Contagion Effect in International Trade After the Japanese 311 Earthquake

Abstract

This study investigates spatial contagion on trading markets when an industrialized country is stricken by a natural disaster. We present a test for contagion effects on the cargo trading among the major trading partners. The test is based on a comparison of the correlation coefficients of transnational trade linkages in industrial cargo volumes before and after a disaster. Using the Japanese 311 earthquake in 2011 as a case study, the results show that spatial contagion is observed for neighboring countries exporting to Taiwan. It also found that the occurrence of contagion effect depends on the industrial market share of the linkages, and the contagion effect disperses over time.