Supply Chain Risk and the Pattern of Trade

Working Paper
Published on 10 April 2016


Eber and Malmberg (2016) analyze the interaction of supply chain risk and trade patterns. They construct a model that yields a novel determinant of comparative advantage. In the model, countries with low supply chain risk specialize in risk-sensitive goods. They also show that risk-sensitivity is determined by the number of customized components used in production. Based on their theory, they construct an empirical measure of risk-sensitivity from input-output tables and measures of customization (Rauch, 1999). Using industry-level trade data and a variety of risk proxies, they show that countries with low supply chain risk indeed export risk-sensitive goods disproportionately. The model has policy implications: Countries that strive to attract a risk-sensitive industry such as car manufacturing can do so by improving supply chain reliability.


Maximilian Eber


Hannes Malmberg

University of Minnesota