Abstract:

A large firm-level dataset that covers 23 countries was assembled from the World Bank

Establishment Surveys and COVID-19 Surveys to analyze the impact of COVID-19 shocks on

exporters and whether their emergency innovation responses improved business resilience,

robustness, and survival during the pandemic. The empirical strategy employed logistic,

Weibull, and negative binomial regressions to model exporters’ behavior amid the disruptions.

The results show that despite the larger exposure to global shocks, exporters, especially those

located in developed countries and connected to global value chains, had higher survival

probability than non-exporters during the crisis. The regressions also confirm that in the face of

COVID-19 shocks, relatively more experienced, productive, and product-innovative exporters

were less likely to exit during the first year of the pandemic, while stringent containment policies

accelerated failure time. In terms of emergency innovation responses amid lockdowns and

disruptions, “positive” technology-intensive responses were more prevalent among exporters

while drastic “negative” emergency responses had higher incidence among non-exporters.

Nevertheless, the regressions show that these emergency responses are either insignificant or

negatively related to exporters’ survival, robustness, and resilience, even in the presence of

government support. This suggests that the emergency responses adopted by firms during the

pandemic were actually signs of distress and mainly used as last-ditch effort to stay in business.

On the other hand, sophisticated emergency product innovations were only observed among

surviving firms. Consistent with the Schumpeterian cleansing effect, the results suggest that the

best way to have prepared for a massive shock such as COVID-19 was through building

superior capabilities many years before the pandemic hit. In terms of policy, relaxing stringency

measures seemed more relevant than government support packages to the survival and

recovery of firms.

About the Author:

Adrian R. Mendoza obtained his PhD in Economics from UP Diliman, where he is also currently

completing his Master of Statistics degree. His research covers topics ranging from household income

diversification, technology and economic growth, economic diversification, innovation of manufacturers

in global value chains (GVCs), social and technological upgrading in GVCs, exchange rates, trade wars,

and the trade impacts of COVID-19. His recent works have been published in the Philippine Review of

Economics, Philippine Journal of Public Policy, the Journal of International Trade & Economic

Development, and several book projects by the Asian Development Bank. He has past experience as

economist at the National Economic and Development Authority, research intern at the International

Monetary Fund Office in Manila, and consultant at the World Bank, International Labour Organization,

Asian Development Bank, and several Philippine government agencies.