Trading through the pandemic: Examining covid-19’s effects on bilateral trade along the global value chain

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School of Business | Master's thesis
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Date

2024

Department

Taloustieteen laitos

Major/Subject

Mcode

Degree programme

Economics

Language

en

Pages

47+4

Series

Abstract

This thesis provides descriptive evidence of the positioning in the global value chain (GVC) as a mitigating factor in COVID-19 induced shock propagation. I study how a country’s export flows were affected by the COVID-19 induced pandemic and its subsequent economic shock, depending on at which stage in the GVC a country’s exports take place. Using country-month panel data, I estimate how a country’s position in the global value chain influences the impact of COVID-19 on its export flows. My thesis adds to the existing literature by explicitly addressing the role of GVC positioning of a country as a mitigating factor of economic shocks. The study reveals that stricter COVID-19 measures, as quantified by a stringency indicator, reduces export performance. Specifically, each unit increase in the stringency index is associated with approximately a 0.514% decrease in exports. Additionally, the findings suggest that countries that are more involved in the early stages of production are less affected by pandemic-induced shocks. Overall, the findings provide valuable insights into how pandemic-related restrictions affect international trade dynamics, emphasising the critical role of both domestic policies and global supply chain positions. The study’s results contribute to the broader understanding of trade resilience and inform policy recommendations for mitigating the adverse effects of global disruptions on trade.

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Thesis advisor

Warnes, Pablo

Keywords

covid-19, international trade, global value chains, policy stringency measures

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https://urn.fi/URN:NBN:fi:aalto-202408185510

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[gradu] Kauppakorkeakoulu / BIZ