On this article we assess the affect of the pandemic and the following disruptions to international worth chains (GVCs) on exporting corporations. To this finish, we use a wealthy dataset on the firm-product-partner nation degree for the universe of French corporations engaged in worldwide commerce over the interval from January 2020 to December 2021. We discover that participation in international worth chains elevated corporations’ vulnerability to the pandemic shock, when it comes to each export gross sales and likelihood of survival within the export market – particularly when provide bottlenecks have been extra salient. Corporations situated comparatively extra downstream within the worth chain have been extra severely affected by provide disruptions. On the similar time, our outcomes counsel that exporting corporations benefited from sourcing their core inputs from totally different nations, supporting the speculation that diversification in international worth chains fosters provide chain resilience.
The outbreak of the coronavirus (COVID-19) pandemic resulted in a pointy contraction in each demand and provide, pushed by lockdown measures adopted in lots of nations throughout the globe in response to the severity of the contagion and its geographical unfold. The worldwide nature of the disaster meant that corporations engaged in worldwide commerce have been uncovered to worldwide disruptions on prime of home ones, with weaker overseas demand for exporting corporations, and a discount in provide translating into shortages of intermediate inputs for importing corporations. Corporations concerned in international worth chains – specifically, corporations that each import intermediate inputs and export items – confronted these two further challenges to their skill to supply and subsequently promote their items. On this context, the additional upstream the disruption happens, the better is the potential for provide bottlenecks to propagate detrimental shocks. Thus, the COVID-19 pandemic has triggered a debate amongst lecturers and policymakers on whether or not provide worth chain commerce is primarily a supply of vulnerability or a supply of resilience.
In our latest paper (Lebastard et al., 2023), we exploit wealthy customs knowledge protecting all French corporations engaged in worldwide commerce to estimate the affect of provide chain linkages on exporting exercise throughout the pandemic. The month-to-month frequency of the information permits us to distinguish between three durations throughout the unfolding of the COVID-19 disaster. The primary section was between February and April 2020, when lockdowns brought on exercise to come back to an abrupt halt in quite a lot of non-essential manufacturing and providers sectors. The second section was between Might and August 2020, when exports recovered to some extent in response to the gradual lifting of pandemic-related restrictions. The third section was from September 2020 to the tip of 2021, when disruptions to international provide chains emerged and progressively intensified. We concentrate on all corporations that had exported each month between July and December 2019. Inside this pattern, our remedy group includes all exporting corporations that had imported intermediate inputs a minimum of as soon as over the identical interval. We assess corporations’ efficiency throughout the disaster, when it comes to export gross sales and likelihood of survival within the export market. The richness of the dataset permits us to then deepen our evaluation and have a look at a number of sources of heterogeneity. Particularly, we examine the extent to which the pandemic had a differential affect relying on whether or not corporations are situated extra upstream or downstream alongside the worth chain and on whether or not they diversify the nations from which they supply their inputs.
Corporations in international worth chains: evaluating the COVID-19 disaster and the nice monetary disaster
Our knowledge present that corporations concerned in international manufacturing networks within the pre-crisis interval skilled the sharpest fall in exports on the onset of the COVID-19 disaster, and recovered at a slower tempo than non-GVC exporters after the financial reopening (Chart 1, panel a). In April 2020 GVC exporters recorded export volumes that have been 42% decrease than the degrees recorded in January 2020. For non-GVC exporters, the cumulative decline was much less drastic, reaching a trough in Might 2020 at 28% beneath the extent recorded in January 2020. The 2 teams diverged additional when the pandemic-related restrictions have been lifted in the summertime of 2020 and when the restoration took form over the next yr. By March 2021 nominal exports of corporations not concerned in international worth chains had reached their January 2020 ranges and by September 2021 they’d recovered nicely past their pre-pandemic ranges, whereas it took till December 2021 for GVC corporations to exceed their January 2020 export ranges.
Export efficiency over time of GVC corporations and non-GVC corporations
Curiously, throughout the 2008 international monetary disaster the scenario was reversed (Chart 1, panel b), with GVC corporations recording a lot smaller reductions of their nominal exports than their non-GVC counterparts. In contrast with August 2008, nominal exports of GVC corporations had fallen by 19% in August 2009, whereas exports of comparable non-GVC corporations had fallen by 1 / 4 at their lowest level in Might 2009. As compared with the COVID-19 disaster, the collapse in commerce in 2008 was much less sizeable and fewer abrupt, though it was extra persistent for each kinds of agency, suggesting that whether or not provide worth chain commerce is principally a supply of vulnerability or a supply of resilience finally is determined by the character of the disaster.
The pandemic had a comparatively better affect on GVC corporations’ exports, particularly when provide disruptions intensified
Chart 2 illustrates the estimated impact of participation in international worth chains on firm-level exports. Our remedy group consists of all steady exporters that had imported a minimum of as soon as between July and December 2019; the management group is the remaining exporting corporations within the dataset, i.e. those who didn’t import over that interval. Our outcomes level to the emergence in April and Might 2020 of the primary detrimental and important impact of being a part of a worldwide worth chain throughout the pandemic, and a brand new extra sizeable and protracted decline in exports beginning in October 2020. Estimates from a difference-in-differences mannequin present that certainly over the latter interval exports by non-GVC corporations benefited from the pent-up demand and collected financial savings, whereas these of GVC corporations remained constrained owing to protracted unavailability of imported inputs.