COVID-19 pandemic and world trade: Some analytical notes

Barua, Suborna (2020): COVID-19 pandemic and world trade: Some analytical notes.

Abstract

The globalization of COVID-19 pandemic is en route to produce a chain of economic impacts worldwide through distortions in global trade and supply chain. The globalization of production and trade shocks in relation to China generate substantial threat to world trade. The aim of this paper is to provide a preliminary and broad-based understanding of likely trade implications of the pandemic. Beginning with an assessment on likely implications for trade between China and the rest of the world, the paper uses a standard trade analysis framework to explain the implications for world trade. The paper then presents a theoretical mapping that shows likely progression and span of trade implications and reviews emerging evidence to identify if real-life outcomes follow the map. The paper concludes that the pandemic is likely to not only introduce new patterns of world trade but also affect trade relations and globalization, making some economies winners and some losers. Given the scarcity of scholarly work on COVID-19’s trade implications, the paper contributes by offering a novel broad-based understanding, which could serve as a basis for advanced analysis. Assessments of the paper could help policy-makers in preparing for a new world order of international trade.

• Item Type: MPRA Paper
• Language: English
• Keywords: COVID-19, coronavirus, coronanomics, globalization, trade
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; F - International Economics > F1 - Trade; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F2 - International Factor Movements and International Business; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F5 - International Relations, National Security, and International Political Economy

References

- AFP. Covid-19: One third of humanity under virus lockdown. The Economic Times. 2020. Available at: https://economictimes.indiatimes.com/news/international/world-news/covid-19-one-third-of-humanity-under-virus-lockdown/articleshow/74807030.cms?from=mdr

- Arezki, Richard. and Nguyen, Ha. “Novel coronavirus hurts the Middle East and North Africa through many channels. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Baldwin, Richard and Beatrice Weder di Mauro. Economics in the Time Of COVID-19. 1st ed. London: CEPR Press. 2020

- Baldwin, Richard, and Tomiura, Eiichi. “Thinking ahead about the trade impact of COVID-19”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Barua, Suborna. “Understanding Coronanomics: The Economic Implications of the Coronavirus (COVID-19) Pandemic”. Manuscript. 2020. Available at SSRN: http://dx.doi.org/10.2139/ssrn.3566477

- Beck, Thorsten. “Finance in the times of coronavirus.” In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Berman, J. FourKites’ research takes long look at COVID-19-related delays and dwell times. Logistics Management. 2020. Available at: https://www.logisticsmgmt.com/article/fourkites_research_takes_long_look_at_covid_19_related_delays_and_dwell_tim/logistics

- Biron, Bethany, and Yuru Zhu. "Major Fast-Food Chains And Retailers In China Are Shutting Their Doors As The Deadly Coronavirus Continues To Spread. Here's A List Of Closures.". The Business Insider, 2020. Available at: https://www.businessinsider.com/coronavirus-fears-mcdonalds-starbucks-close-2020-1.

- Bloomberg. “China’s Exports Slump as Coronavirus Forces Shutdowns”. Bloomberg News. 2020a. Available at: https://www.bloomberg.com/news/articles/2020-03-07/china-s-jan-feb-exports-fall-17-2-y-y-in-dollars-est-16-2

- Bloomberg. “China’s Inflation Slows as Coronavirus Locks Down Economy”. Bloomberg. 2020b. Available at: https://www.bloomberg.com/news/articles/2020-03-10/chinese-inflation-slows-in-february-factory-deflation-returns

- Boerner, Lars, and Battista Severgnini. “Epidemic trade." 2011. Available at SSRN: https://ssrn.com/abstract=1896603

- Boone, Laurence, Haugh, David, Pain, Nigel, and Salins, Veronique. “Tackling the fallout from COVID-19”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Budd Group Bulletin. (2020). COVID-19: Land, Air & Sea Borders Closed in Togo. Crew Quarantine Measures. Available at: http://www.budd-pni.com/news-art-the-budd-group.asp?ANNEE=2020&ID_A=1418

- Cecchetti, Stephen .G. and Schoenholtz, Kermit, L. Contagion: Bank runs and COVID-19.In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Cochrane, John, H. “Coronavirus monetary policy.”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- DeBord, Matthew. “General Motors and Ford are ramping up ventilator production to fight the coronavirus pandemic. Here's where they are now.”. Business Insider. 2020. Available at: https://www.businessinsider.com/coronavirus-general-motors-ford-ventilator-production-progress-2020-3

- di Mauro, Beatrice, Wedar. “Macroeconomics of the flu”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Dryad Global. Coronavirus Outbreak and the impact on shipping. Dryad Global. 2020. Available at: https://dryadglobal.com/coronavirus-outbreak-impact-on-shipping/

- ECDC. “Q & A On COVID-19”. European Centre for Disease Prevention and Control. 2020. Available at: https://www.ecdc.europa.eu/en/covid-19/questions-answers

- Espitia, Alvaro, Nadia Rocha, and Michele Ruta (2020, April 9). “Trade and the COVID-19 crisis in developing countries”. VOX CEPR Policy Portal. 2020. https://voxeu.org/article/trade-and-covid-19-crisis-developing-countries

- Evenett, Simon. “Sickening thy neighbour: Export restraints on medical supplies during a pandemic”. VOX CEPR Policy Portal. 2020. https://voxeu.org/article/export-restraints-medical-supplies-during-pandemic

- Farrer, Martin. “Coronavirus economic impact: Australia could be among world's hardest hit nations.”. The Guardian. 2020. Available at: https://www.theguardian.com/world/2020/feb/08/coronavirus-economic-impact-australia-could-be-among-worlds-hardest-hit-nations

- Fazl-e-Haider, Syed. “Coronavirus brings a halt to China's trillion-dollar Belt and Road Initiative”. The New Arab. 2020. https://english.alaraby.co.uk/english/indepth/2020/3/11/chinas-belt-and-road-initiative-affected-by-coronavirus

- Fernandes, Nuno. “Economic effects of coronavirus outbreak (COVID-19) on the world economy." Available at SSRN 3557504 (2020). DOI: http://dx.doi.org/10.2139/ssrn.3557504

- Fidler, David P. “Globalization, international law, and emerging infectious diseases." Emerging infectious diseases 2, no. 2 (1996): 77.

- Fornaro, Luca and Wolf, Martin. “Covid-19 Coronavirus and Macroeconomic Policy.” Working Paper, Centre de Recerca en Economia Internacional (CREi). 2020. http://www.crei.cat/wp-content/uploads/2020/03/C19-1.pdf

- Freeman, Heather Berit. "Trade epidemic: the impact of the mad cow crisis on EU-US relations." BC Int'l Comp. L. Rev. 25 (2002): 343.

- Frenk, Julio, Octavio Gómez-Dantés, and Felicia M. Knaul. “Globalization And Infectious Diseases". Infectious Disease Clinics Of North America 25 (3): 593-599. 2020. DOI:10.1016/j.idc.2011.05.003.

- Giuffrida, Angela. “Italy and China in plan for new Silk Road-style trade network” .The Guardian. 2020 https://www.theguardian.com/world/2019/mar/23/italy-china-new-silk-road-belt-and-road-g7

- Gubler, Duane J., and Leon Rosen. “Variation among geographic strains of Aedes albopictus in suceptibility to infection with dengue viruses." The American journal of tropical medicine and hygiene 25, no. 2 (1976): 318-325.

- He, Laura. “China's factories just had a historically terrible month because of the coronavirus”. CNN. 2020. Available at: https://edition.cnn.com/2020/03/01/economy/china-pmi-economy-coronavirus/index.html

- Henson, Spencer, and Rupert Loader. 1999. "Impact of Sanitary and Phytosanitary Standards on Developing Countries And The Role Of The SPS Agreement". Agribusiness 15 (3): 355-369.

- Huffstutter, P.J. “Coronavirus reroutes U.S. chicken shipments bound for China. Reuters”. 2020. Available at: https://www.reuters.com/article/us-china-health-chicken/coronavirus-reroutes-us-chicken-shipments-bound-for-china-idUSKBN20730V

- IATA. 2020. “Air Cargo Market Analysis". International Air Transport Association. 2020. Available at: https://www.iata.org/en/iata-repository/publications/economic-reports/air-freight-monthly-analysis---jan-2020/

- ICAO. “Economic impact estimates due to COVID-19 travel bans”. Montréal: United Nations. 2020. https://www.icao.int/Newsroom/Pages/Economic-impact-estimates-due-to-COVID-19-travel-bans.aspx

- Kimball, A. M. “An epidemic of tariffs? infectious disease and global trade in an era of change." International Journal of Infectious Diseases 79 (2019): 24.

- Kimball, A. M., K. Wong, and K. Taneda. "An evidence base for international health regulations: quantitative measurement of the impacts of epidemic disease on international trade." Revue scientifique et technique-Office international des épizooties 24, no. 3 (2005): 825.

- Kimball, Ann Marie. Risky trade: Infectious disease in the era of global trade. Routledge, 2006.

- Knowler, G. COVID-19: Annual China port volume to fall for second time since 1970: Alphaliner. 2020. Available at: https://www.joc.com/maritime-news/annual-china-port-volume-fall-second-time-1970-alphaliner_20200325.html

- Labiak, M. Covid-19: PM orders closure of all shops selling non-essential goods as UK locked down. Property Week. 2020. Available at: https://www.propertyweek.com/news/covid-19-pm-orders-closure-of-all-shops-selling-non-essential-goods-as-uk-locked-down/5106990.article

- Legrain, Philippe. “The Coronavirus Is Killing Globalization As We Know It". Foreign Policy. 2020. Available at: https://foreignpolicy.com/2020/03/12/coronavirus-killing-globalization-nationalism-protectionism-trump/.

- Leigh, Gabriel. “The Number Of Daily Flights Is Now Dropping Drastically: The Latest In Aviation”. Forbes. 2020. Available at: https://www.forbes.com/sites/gabrielleigh/2020/03/30/the-number-of-daily-flights-is-now-dropping-drastically-the-latest-in-aviation/#701c2b9943d4

- Mack, Alison, Eileen R. Choffnes, and David A. Relman, eds. Infectious disease movement in a borderless world: workshop summary. National Academies Press, 2010.

- Maliszewska, Maryla, Aaditya Mattoo, and Dominique van der Mensbrugghe. “The Potential Impact of COVID-19 on GDP and Trade: A Preliminary Assessment. Policy Research Working Paper 9211. 2020. The World Bank. Available at: http://documents.worldbank.org/curated/en/295991586526445673/pdf/The-Potential-Impact-of-COVID-19-on-GDP-and-Trade-A-Preliminary-Assessment.pdf

- Mann, Catherine, L. “Real and financial lenses to assess the economic consequences of COVID-19”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- McKibbin, Warwick and Fernando, Roshen. “The economic impact of COVID-19”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Meninno, Rafaella and Wolff, Guntram. “As coronavirus spreads, can the EU afford to close its borders?”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Mento, Pete. "Coronavirus and Global Trade". Global Trade, 2020. Available at: https://www.globaltrademag.com/coronavirus-and-global-trade/

- Miller, Greg. “Will ports bar cargo ships with COVID-19-positive crew?. American Shipper”. 2020. Available at: https://www.freightwaves.com/news/will-ports-bar-cargo-ships-with-covid-19-positive-crew

- Moore, Molly. “APAC: COVID-19 impact on tourist arrivals by country or region 2020”. Statista. 2020. Available at: https://www.statista.com/statistics/1103147/apac-covid-19-impact-on-tourist-arrivals-by-country/

- Mur, Lina, Beatriz Martínez-López, and José Manuel Sánchez-Vizcaíno. “Risk of African swine fever introduction into the European Union through transport-associated routes: returning trucks and waste from international ships and planes." BMC veterinary research 8, no. 1 (2012): 149.

- Nakafuji, Rei and Ken Moriyasu. “Multinationals reroute supply chains from China -- for good? Komatsu, Daikin and Asics shift operations elsewhere”. Nikkei Asian Review. 2020. Available at: https://asia.nikkei.com/Spotlight/Coronavirus/Multinationals-reroute-supply-chains-from-China-for-good

- O’Byrne, Rob. “How The Coronavirus Epidemic is Throttling Global Supply Chains”. Logistics Bureau. 2020. Available at: https://www.logisticsbureau.com/how-the-coronavirus-epidemic-is-throttling-global-supply-chains/

- OECD. “Coronavirus: The world economy at risk”. OECD Interim Economic Assessment, 2 March. 2020. Organization for Economic Cooperation and Development.

- Pallini, Thomas. “55 global airlines have completely stopped flying scheduled flights due to travel bans, airspace closures, and low demand for travel — see the full list”. Business Insider. 2020. Available at: https://www.businessinsider.com/coronavirus-global-airlines-stopping-flights-suspending-operations-2020-3#tame-45

- Paris, Costas. “Coronavirus Rattles Shipping Industry as Supply Shock Moves to Demand Decline”. Wall Street Journal. 2020. Available at: https://www.wsj.com/articles/coronavirus-rattles-shipping-industry-as-supply-shock-moves-to-demand-decline-11585249552

- Petro, Greg. “The Coronavirus Tsunami: What’s To Come For U.S. Retail”. Forbes. 2020. https://www.forbes.com/sites/gregpetro/2020/03/20/the-coronavirus-tsunami-whats-to-come-for-us-retail/#128e4da6609d

- Piven, Ben. “Too soon to tell': Coronavirus could take big toll on US economy. Al Jazeera. 2020. Available at: https://www.aljazeera.com/ajimpact/coronavirus-big-toll-economy-200226215552868.html

- Porter, Dorothy. Health, Civilization and the State: A history of public health from ancient to modern times. Routledge. 2005.

- Rapoza, Kenneth. China’s Trade War Recovery Is Now Seriously Threatened By Coronavirus. Forbes. 2020. Available at: https://www.forbes.com/sites/kenrapoza/2020/01/26/chinas-trade-war-recovery-is-now-seriously-threatened-by-coronavirus/#27f316fe11dc

- Reagan, Courtney. “Retailers shift production to make masks, gowns for health-care workers in coronavirus pandemic”. CNBC. 2020. Available at: https://www.cnbc.com/2020/03/26/coronavirus-retailers-make-masksgowns-for-healthcare-workers.html

- Rezza, Giovanni. "Re-emergence of Chikungunya and other scourges: the role of globalization and climate change." Ann Ist Super Sanita 44, no. 4 (2008): 315-318.

- Santos, Danny. “How Shopping Centres Globally are Responding to Coronavirus”. Aislelabs. 2020. Available at: https://www.aislelabs.com/blog/2020/03/23/how-shopping-centres-responding-coronavirus/

- Saul, Jonathan and Lisa. “Baertlein China's coronavirus disrupts global container shipping trade”. Reuters. 2020. Available at: https://www.reuters.com/article/us-china-health-shipping/chinas-coronavirus-disrupts-global-container-shipping-trade-idUSKBN2002K1

- Tajitsu, Naomi and Maki Shiraki. “Now made in Mexico: Japan auto suppliers shift China production after coronavirus”. Reuters. 2020. Available at: https://www.reuters.com/article/health-coronavirus-japan-autos/now-made-in-mexico-japan-auto-suppliers-shift-china-production-after-coronavirus-idUSL5N2AR0HF

- Tan, Huileng. “Coronavirus outbreak in China spurs supply chain shifts that began during trade war”. CNBC. 2020. Available at: https://www.cnbc.com/2020/02/20/coronavirus-outbreak-spurs-supply-chain-shifts-started-by-us-china-trade-war.html

- The Manufacturer. “The best and worst case for UK supply chains affected by the coronavirus”. The Manufacturer. 2020. Available at: https://www.themanufacturer.com/articles/best-worst-case-uk-supply-chains-affected-coronavirus/

- Ting-Fang, Cheng and Lauly Li (2020, February 26). Google, Microsoft shift production from China faster due to virus: 'Made in Vietnam' Pixel phones and Surface laptops expected in 2020. Nikkei Asian Review. Available at: https://asia.nikkei.com/Spotlight/Coronavirus/Google-Microsoft-shift-production-from-China-faster-due-to-virus

- Tirschwell, Peter. “COVID-19: Coronavirus creating unprecedented container shipping disruption”. JOC. 2020. Available at: https://www.joc.com/maritime-news/container-lines/coronavirus-creating-unprecedented-container-shipping-disruption_20200221.html

- UNCTAD. Global trade impact of the coronavirus (COVID-19) epidemic. 2020a. Trade and Development Report Update. United Nations Conference on Trade and Development. Available at: https://unctad.org/en/PublicationsLibrary/ditcinf2020d1.pdf

- UNCTAD. “Impact of the Coronavirus Outbreak on Global FDI. Investment Trends Monitor, Special Issue – March. 2020b. United Nations Conference on Trade and Investment.

- Vaid, V. FourKites Data Shows Facilities Struggling to Keep up with Spike in Shipments. FourKites. 2020. Available at: https://www.fourkites.com/blogs/fourkites-data-shows-facilities-struggling-to-keep-up-with-spike-in-shipments/

- Varoufakis, Yanis. "Coronavirus Has Sparked A Perfect Storm Of Nationalism And Financial Speculation". The Guardian. 2020. Available at: https://www.theguardian.com/commentisfree/2020/mar/08/coronavirus-nationalism-economy-wall-street

- Wei, Zhen, Wang, Jun, and Verbraken, Thomas. The coronavirus epidemic: Implications for markets. MSCI. 2020. Available at: https://www.msci.com/www/blog-posts/the-coronavirus-epidemic/01718848208

- WHO. “Q&A On Coronaviruses (COVID-19)".2020. Available at: https://www.who.int/news-room/q-a-detail/q-a-coronaviruses

- Wilson, Mary E. “Travel and the emergence of infectious diseases." Emerging infectious diseases 1, no. 2 (1995): 39.

- Wood, Johnny. “China is sending medical experts and supplies to help Italy fight coronavirus”. World Economic Forum. 2020. Available at: https://www.weforum.org/agenda/2020/03/coronavirus-covid-19-italy-china-supplies/

- Wood, Zoe and Sweney, Mark. “Coronavirus shutdown ravages high street as retailers take emergency action.” The Guardian. 2020. Available at: https://www.theguardian.com/business/2020/mar/20/marks-and-spencer-considers-temporary-store-closures-wetherspoons-coronavirus

- Wren-Lewis, S. (2020). “The economic effects of a pandemic”. In Economics in the Time of COVID-19. edited by Richard Baldwin and Beatrice Weder di Mauro, London: CEPR Press, 2020.

- Wright, Rebecca. Coronavirus: “NZ lamb is largely being diverted towards the Middle East not Europe”. Agriculture and Horticulture Development Board, UK. 2020. Available at: https://ahdb.org.uk/news/coronavirus-nz-lamb-is-largely-being-diverted-to-towards-the-middle-east-not-europe

- WTO. (2020a). “International Tourist Arrivals Could Fall by 20-30% in 2020. Available at: https://www.unwto.org/news/international-tourism-arrivals-could-fall-in-2020

- WTO. (2020a). “Trade Statistics and Outlook”. Press Release. World Trade Organization. Available at: https://www.wto.org/english/news_e/pres20_e/pr855_e.pdf

- WTO. (2020c). Trade In Medical Goods In The Context of Tackling COVID-19. Information Note. World Trade Organization. Available at: https://www.wto.org/english/news_e/news20_e/rese_03apr20_e.pdf

- WTO. (2020d). “Goods Trade Barometer, 17 January 2020. World Trade Organization”. Available at: https://www.wto.org/english/news_e/news20_e/wtoi_17feb20_e.pdf