Supply Shocks in Global Value Chains and Export Performance: Evidence from Bangladesh Using Triple Difference-in-Differences

Miah Mohammad Rayhan

Ichihashi Masaru

The Journal of Development Studies

In this paper, we evaluate how supply shocks in global value chains, such as the lockdown in China during the coronavirus pandemic, affected firm-product-level export performance in Bangladesh, which is a least-developed country where domestic inputs are inadequate due to capacity constraints. Transaction-level customs data on the universe of Bangladeshi apparel manufacturing firms are used in the analysis. We apply a triple difference-in-differences approach to compare the woven apparel exports of the firms that relied on China for inputs before and after the lockdown with those of knit apparel and firms that depended on the rest of the world as a comparison group. The results show that firms exposed to the Chinese input supply shock experienced a 36.5% decline in woven apparel exports after the lockdown. A plausible explanation for the decline in exports is the reduced shipment size driven by the constrained production capacity due to the shortage of inputs from China. We also find that exposed firms whose exports were highly concentrated in the European Union and the United States incurred an additional 18% decline compared to other firms.

Lockdown policy

China

GVCs

intermediate inputs

triple difference-in-differences

quadruple difference-in-differences

eng

Taylor & Francis

This is an Accepted Manuscript of an article published by Taylor & Francis in The Journal of Development Studies on 03 Jun 2024, available at: https://doi.org/10.1080/00220388.2024.2354237.

This is not the published version. Please cite only the published version.

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[DOI] https://doi.org/10.1080/00220388.2024.2354237 isVersionOf