Import Substitution Revival and the Welfare Gains of International Fragmentation

Import Substitution Revival and the Welfare Gains of International Fragmentation | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Import Substitution Revival and the Welfare Gains of International Fragmentation ARNOLD BLONDEL NJIKE OYA This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-5839137/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study examines the welfare effects of a trade shock resulting from a complete shutdown of trade in intermediate inputs. Novel insights into the implications on consumption possibilities are derived within the framework of a model incorporating endogenous quality and substitution between intermediate inputs and final goods. The analysis shows that the loss of access to foreign intermediate inputs by a country’s local producers increases the price of final goods. However, this increase is partially offset by a rise in imports of final goods utilizing previously imported inputs. Empirical evidence establishes the existence and increasing prevalence of this phenomenon over time. JEL classification code : F100, F620 Global supply chains Welfare effects of trade Quality Technology Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. 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Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-5839137","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":437930806,"identity":"1568fccd-d5a0-4543-b0fb-817119b7cdf6","order_by":0,"name":"ARNOLD BLONDEL NJIKE OYA","email":"data:image/png;base64,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","orcid":"https://orcid.org/0000-0002-4905-7230","institution":"Pantheon-Sorbonne University Department of Economics: Universite Paris 1 Pantheon-Sorbonne UFR 02 Economie","correspondingAuthor":true,"prefix":"","firstName":"ARNOLD","middleName":"BLONDEL NJIKE","lastName":"OYA","suffix":""}],"badges":[],"createdAt":"2025-01-16 06:29:50","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-5839137/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-5839137/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":91820466,"identity":"008dad49-3d09-4c19-a4bc-1a780f922001","added_by":"auto","created_at":"2025-09-22 07:15:26","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":482715,"visible":true,"origin":"","legend":"","description":"","filename":"ArnoldNJIKETIVA30.pdf","url":"https://assets-eu.researchsquare.com/files/rs-5839137/v1_covered_613e7d9f-b524-4303-8834-ba4eae2aacbd.pdf"}],"financialInterests":"","formattedTitle":"Import Substitution Revival and the Welfare Gains of\nInternational Fragmentation","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"Global supply chains, Welfare effects of trade, Quality, Technology","lastPublishedDoi":"10.21203/rs.3.rs-5839137/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-5839137/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study examines the welfare effects of a trade shock resulting from a complete shutdown of trade in intermediate inputs. 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