Regional Diffusion of Foreign Demand Shocks Through Trade and Ownership Networks

Lionel Fontagné and Gianluca Santoni

Working Papers from CEPII research center

Abstract: International demand shocks are transmitted within the trade and ownership firms' networks and impact directly or indirectly domestic firm productivity and labor misallocation. Considering manufacturing firms for Italy, Spain and France over the period 2009-2017, we quantify these transmission channels from the global economy to the domestic firms, and within the domestic economy across locations, sectors and firms. We compute in a shift share fashion international demand shock at the district-sector-year level as plausibly exogenous to individual firms. Our results confirm that global shocks are transmitted through trade networks and that this transmission is largely mediated by firms' ownership networks both across and within the borders of the three countries.

Keywords: Globalization; Productivity; Networks; FDI (search for similar items in EconPapers)
JEL-codes: F14 F23 F61 (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-eur, nep-geo, nep-int and nep-net
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2022-08

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