This article examines the effects of the embargo (blockade) imposed on Qatar in June 2017 by four countries: Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain. Using highly disaggregated product-destination quarterly trade datasets provided by the Qatar General Authority of Customs, we find a significant decline in Qatar’s aggregate imports and consumer welfare (with an increase in the prices of imported goods) in the short run, but not thereafter. Political relations with non-besieging countries seem to be associated with Qatar’s bilateral trade after the blockade, particularly in the first quarter. Shortly after the blockade, countries opposing the blockade experienced a sizable growth in exports to Qatar. In the medium to long run, Qatar succeeded in mitigating the impact of the blockade by diversifying its import origins and adopting new reforms to stabilize the economy and enhance the country’s food security and self-sufficiency.
Intra-firm trade, from parents to affiliates, has been combined with standard models of multinational production (MP) to deliver gravity-style predictions for foreign affiliates sales. Nonetheless, the evidence shows that intra-firm trade is concentrated among a small set of large multinational firms. Using firm level data from 35 countries, we document that only firms belonging to multinational corporations (MNCs) in the upper tail of the firm's size distribution are significantly affected by the distance to their parents. We present a simple framework featuring MNCs selection into intra-firm trade and derive the analytical gravity equations that are consistent with the empirical findings.
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