Impacts of COVID-19 Pandemic on International Trade in Goods of OECD Countries
Main Article Content
Abstract
The aim of this research is to analyze influences of the COVID-19 pandemic on international trade in goods of OECD countries. It is still too early to make an assessment of the impact of the virus based on full statistical evidence. Hence, we investigate trade among 37 OECD countries in 2019 and 2020 (trade data from OECD) to compare changes in global trade before COVID-19 (in 2019) and in the time of COVID-19 (in 2020). The disease burden of COVID-19 is measured in terms of the number of cases and deaths. We get COVID-19 data from the World Health Organization (WHO) monthly, trade data from OECD quarterly for a trade model that is based on the standard trade gravity variable from the CEPII gravity database [1]. Our findings can be summarized as follows: First, the COVID-19 pandemic has negative effects on the international trade of OECD countries, particularly exporting countries, because the development of the COVID-19 pandemic prevents trading activities worldwide. Meanwhile, the COVID-19 pandemic has positive affects on importing countries because of demand for medical goods or essential foods. However, the level of the COVID-19 effect on exporting countries is much bigger than for importing countries; COVID-19 is truly a disaster for our world. Second, trade policy measures of the response to the COVID-19 pandemic have led to negative effects in the short-term, but in the long-term these measures create positive impacts on international trade and economics as well.
References
[2] WHO Coronavirus (COVID-19) Dashboard, World Health Organization (WHO) (accessed on March 6 2021).
[3] International Monetary Fund, World Economic Outlook: The Great Lockdown, 2020, Washington, D.C., https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020 (accessed on 15 Feb 2021).
[4] Eddy Bekkers and Robert B. Koopman, “Simulating the Trade Effects of the COVID-19 Pandemic - Scenario Analysis based on Quantitative Trade Modelling,” The World Economy, 2020, 00, 1-23.
[5] OECD, “Key Information about the OECD,” 2021, https://www.oecd.org/general/Key-information-about-the-OECD.pdf (accessed on 24 Feb 2021).
[6] Hayakawa Kazunobu, Mukunoki Hiroshi, “Impacts of COVID-19 on International Trade: Evidence from the First Quarter of 2020,” Discussion Paper on the Journal of the Japanese and International Economies Vol. 60, 2021, http://hdl.handle.net/2344/00051734 (accessed on 24 Feb 2021).
[7] Baker, S., Bloom, N., Davis, S., and Terry, S., “Covid-induced Economic Uncertainty and Its Consequences,” 2020, VoxEU.org, https://voxeu.org/article/covid-induced-economic-uncertainty-and-its-consequences (accessed on 24 Feb 2021).
[8] C. T. Vidya and K. P. Prabheesh, “Implications of COVID-19 Pandemic on the Global Trade Networks,” Emerging Markets Finance and Trade, 56 (2020) 10, 2408-2421.
[9] Ali Mohsin, Alam Nafis, Rizvi, Syed Aun R., “Coronavirus (COVID-19) - An Epidemic or Pandemic for Financial Markets,” 2020, 10.1016/j.jbef.2020.100341 (accessed on 15 Feb 2021).
[10] Emmanuel Apergis, Nicholas Apergis, “Can the COVID-19 pandemic and oil prices drive the US Partisan Conflict Index?,” 2020, 10.46557/001c.13144 (accessed on 24 Mar 2021).
[11] Mengyao Fu, Huayu Shen, “COVID-19 and Corporate Performance in the Energy Industry,” 2020, 10.46557/001c.12967 (accessed on 24 Mar 2021).
[12] Luis A. Gil-Alana, Manuel Monge, “Crude Oil Prices and COVID-19: Persistence of the Shock,” 2020, 10.46557/001c.13200 (accessed on 24 Mar 2021).
[13] Omair Haroon, Syed Aun R. Rizvi, “COVID-19: Media Coverage and Financial Markets Behavior - A Sectoral Inquiry,” 2020, 10.1016/j.jbef.2020.100343 (accessed on 24 Mar 2021).
[14] Yen-Chin Liu, Rei-Lin Kuo, Shin-Ru Shih, “COVID-19: The First Documented Coronavirus Pandemic in History,” Biomedical Journal, 43 (August 2020) 4, 328-333,
[15] Jonathan I. Dingel Brent Neiman, “How Many Jobs Can be Done at Home?,” Journal of Public Economics, 189 (2020), 104235, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2020.104235 (accessed on 24 Mar 2021).
[16] Edward Leamer, James Levinsohn, “International Trade Theory: The Evidence,” Handbook of International Economics, 3 (1995), 1339-1394.
[17] Kazunobu Hayakawa and Kohei Imai, “Who Sends Me Face Masks? Evidence for the Impacts of COVID-19 on International Trade in Medical Goods,” IDE Discussion Paper, 810 (2021), 1-28.
[18] OECD, “COVID-19 and International Trade: Issues and Actions,” 2020, https://www.oecd.org/coronavirus/policy-responses/covid-19-and-international-trade-issues-and-actions-494da2fa/ (accessed on 24 Mar 2021).
[19] Pradyot Ranjan Jena, Ritanjali Majhi, Rajesh Kalli, Shunsuke Managi, Babita Majhi, “Impact of COVID-19 on GDP of Major Economies: Application of the Artificial Neural Network Forecaster,” Economic Analysis and Policy, 69 (2021), 324-339.
[20] Richard Baldwin and Beatrice Weder di Mauro, “Economics in the Time of COVID-19,” 2020, A VoxEU.org Book, CEPR Press, https://cepr.org/sites/default/files/news/COVID-19.pdf (accessed on 24 Mar 2021).
[21] Charles Perrings, Simon Levin, Peter Daszak, “The Economics of Infectious Disease, Trade and Pandemic Risk,” EcoHealth, 15 (2018), 241-243.
[22] Lukasz Gruszczynski, “The COVID-19 Pandemic and International Trade: Temporary Turbulence or Paradigm Shift?,” European Journal of Risk Regulation, 11 (2020), 337-342.
[23] Anderson, J. E., “The Gravity Model,” Annual Review Economics, 3 (2011) 1, 133-160.
[24] Anderson, J. E., & Van Wincoop, E., “Gravity with Gravitas: A Solution to the Border Puzzle,” American Economic Review, 93 (2003) 1, 170-192.
[25] Fally, T., “Structural Gravity and Fixed Effects,” Journal of International Economics, 97 (2015) 1, 76-85.
[26] Heid, B., Larch, M., & Yotov, Y., “Estimating the Effects of Non-discriminatory Trade Policies Within Structural Gravity Models,” CESifo Working Paper, 6735 (2017), CESifo.
[27] Yotov, Y. V., Piermartini, R., Monteiro, J. A., & Larch, M., “An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model,” Geneva: World Trade Organization, 2016.
[28] Silva, J. S., & Tenreyro, S., “The Log of Gravity,” The Review of Economics and statistics, 88 (2006) 4, 641-658.
[29] Blair, G., Cooper, J., Coppock, A., Humphreys, M., Sonnet, L., & Fultz, N. “Package ‘estimator’,” Stat, 7 (2018) 1, 295-318.
[30] Wölwer, A. L., Burgard, J. P., Kunst, J., & Vargas, M. “Gravity: Estimation Methods for Gravity Models in R,” Journal of Open Source Software, 3 (2018) 31, 1038.