CGPA Working Paper: Agri-Food Trade: Globalization, Nearshoring, and Trade Networks

Recent geopolitical events—including, the U.S.-China trade war, Brexit, the COVID-19 pandemic, and the Russian invasion of Ukraine—have heightened trade policy uncertainty, disrupted supply chains, and accelerated nearshoring. These shifts may have reshaped the role of globalization in agri-food trade, particularly in how distance, trade networks measured by the number of export destinations, and nearshoring influence trade flows. Using a structural gravity model, this study examines how these factors in agri-food trade have changed between 2010 and 2023. The results indicate that recent globalization trends have increased the impact of distance on primary commodity trade but reduced it for processed food trade, though these changes do not appear to be driven by any single event. Nearshoring has reduced trade in primary and minimally processed food but has not affected processed food trade. While trade networks do not influence primary commodity trade, they enhance trade in both minimally processed and processed food products. Importantly, the interaction between nearshoring and trade networks expands trade, suggesting that these factors jointly mitigate trade frictions. Finally, the findings indicate that countries with broader trade networks experience lower trade costs associated with distance.