Why World Exports Are Susceptible to the Economic Crisis? --- The "Export Overshooting'' Phenomenon

This paper provides some evidence of the ``export overshooting'' phenomenon, i.e., the unusually large deviation of exports from their long-run level. We examined the exports of 11 economies over the period 2000--2009 and found overshooting did occur during the 2001 and 2008 crises. The overshooting, however, was more severe in Taiwan than in other countries, and in the 2008 crisis than in the 2001 crisis. We argue that the bullwhip effect is a major driving force behind the ``export overshooting'' phenomenon. Following this line of argument, Taiwan's increasing susceptibility to economic crisis can be attributed to an increase in cross-border vertical specialization, offshore outsourcing of downstream production and the concentration of her exports in high-tech products that are sensitive to demand shocks.