Cross-Border Intra-Firm Trade and the Propagation of Idiosyncratic Shocks: A New Dataset
We study how disruptions in international production networks propagate across countries. We use comprehensive data on natural disasters around the globe over the last two decades from the EM-DAT and SHELDUS database to identify exogenous shocks to sourcing foreign inputs. We then trace out the effect of these shocks on activity of multinationals located in the United States. and their network of foreign affiliates using U.S. Bill of Lading microdata and data on domestic and international ownership linkages from Orbis. Our findings indicate that major natural disasters can have an economically significant negative impact even far from the directly affected areas. Furthermore, the strength of the propagation depends on whether the shocks led to disruptions in intra-firm or arms-length trade. This technical note provides detailed information on the construction of the novel dataset used in Alviarez et al. (2021).