Shocked by COVID: Exporting along global value chains
firms
brexit
CEP Discussion Paper dp2105, 2025. With Holger Breinlich and Jun Du.
Using UK customs data from 2017 to 2020 and a shift-share identification strategy that exploits the COVID-19 pandemic as a natural experiment, we estimate an elasticity of exports with respect to intermediate imports of 0.4: a one-standard-deviation increase in COVID-related restrictions in sourcing countries reduced intermediate exports by 3.7%. The result highlights a paradox in protectionist trade policy — measures aimed at self-sufficiency can damage export performance by disrupting the supply chains exporters depend on.
Show abstract
Using UK customs data from 2017 to 2020 and a shift-share identification strategy that exploits the COVID-19 pandemic as a natural experiment, we estimate an elasticity of exports with respect to intermediate imports of 0.4: a one-standard-deviation increase in COVID-related restrictions in sourcing countries reduced intermediate exports by 3.7%. The result highlights a paradox in protectionist trade policy — measures aimed at self-sufficiency can damage export performance by disrupting the supply chains exporters depend on.
COVID-19 hit firms embedded in global value chains differently depending on their position in the chain — upstream suppliers and downstream assemblers absorbed the shock through different channels. Using UK firm-level export data spanning the pandemic, we trace how GVC position shaped the size and persistence of the export shock, and how much of the disruption has since reversed.
Working paper: CEP Discussion Papers dp2105