How did Trade in GVC-based Products Respond to Previous Health Shocks? Lessons for COVID-19

59 Pages Posted: 2 Nov 2020

See all articles by Anirudh Shingal

Anirudh Shingal

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Prachi Agarwal

Center for Economic Studies and Planning, Jawaharlal Nehru University

Date Written: October 2020

Abstract

Using difference-in-difference analysis, we examine how trade in GVC-based products may have responded to two previous health shocks - SARS and MERS. Our identification strategy exploits differences in the time period of severe incidence of each disease and in the coverage of trading partners that were more adversely affected than others. While we find no evidence for “reshoring” in response to each of these virus outbreaks, there is some evidence for “near-shoring” in the stylized facts on SARS. Empirical analysis also suggests geographical diversification of value chains - import shares from China and UAE declined during each outbreak, while MERS was accompanied by a fall in import concentration; these effects persisted over time for SARS suggesting that the associated value-chains were not resilient to these health shocks. The findings are observed at both the intensive (import value) and extensive (number of HS-6 products and export destinations) margins. The SARS effects are driven by lower-middle-income importers that were more integrated in GVCs, received more investment, were more competitive and were more reliant on the severely affected partners. We expect similar disruptions to GVC-trade from COVID-19, especially diversification away from China.

Keywords: GVC-trade; health shocks; COVID-19; reshoring; near-shoring; GVC-disruptions.

JEL Classification: F1

Suggested Citation

Shingal, Anirudh and Agarwal, Prachi, How did Trade in GVC-based Products Respond to Previous Health Shocks? Lessons for COVID-19 (October 2020). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2020/68, Available at SSRN: https://ssrn.com/abstract=3722109 or http://dx.doi.org/10.2139/ssrn.3722109

Anirudh Shingal (Contact Author)

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Prachi Agarwal

Center for Economic Studies and Planning, Jawaharlal Nehru University ( email )

New Delhi
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
11
Abstract Views
369
PlumX Metrics