Banu Demir-Pakel to deliver Inaugural lecture on Wednesday 11 June

Rethinking international trade

In her lecture entitled “Firms, Frictions, and Connections: Understanding the Origins and Implications of Trade”, Banu Demir-Pakel will reflect on how international trade is shaped by the ability of firms to form and sustain productive business connections - with buyers and suppliers - and how various frictions constrain those connections. These frictions may be financial (such as limited access to credit), informational (such as difficulty in identifying reliable business partners), or infrastructural (such as poor transport or digital access). She will argue that these constraints are not negligible but they determine who can participate in trade, how production is organised, and how economies respond to shocks.

This perspective is particularly relevant today, as recent policy shifts – such as the renewed wave of trade wars in 2025 – highlight how vulnerable global trade remains to policy uncertainty and geopolitical tensions. These developments have led to renewed concerns about supply chain disruptions, revealing the fragility of firm-to-firm relationships and highlighting the need to understand trade not as frictionless exchange, but as a network shaped by real-world constraints.

Theoretical and empirical perspectives

Using both theoretical models and detailed firm-level data, Demir-Pakel will show in her lecture that trade is not an anonymous exchange of goods, but a complex process involving relationships between firms, where frictions and complementarities play a crucial role. This has wide-reaching implications: from explaining why certain firms or regions remain excluded from global markets, to understanding how trade networks amplify or absorb disruptions.

Banu Demir-Pakel, who was appointed as Professor of Applied Regional Economics  in November 2023, will also elaborate on how economic policy - such as investments in infrastructure or climate regulations - can reshape firm-to-firm connections, and what this implies for the design of more effective policy interventions. 

About the research of Banu Demir-Pakel

Banu Demir-Pakel specialises in international trade, firm dynamics, and environmental economics. In her research, she combines theoretical and empirical approaches by developing convincing identification strategies based on actual policy changes or policy interventions (e.g. transport infrastructure improvements), and then interpret the empirical results using theoretical insights. Her work directly informs policymaking.