The authors of this IMF Working Paper have constructed a new database that covers production and trade in 136 primary commodities and 24 manufacturing and service sectors for 145 countries. They use this data to estimate the spillover effects of trade fragmentation scenarios in a multi-country, multi-sector general-equilibrium model that accounts for the unique demand and supply characteristics of commodities. The results of their analysis suggest that trade fragmentation can have significant impacts on both the global economy and individual countries, with some sectors and countries being more vulnerable to these effects than others. The authors conclude that policymakers should take into account the potential impacts of trade fragmentation when designing trade policies and strategies.
