The Covid-19 pandemic and international supply chains

The Covid-19 pandemic has caused major disruptions in international trade and has raised concerns about adverse effects on international supply chains. Using a unique establishment survey matched with administrative data from Germany, we provide novel evidence on how establishments have adjusted their supply chains in response to pandemic-induced disruptions. We find that establishments that experienced difficulties in obtaining intermediate inputs as a result of the pandemic are significantly more likely to change their network of suppliers than establishments without such problems, especially if disruptions affected imports from abroad. Establishments experiencing supply chain difficulties are more likely to replace a distant with a closer supplier. However, these adjustments in response to the pandemic appear to be temporary.