Understanding the impact of COVID-19 supply disruptions on exporters in global value chains

In this context, the further upstream the disruption occurs, the greater is the potential for supply bottlenecks to propagate negative shocks.

Metadata
Provider: 
ECBECB
URL: 
https://www.ecb.europa.eu//pub/economic-research/resbull/2023/html/ecb.rb230322~5c08629152.en.htmlhttps://www.ecb.europa.eu//pub/economic-research/resbull/2023/html/ecb.rb230322~5c08629152.en.html
Retrieved on: 
Thursday, March 23, 2023
Information
Tags: 
Terazosin, European Central Bank, International economics, Probability, Journal of International Economics, Central bank, Coronavirus, Direction, American Economic Review, COVID-19, Survival, Economist, OECD, IMF Economic Review, Research, Great Trade Collapse, RESEARCH, Bullwhip effect, Journal, Directorate, Data, ECB, M, No, GVC, GVCS, Commerce, CASD, Video game, Tourism, Rare-earth element, Dam, Instrumentation, Pharmaceutical industry, Textile, Serafini
Geotags: 
CHINA, FRANCE
Summary
Key Points: 
  • In this context, the further upstream the disruption occurs, the greater is the potential for supply bottlenecks to propagate negative shocks.
  • The third phase was from September 2020 to the end of 2021, when disruptions to global supply chains emerged and progressively intensified.
  • Within this sample, our treatment group comprises all exporting firms that had imported intermediate inputs at least once over the same period.
  • We assess firms’ performance during the crisis, in terms of export sales and probability of survival in the export market.
  • The richness of the dataset allows us to then deepen our analysis and look at several sources of heterogeneity.
  • In April 2020 GVC exporters recorded export volumes that were 42% lower than the levels recorded in January 2020.
  • Chart 2 illustrates the estimated effect of participation in global value chains on firm-level exports.
  • We find that participation in GVCs increased firm vulnerability during the pandemic, with the negative impact of supply disruptions being greater for firms located relatively more downstream in the value chain.
  • In this article we investigate the impact of supply chain linkages on exporting firms during the pandemic.
  • Highly granular data for the universe of French exporters allow us to provide one of the first firm-level quantifications of the impact of supply bottlenecks that occurred in 2021, when disruptions along value chains were at historically high levels.
  • We find that exporters in global value chains suffered relatively more than other exporters during the COVID-19 crisis.
  • This additional negative effect was mostly driven by exporters at downstream production stages, whereas diversifying sourcing networks for core imports helped to buffer the impact.
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