Impacts of COVID‐19 on Global Value Chains

Abstract

We investigate the impacts of COVID‐19 on global value chains by examining bilateral trade in finished machinery products from January to June in both 2019 and 2020. We use the numbers of COVID‐19 cases and deaths as measures of the impact of the pandemic. Specifically, we investigate how these impacts affect value chains in three scenarios—countries that import finished machinery products, countries that export finished machinery products, and countries that export machinery parts to countries exporting finished machinery products—to assess the impacts on demand, output, and supply chain, respectively. In our analysis, the largest negative impacts were from supply chain effects, followed by output effects. In contrast, we did not find significant impacts from demand effects. We also found that output effects are not so strong in intra‐Asian trade compared with trade in other regions.

International Production Networks Are Overcoming COVID-19 Shocks: Evidence from Japan's Machinery Trade

“…We also demonstrated that the COVID-19 brought positive demand shocks for specific products with special demand due to its nature in addition to direct and indirect negative supply shocks and negative demand shocks, which partially explain heterogeneous effects not only among sectors but also among products in the same sector. While Hayakawa and Mukunoki (2021) demonstrated that the largest negative impacts were from supply chain effects and that no significant impact was found from demand effects, our empirical study rather emphasizes the impacts from negative demand shocks as well as claiming the importance of positive demand shocks for some specific products related to teleworking, disinfection, and stay-at-home activities and negative supply shocks.…”

“…6 Baldwin and Freeman (2020) discussed initial negative supply shocks on imports from China and its quick recovery. Hayakawa and Mukunoki (2021) analysed the impacts of COVID-19 on global value chains using accumulated monthly trade data from January to June and demonstrated the negative supply effects through supply chains. Also, Meier and Pinto (2020) focused on the U.S.-China production link and revealed that the industries with extensive exposure to intermediate goods imports from China experienced a large drop in production and trade.…”

Can e-commerce mitigate the negative impact of COVID-19 on international trade?

“…Fuchs et al ( 2020 ) empirically investigated whether previous economic linkages established through trade and investment as well as political relations were associated with China’s export pattern of critical medical goods. Hayakawa and Mukunoki ( 2021a , 2021b , 2021c ) investigated the effects of COVID-19 on worldwide trade. Like Chang and Meyerhoefer ( 2021 ), Hayakawa and Mukunoki ( 2021a , 2021c ) examined how the number of confirmed COVID-19 cases in addition to that of COVID-19 deaths affected international trade or global value chains.…”

“…Hayakawa and Mukunoki ( 2021a , 2021b , 2021c ) investigated the effects of COVID-19 on worldwide trade. Like Chang and Meyerhoefer ( 2021 ), Hayakawa and Mukunoki ( 2021a , 2021c ) examined how the number of confirmed COVID-19 cases in addition to that of COVID-19 deaths affected international trade or global value chains. Hayakawa and Mukunoki ( 2021b ) also investigated if the existence of lockdown policies, such as stay-at-home and workplace-closing orders, reduced international trade by employing monthly trade data.…”

COVID-19 and Global Supply Chain Configuration: Economic and Emissions Impacts of Australia-China Trade Disruptions

“…The impacts of COVID-19 on supply chains have been extensively examined in the literature. Existing studies on COVID-19 and GVCs mostly focus on the impact of COVID-19 on supply chains (11,12), the overall measurement of resilience (13,14), an alternative concept for supply chains (15), prediction of its impact (11) or management of supply chain resilience (16,17). There has also been discussion of COVID-19's impact on globalisation, albeit mainly in terms of physical restrictions rather than trade (18).…”