Research

Supply chains in times of crisis: Evidence from Kenya’s production network

with Peter Wankuru Chacha and Benard Kipyegon Kirui
Working paper
PEDL C-19 blog posts:
Domestic and international trade flows | Employment in formal firms

Abstract

Trading relationships between suppliers and buyers play a key role in transmitting both local and international shocks. We use rich transaction-level data from Kenya to study the relevance of a firm’s domestic network position and links to international supply chains in determining its trajectory during the COVID-19 crisis. We document that firms with varying degrees of exposure to import and export markets differ substantially in terms of their size and age profile. The specialisation of direct importers, often intermediaries, on international markets made them very vulnerable to the initial COVID-19 shock. Exporters, one-third of which operate in primary sectors, experienced a less drastic downturn. We find that both importers and exporters adjust their domestic supply chains in response to international trade shocks. Sourcing from international markets crowds in domestic purchases, while sales abroad and at home are substitutes. Diversified domestic networks further helped to mitigate the impact of severe shocks like the COVID-19 crisis and contributed to a stronger recovery.

Mapping Kenya’s production network

with Peter Wankuru Chacha and Benard Kipyegon Kirui

In brief

We use administrative tax records to track over 4 million firm-to-firm relationships between 57,000 formal private sector firms in Kenya. The data allows us to map the domestic production network and study trade flows between regions and sectors over the course of six years. We further study links of the network to international supply chains, proximity to final consumers and the public sector.

Upgrades to internet infrastructure and domestic market integration

In brief

This project studies the relevance of upgrades to digital infrastructure for domestic firm-to-firm trade and the geographic dispersion of welfare gains from greater connectivity in Kenya.

Tracking price dynamics during a pandemic in Kenya and Uganda

with George Kariuki Kinyanjui and Doreen K. Rubatsimbira
Bank of Uganda working paper | IGC report | Policy brief

Abstract

As the Covid-19 pandemic unfolded across the globe, the economic impact has been characterised by a combination of supply and demand shocks with an a priori unclear effect on price dynamics. Using real-time primary price data covering a wide range of geographic areas, we track the impact of the pandemic on prices in Kenya and Uganda during the initial shutdown period and the subsequent re-opening phase. We find evidence that price levels for essential food items were higher during the initial phase of the pandemic. The impact was short-lived and moderate in Kenya, but continued for an extended period in Uganda where government restrictions were tighter and in place for a more prolonged period of time. We further combine the price data with information on changes in visiting patterns of smartphone users at localities like workplaces, grocery stores and other retail locations. The results suggest that mobility patterns continue to have an impact on price dynamics beyond the initial shutdown phase. We estimate that a 10 percentage point reduction in activities at workplace locations leads to a 0.3% and 1.4% increase in food prices in Kenya and Uganda respectively. This result is stable across a variety of empirical specifications, although we cannot rule out that the effect is zero in Kenya.

Who is paying the price? The response of consumer prices to political disruptions

In brief

This project looks at the implications of protests and political disruptions for consumer price dynamics in Ethiopia and Pakistan combining geo-referenced secondary and primary data.

Pre-doctoral publication

Taxing investments in the Asia-Pacific region: the importance of cross-border taxation and fiscal incentives.

World Tax Journal 8(2), pp.193-223 (2016)
with Katharina Nicolay
ZEW working paper | Published version