Arm's-Length Trade : A Source of Post-Crisis Trade Weakness

Trade growth has slowed sharply since the global financial crisis. U.S. trade data highlights that arm's-length trade —trade between unaffiliated firms—accounts disproportionately for the overall post-crisis trade slowdown. This is partly beca...

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Main Authors:	Lakatos, Csilla, Ohnsorge, Franziska
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2017
Subjects:	TRADE INTRA-FIRM TRADE MULTINATIONAL CORPORATIONS SLOWDOWN
Online Access:	http://documents.worldbank.org/curated/en/659891499793795498/Arms-length-trade-a-source-of-post-crisis-trade-weakness http://hdl.handle.net/10986/27647

id	okr-10986-27647
recordtype	oai_dc
spelling	okr-10986-276472021-06-08T14:42:47Z Arm's-Length Trade : A Source of Post-Crisis Trade Weakness Lakatos, Csilla Ohnsorge, Franziska TRADE INTRA-FIRM TRADE MULTINATIONAL CORPORATIONS SLOWDOWN Trade growth has slowed sharply since the global financial crisis. U.S. trade data highlights that arm's-length trade —trade between unaffiliated firms—accounts disproportionately for the overall post-crisis trade slowdown. This is partly because arm's-length trade depends more heavily than intra-firm trade on emerging market and developing economies (EMDEs), where output growth has slowed sharply from elevated pre-crisis rates, and on sectors with rapid pre-crisis growth that boosted arm's-length trade pre-crisis but that have languished post-crisis. Compounding such compositional effects, arm's-length trade is also more sensitive to changes in demand and real exchange rates. For example, the income elasticity of arm's-length exports is about one-fifth higher than that of intra-firm exports. Hence, post-crisis global growth weakness has weighed more on arm's-length trade than on intra-firm trade. Unaffiliated firms may also have been hindered more than multinational firms by constrained access to finance during the crisis, heightened policy uncertainty, and their typical firm-level characteristics. 2017-07-19T18:20:52Z 2017-07-19T18:20:52Z 2017-07 Working Paper http://documents.worldbank.org/curated/en/659891499793795498/Arms-length-trade-a-source-of-post-crisis-trade-weakness http://hdl.handle.net/10986/27647 English en_US Policy Research Working Paper;No. 8144 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	TRADE INTRA-FIRM TRADE MULTINATIONAL CORPORATIONS SLOWDOWN
spellingShingle	TRADE INTRA-FIRM TRADE MULTINATIONAL CORPORATIONS SLOWDOWN Lakatos, Csilla Ohnsorge, Franziska Arm's-Length Trade : A Source of Post-Crisis Trade Weakness
relation	Policy Research Working Paper;No. 8144
description	Trade growth has slowed sharply since the global financial crisis. U.S. trade data highlights that arm's-length trade —trade between unaffiliated firms—accounts disproportionately for the overall post-crisis trade slowdown. This is partly because arm's-length trade depends more heavily than intra-firm trade on emerging market and developing economies (EMDEs), where output growth has slowed sharply from elevated pre-crisis rates, and on sectors with rapid pre-crisis growth that boosted arm's-length trade pre-crisis but that have languished post-crisis. Compounding such compositional effects, arm's-length trade is also more sensitive to changes in demand and real exchange rates. For example, the income elasticity of arm's-length exports is about one-fifth higher than that of intra-firm exports. Hence, post-crisis global growth weakness has weighed more on arm's-length trade than on intra-firm trade. Unaffiliated firms may also have been hindered more than multinational firms by constrained access to finance during the crisis, heightened policy uncertainty, and their typical firm-level characteristics.
format	Working Paper
author	Lakatos, Csilla Ohnsorge, Franziska
author_facet	Lakatos, Csilla Ohnsorge, Franziska
author_sort	Lakatos, Csilla
title	Arm's-Length Trade : A Source of Post-Crisis Trade Weakness
title_short	Arm's-Length Trade : A Source of Post-Crisis Trade Weakness
title_full	Arm's-Length Trade : A Source of Post-Crisis Trade Weakness
title_fullStr	Arm's-Length Trade : A Source of Post-Crisis Trade Weakness
title_full_unstemmed	Arm's-Length Trade : A Source of Post-Crisis Trade Weakness
title_sort	arm's-length trade : a source of post-crisis trade weakness
publisher	World Bank, Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/659891499793795498/Arms-length-trade-a-source-of-post-crisis-trade-weakness http://hdl.handle.net/10986/27647
_version_	1764465637439045632

Arm's-Length Trade : A Source of Post-Crisis Trade Weakness

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