Abstract:
This paper examines the impact of floods on regional import dynamics in South Africa. Floods can disrupt firms' production activities and thereby hinder their participation in import markets. At the same time, firms may increase imports to compensate for disruptions in domestic supply networks. We study these opposing adjustment mechanisms using administrative firm-level data combined with detailed customs transactions records from South Africa. Analysing a monthly panel of municipal-level import volumes from 2013 to 2021, we find that floods do not have lasting effects on aggregate import dynamics on average. However, this aggregate null result masks substantial heterogeneity across firm types. Firms operating in the trading sector (intermediaries) respond strongly to flood shocks. Local floods reduce intermediaries' import activity, consistent with broad disruptions to local economic activity and demand. By contrast, intermediaries increase their imports in response to floods that affect the supply chains of local firms. These responses are predominantly driven by imports of low-complexity products and imports from other African trading partners, while similar adjustments are weaker and less robust for other countries. Overall, our results highlight that analyses focusing solely on direct imports by manufacturing firms overlook the central role of intermediaries in shaping regional import dynamics following natural disasters
