Disruptions and Reshoring
By Shekhar Tomar, Anindya Chakrabarti, Kanika Mahajan
AEJ: Applied Economics | January 2025
AEJ: Applied Economics | January 2025
DOI
www.aeaweb.org/articles?id=10.1257/app.20230270
Citation
Tomar, Shekhar., Chakrabarti, Anindya., Mahajan, Kanika. (2024). Trade Disruptions and Reshoring AEJ: Applied Economics www.aeaweb.org/articles?id=10.1257/app.20230270.
Copyright
AEJ: Applied Economics, 2024
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Abstract
Firms are increasingly concerned about the resilience of their sales and sourcing decisions. Using administrative 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 five percent lower even six months after all restrictions were lifted. Reshoring explains this phenomenon as plants more dependent on inter-state sales (input-sourcing) shift from inter- to intra-state sales (input-sourcing). State borders rather than distance are salient in explaining the observed substitution. We propose a novel product-level measure that determines the extent of reshoring.
Shekhar Tomar is an Assistant Professor of Economics and Public Policy at the Indian School of Business (ISB). He completed his PhD from the Toulouse School of Economics in 2017 and worked as a Research Economist at the Reserve Bank of India (RBI) between 2017 and 2019. His research lies at the intersection of macroeconomics, trade, and finance, and he extensively uses micro-data to answer macroeconomic questions in his work. During his stint at the RBI, he regularly contributed to policy work on monetary policy and trade issues in India.

Shekhar Tomar