This piece of scientific work aims to answer the following research questions. These questions were derived as the primary reasons for this thesis and were motivated due to the current global health and social crisis, the economic disruptions caused by it all over the world, the need to better understand the effects of it on businesses and the need to investigate the best ways to be able to better cope with future disruptions.
Main question: How can export-oriented industrial SMEs build resilience in times of the COVID-19 pandemic and beyond? Sub question 1: How has the COVID-19 pandemic affected the global economy in the context of international trade? Sub question 2: What have been the main challenges faced by B2B export-oriented SMEs during the COVID-19 pandemic?
Owing to the new and emerging field of business research that the COVID-19 pandemic has created, research has been developing on the topic. Researchers have primarily concentrated on specific issues such as understanding the impacts of the pandemic on the supply chain, import and export flows and trade policies. Often lacking a practical-oriented application of findings for Managers and their organizations and a focus on the challenges faced by export-oriented Small and Medium-Sized Enterprises (SMEs).
The purpose of this bachelor thesis is to examine the impacts of the COVID-19 pandemic on international business operations and especially in Business to Business international sales and marketing focusing first and foremost on SMEs, and to provide a concise overview concerning the topic of international trade disruptions during the pandemic as well as strategies and better practices for responding to and mitigating these risks and threats.
Table of Contents
Acknowledgements
Table of Contents
List of Figures
List of Tables
List of Abbreviations/Glossary
Executive Summary
1. Introduction
1.1 Background
1.2 Problem Description
1.3 Research Questions
1.4 Purpose and Goals
1.5 Thesis Outline
1.6 Methodology and Research Process
2. The Effects of COVID-19 on the Global Economy
2.1 Across Different Countries & Regions
2.1.1 The Americas
2.1.2 Europe
2.1.3 Africa
2.1.4 Asia
2.1.5 Oceania
2.2 The Impact on International Trade
2.2.1 Across Different Industries
2.3 Summary
3. The Implications of COVID-19 on SMEs’ International Business Operations
3.1 B2B Sales & Marketing
3.2 Supply Chain & Manufacturing
3.3 Finance & Cash Flows
3.4 Personnel
3.5 Summary
4. Strategies & Suitable Practices for Increased Export Resilience
4.1 The Digital Factor
4.2 Strategic Sales & Marketing in Times of Disruption
4.2.1 Prospecting
4.2.2 Approach
4.2.3 Product Presentation, Overcoming Objections, and Closing the Deal
4.2.4 Follow-Up
4.3 Strategic Supply Chain & Manufacturing Management
4.4 Strategic Cash Flows & Financial Management
4.4 Strategic Personnel Management
4.5 Managerial Implications
5. Conclusion
5.1 Limitations and Future Outlook
List of References
Appendix
Acknowledgements
For the realization of this bachelor thesis, the support of the people that helped me throughout the entire process was vital. To all of the people involved in the process of writing this dissertation, I can only be grateful.
Especially, I would like to thank Prof. Hammer for his valuable insights during the conception phase of this bachelor thesis, as well as for his suggestions and support in the form of constructive criticism and on providing additional material.
Mr. Jozic, for his support during the coaching phase and his valuable contributions in details that could have gone unnoticed by me.
Finally, I would like to express my profound gratitude to my father, mother, and brother for supporting and incentivizing me throughout my whole life and making it possible for me to pursue my studies and through the process of researching and writing this thesis. The accomplishment of this work would not have been possible without them. Thank you.
List of Figures
Figure 1: Global GDP Growth 2007 - 2020
Figure 2: GDP Growth Rate Across the Americas - 2019
Figure 3: GDP Growth Rate Across the Americas - 2020
Figure 4: GDP Growth Rates Across Europe - 2019
Figure 5: GDP Growth Rates Across Europe - 2020
Figure 6: GDP Growth Rates Across Africa - 2019
Figure 7: GDP Growth Rates Across Africa - 2020
Figure 8: GDP Growth Rates Across Asia - 2019
Figure 9: GDP Growth Rates Across Asia - 2020
Figure 10: GDP Growth Rates Across Oceania - 2019
Figure 11: GDP Growth Rates Across Oceania - 2020
Figure 12: World Total Trade in Goods and Commercial Services - 2010-2020
Figure 13: Yearly Total Value of Global Trade - 2016-2020
Figure 14: World Merchandise Trade by Region - 2020
Figure 15: Global Trade Trends Across the World
Figure 16: Sectoral Trade - January to September 2020
Figure 17: World Merchandise Exports of Manufactured Goods - 2020
Figure 18: State of Business Operations During COVID-19 by Company Size - 2020
Figure 19: Financial Impact Caused by COVID-19 by Company Size
Figure 20: Availability of Enough Funds During COVID-19 by Company Size
List of Tables
Table 1: Global Economies and COVID-19 - 20/04/2022
Table 2: Real GDP Growth in Different Regions 2019 - 2026
Table 3: Implications and Strategies to Mitigate the Sales & Marketing Impact of COVID-19 47 Table 4: Implications and Strategies to Mitigate the Supply Chain & Manufacturing Impact of COVID-19
Table 5: Implications and Strategies to Mitigate the Financial & Cash Flow Impact of COVID-19
Table 6: Implications and Strategies to Mitigate the Personnel Impact of COVID-19 50 Table 7: GDP Growth Rates Across the G20 Members - 2019 - 2026 (IMF 2021)
List of Abbreviations/Glossary
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Executive Summary
The COVID-19 pandemic has inflicted not only a health problem but also a socio-economic one with tremendous repercussions for business operations. Due to restrictions on the movement of people, travel and on business operations, many organizations faced enormous challenges during the period of the pandemic and the restrictions that followed. The issue was exacerbated regarding the international trade sector, since it is a sector of higher volatility as it is intimately linked to global value chains, and restrictions on one country or region had severe repercussions on the whole value chain creation.
The pandemic primarily affected industrial powers which also happen to have a greater share of participation in the export of industrial goods. The pandemic has been an unprecedented event due to its scale, which caused severe GDP contractions in most countries and also reduced trade volume and value in most sectors. SMEs are particularly vulnerable to disruptions and therefore, it is in the interests of their managers to examine the areas of vulnerability and possible ways of mitigating the risks attached to the globalized world and of being dependent on foreign markets. In this context, the effect of the pandemic with regards to the global economy has been investigated through the analysis of pertinent statistical data as well as of emerging scientific literature. It was constated that the only sectors capable of withstanding the pandemic and growing were the textile and telecom ones, due to increased demand for PPE as well as for digital devices. China managed to sustain economic growth in spite of the pandemic, this can be attributed to its effective way of combating it as well as its pivotal role in the manufacturing of PPE and electronics, as well as its significant participation in international trade.
Companies worldwide have been facing depressed demands in some sectors, and also tough restrictions on personal meetings and on people being present at the companies’ offices and/or production plants, which in turn has caused lowered or even negative cash flows. The main factor contributing to organizational resilience during the pandemic has been digitalization, which was already an ongoing trend but during the pandemic, a rapid acceleration in its implementation could be observed. Companies that successfully implemented digital platforms and tools were better able to cope with the uncertain environment and thus eliminated many of the challenges brought by the pandemic.
This thesis has been based purely on theoretical input built from the analysis and interpretation of statistical data as well as of scientific literature. It would therefore be the next step, to acquire empirical evidence in order for a more realistic approach to be taken. Other important fields of research that would contribute to filling the knowledge gap would be the investigation of the pandemic effects on exchange rates and on protectionism.
1. Introduction
1.1 Background
The COVID-19 disease has been an unprecedented global phenomenon that has caused one of the most profound crises of our time. The socio-economic impact has been devastating and repercussions will continue to unfold in the following years to come (Mena, Karatzas, and Hansen 2022). The COVID-19 virus was first detected in December 2019 in the region of Wuhan, China (WHO 2020), and has ever since continued to propagate to all parts of the globe resulting in the ongoing 2019-22 coronavirus pandemic.
Amidst the great health risk posed by the COVID-19 health emergency, the World Health Organization (WHO) declared on 30 January 2020 that the SARS-CoV-2 outbreak constituted a Public Health Emergency of International Concern, about one month after, on 11 March 2020, COVID-19 was declared a global pandemic (the highest level of a health emergency) (WHO 2020). According to the World Health Organization, by 4 February 2022, the COVID-19 virus had infected 386,5 million people globally and had caused over 5,7 million fatalities (WHO 2022).
As infectious cases began to arise in February 2020, national governments across the world responded to the crisis by imposing containment measures (Hale et al. 2021) (e.g., lockdowns, travel bans, and workplace closures) to reduce social activities to a minimum in an attempt to contain the propagation of the pandemic and its negative health consequences as well as the consequences that followed as a result of the measurements imposed by governments and local authorities.
Such measures were effective in curbing the rising cases of the infectious disease in the short run and allowed healthcare systems to be better prepared. These measurements were, however, disastrous for the economy as quarantines, travel restrictions, industry closures, and the steep drop in the service sector have all resulted in substantial economic disruptions. For Gopinath (2020) the economic effects of the ‘great lockdowns’ could be compared to that of the Great Depression.
1.2 Problem Description
The COVID-19 crisis has been not only a health crisis, but also an economic one (Frost and Sullivan 2021). Apart from the devastating health impact and the disruption to people’s lives, the COVID-19 pandemic has caused a tremendous decline in the global economy, caused primarily by closures and interruptions to economic activities and business operations in almost all sectors and in most countries in the world. The crisis' effects, along with the necessary public health response, have resulted in the largest and fastest decline in international financial flows in modern history (Altman 2020).
While it is argued that globalization has brought many benefits to the world’s economy, it is also necessary to mention that it has increased the exposure and vulnerability of economic systems to more risks (Goldin and Mariathasan 2016; Scheibe and Blackhurst 2017). In a strongly connected and integrated world with constant and voluminous international flows, an event such as the COVID-19 pandemic served to test and stress the resilience of global supply chains and trade.
This issue has been of particular relevance and is worth investigating, since the countries most affected by the pandemic were also the ones with the highest shares of global GDP, manufacturing output, and trade volume, as shown in Table 1.
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Table 1: Global Economies and COVID-19 - 20/04/2022 (World Bank 2022; WHO 2022; and calculations made by the author (20/04/2022))
The USA, China, Japan, Germany, UK, France, India, Italy, Brazil, and Canada combined account for:
- 66 percent of the world’s GDP
- 69 percent of the world’s manufacturing
- 46 percent of the world’s exports
- 56 percent of the world’s manufactured exports
And for:
- 50,31 percent of all COVID-19 global cases (20/04/2022)
- 46,03 percent of all COVID-19 global deaths (20/04/2022)
The COVID-19 virus has affected every part of the globe but, major economic powers such as the USA, UK, and France have been hit the hardest, which has caused the whole global economy to be at a standstill position for an unknown period (Abdin 2020). As the global economic activities of manufacturing and exporting have been particularly affected, the entire international business environment, as well as international trade, has been decimated (Verbeke and Yuan 2021).
The pandemic has been characterized by simultaneous supply and demand disruptions in the interconnected world economy (Chudik et al. 2020) and has created challenges for almost all companies. Especially for the smaller and inexperienced ones that had to improvise and try different and sometimes uncertain strategies in order to survive or suffer from the harsh consequences of global economic disruption both with regards to their supply chains as well as with falling foreign demand and consequently lowered revenues. As argued by Goldin and Mariathasan (2016), most firms today participate either directly or indirectly in global supply chains and are either way embedded in the broader international trade system. The pandemic caused those companies to face considerable challenges with regards to their present and future operations.
1.3 Research Questions
This piece of scientific work aims to answer the following research questions. These questions were derived as the primary reasons for this thesis and were motivated due to the current global health and social crisis, the economic disruptions caused by it all over the world, the need to better understand the effects of it on businesses and the need to investigate the best ways to be able to better cope with future disruptions.
Main question: How can export-oriented industrial SMEs build resilience in times of the CO VID-19 pandemic and beyond?
Sub question 1: How has the COVID-19 pandemic affected the global economy in the context of international trade?
Sub question 2: What have been the main challenges faced by B2B export- oriented SMEs during the CO VID-19 pandemic?
1.4 Purpose & Goals
Owing to the new and emerging field of business research that the COVID-19 pandemic has created, research has been developing on the topic. Researchers have primarily concentrated on specific issues such as understanding the impacts of the pandemic on the supply chain (Eppinger et al. 2020; Oldekop et al. 2020; Verma and Gustafsson 2020; Vidya and Prabheesh 2020), import and export flows (Baldwin and Tomiura 2020; Maliszewska, Mattoo, and van der Mensbrugghe 2020; Cao et al. 2020) and trade policies (Gruszczynski 2020; Evenett 2020; Barichello 2020; Baldwin and Evenett 2020; Pelc 2020). Often lacking a practical-oriented application of findings for Managers and their organizations and a focus on the challenges faced by export-oriented SMEs.
The purpose of this bachelor thesis is to examine the impacts of the COVID-19 pandemic on international business operations and especially in B2B international sales & marketing focusing first and foremost on SMEs, and to provide a concise overview concerning the topic of international trade disruptions during the pandemic as well as strategies and better practices for responding to and mitigating these risks and threats.
The goals of this work are concisely expressed below:
- Examine the vulnerability of the global economy and international trade during the COVID-19 pandemic and identify the main risks threatening business operations of exporting SMEs.
- Present and discuss strategies to mitigate risks and increase resilience.
It is not the aim of this thesis to empirically investigate the specific issues faced by a given company that has been affected by the disruptions caused by the COVID-19 pandemic, nor to focus on the challenges faced by larger exporting companies (those organizations with 250 employees or more (ILO 2015, p2)).
1.5 Thesis Outline
In order for the final goal of answering the research questions of this scientific work to be achieved, this thesis will be structured as follows:
Firstly, to obtain a better understanding of the implications that COVID-19 had on the whole world, the effects of the pandemic on the global economy will be analyzed. A further analysis comprising of different countries and regions will follow. Since the effects of the pandemic have not been equal across all countries and regions, it is of central importance for the progression of this thesis to understand how different economies across the globe have been particularly affected during the pandemic. Following that, the impact of COVID-19 on international trade will be analyzed, including an analysis of the impact on different industries and sectors.
Secondly, in order for a better understanding of the challenges faced by companies during the pandemic to be investigated, the implications of COVID-19 in business operations will be analyzed. This analysis will comprise four main macro-areas; B2B Sales & Marketing, Supply Chain & Manufacturing, Finance & Cash Flows, and finally Personnel.
Thirdly, after a thorough understanding of the challenges faced by companies during the pandemic, the best ways to mitigate risks and to build greater resilience will be analyzed and discussed, special focus will be paid to the digital factor, B2B Marketing & Sales as well as to the managerial implications. Following that, a conclusion will be presented along with an explanation of the study’s limitations as well as its future outlook.
1.6 Methodology & Research Process
Due to the nature of this scientific work, its purposes, and objectives as described in Chapter 1.4, and in order for the research questions to be fully investigated and answered, literature will be reviewed. Findings will be acquired through the analysis of pertinent scientific research and literature. The process will include a broad review of the existing emerging body of knowledge, for a common base of knowledge to be built. A succinct representation of the most relevant findings will thereafter be built, so as to provide a general framework of strategic management in times of disruption, with an emphasis on the disruptions caused by the COVID-19 crisis on export-oriented SMEs.
The literature analysis and review will involve the investigation of well-founded and diversified content obtained from reliable sources such as journal articles, papers, books, reports, as well as statistical data produced by international organizations. The assessment and determination of the quality of a given content will be realized by considering metrics such as publication in peer-reviewed journals, authors’ background and experiences, publication in prominent journals, or in other means of communication. After the acquisition of knowledge and understanding of the analyzed contents, the most relevant ones will be considered in this bachelor thesis. Scientific content is primarily obtained through the utilization of scientific databases. In many cases, other sources such as newspapers and websites deemed to provide reliable and relevant sources of information will be considered.
As this work intends to investigate the hurdles faced by export-oriented SMEs and to provide a general framework of best practices and strategies for increased export resilience in times of disruption and not on tackling a specific issue of a particular company, it will not contain an empirical part. Conclusions and findings will not be drawn from the analysis of evidence stemming from real problems faced by a particular company, but instead on a combination of both personal intuition and opinion as well as on the analysis of literature tackling similar topics and their interpretations.
2. The Effects of COVID-19 on the Global Economy
In the globalized world, the impacts of the COVID-19 pandemic have gone beyond morbidity and mortality. The impact of the ongoing pandemic could also be felt with regards to the international trade sector (WTO 2020). As described in Chapter 1.2, Table 1, COVID-19 has had an impact (relating both to deaths and infections) first and foremost on industrial powerhouses that also happen to have the highest shares of exports and consequently greater participation in global trade.
Due to the rapid propagation of COVID-19 cases, a proper evaluation of the economic impacts caused by the pandemic is paramount, however, actually analyzing it is extremely challenging when the aim is to mitigate uncertainty (Baker et al. 2020). At the beginning of the pandemic, due to production interruptions and the slowing down of the Chinese economy, the proper functioning of global supply chains was disturbed (Yuegang 2021) causing many other companies around the world, that were dependent on Chinese inputs, to suffer and as a result produce lower outputs themselves. Economic activities were slowed down further by limitations in transport (Dixon 2020). Customer behavior caused by the apparent uncertainty has also created many market anomalies and distorted international trade (Lingqvist et al. 2021). Global financial markets also responded quickly to the pandemic emergency, causing unprecedented changes in global stock indices (Bradley and Stumpner 2021).
Several prior studies have shown that disease outbreaks are a potent vector of economic hazards (Bloom and Canning 2004). History is filled with plenty of similar examples, in the form of plagues, endemics, and pandemics, in many cases causing or contributing to the collapse of empires, social unrest, economic disruptions and ultimately exposing the fragility of the world economy (Ibn-Mohammed et al. 2021). COVID-19 caused many negative impacts on the global economy, which ranged from a severe contraction of GDP in many of the hardest hit countries to social and environmental issues across all segments of society. In several cases, socio-economic activities were completely stopped, as millions of workers and customers were in quarantine, borders were closed hindering tourism, schools were not operating, manufacturing was crippled, events with economic potential were canceled, and unemployment rates increased (Baker et al. 2020; Basilaia and Kvavadze 2020; Devakumar et al. 2020; Kraemer et al. 2020; Thunstrom et al. 2020; Toquero 2020).
The pandemic has exposed the weaknesses of the global economy and revealed its lack of resilience in moments of disruption and subsequent crisis (Pinner, Rogers, and Samandari. 2020). The government policies imposed in order to flatten the contagion curve of the COVID-19 disease have contributed to healthcare systems not becoming completely overwhelmed (JHU 2020), but new cases are still being reported at the time of writing this thesis in many countries despite the measurements and advanced vaccination stages, which causes a full recovery to both normal life and the global economy to be hampered.
In 2020, it was reported by the International Monetary Fund (IMF) that in such an unprecedented circumstance, all economies including developed, emerging, and developing would experience economic recession caused by the great lockdowns. In April 2020, in the time span of three months, the IMF changed its early global economic forecast from +3.3 percent to -3 percent, a tremendous change of 6.3 percent (IMF 2020). Also, it is important to consider that due to the massive unemployment and growing income inequality, global poverty is expected to rise, hitting Sub-Saharan Africa the hardest, increasing social exclusion and discrimination in the medium and long-term if not addressed properly (UNDESA 2020).
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As shown in Figure 1, global GDP has been crippled since the COVID-19 outbreak, reaching a sharp decline of -3,363 percent in 2020, a value greater than that of the 2009 global crisis (-1,308 percent) and greater than that of any recession that occurred over the past six decades.
According to the IMF World Economic Outlook Update released in January 2022, global GDP growth is expected to moderate from the high growth rate observed in the previous year (+5.9 percent) to +4.4 percent in 2022, the same report also forecasts a positive growth of +3.8 percent in 2023 for the global economy. However, as the new Omicron variant spreads, countries have been reimposing lockdowns, which has raised energy prices and brought both higher and broader inflation (IMF 2022).
2.1 Across Different Countries & Regions
The pandemic has affected the vast majority of countries in the world, but its economic effect has not been the same across all countries and regions. Some countries suffered from a sharp decline in their economy while others were better able to cope with it, suffered from a mild decline, or even managed to sustain positive economic growth in spite of the pandemic.
As this thesis is focused on understanding how exporting companies of manufactured goods can build resilience in times of disruption and beyond, it will primarily focus on the analysis of the economic impact that COVID-19 had on the G20, the group of the 20 largest economies in the world that combined represent more than 80 percent of global GDP (G20 2022). In the following sections, a brief regionally segmented analysis based on each continent can be found, comparing GDP growth rate both prior (2019) and during the pandemic (2020), so as to provide a referential point for objective comparisons to be made.
2.1.1 The Americas
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Figure 2: GDP Growth Rates Across the Americas - 2019 (IMF 2019)
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2.1.2 Europe
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Figure 4: GDP Growth Rates Across Europe - 2019 (IMF 2019)
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In 2019, GDP grew positively in all European countries. Eastern Europe had faster average growth rates if compared with Western Europe (+3.0 percent vs. +1.5 percent).
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In 2020, most European countries suffered from GDP contractions, with the exceptions being Ireland (+5.9 percent), and Turkey (G20) (+1.8 percent). Western European countries suffered from the sharpest declines in GDP.
In the G20 the following declines could be observed:
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Figure 5: GDP Growth Rates Across Europe - 2020 (IMF 2020)
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2.1.3 Africa
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Figure 6: GDP Growth Rates Across Africa - 2019 (IMF 2019)
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In 2019, most of Africa recorded positive GDP growth rates. Exceptions were Sudan (-2.2 percent), Liberia (2.5 percent), Equatorial Guinea (-6 percent), Republic of Congo (-0.4 percent), Angola (-0.5 percent), Namibia (0.6 percent), Zimbabwe (-6.1 percent), and Lesotho (-1.5 percent).
South Africa, the only G20 member on the continent, recorded a positive growth of +0.1 percent.
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In 2020, most of Africa registered negative growth rates. However, some countries were able to register positive growth rates in spite of the pandemic, they were:
Egypt (+3.6 percent), Niger (+3.6 percent), Senegal (+1.5 percent), Guinea (+7.1 percent), Cote d’Ivoire (+2 percent), Burkina Faso (+1.9 percent), Ghana (+0.4 percent), Togo (+1.8 percent), Benin (+3.8 percent), Central African Republic (+1 percent), Ethiopia (+6.1 percent), Tanzania (+4.8 percent), Dem. Rep. of the Congo (+1.7 percent), and Malawi (+0.9 percent). The average growth rate for Africa was (-1.6 percent).
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Figure 8: GDP Growth Rates Across Asia - 2019 (IMF 2019)
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In 2019, most of Asia recorded positive growth rates, with China (+6 percent) and other Southeastern Asian countries having the highest growth rates.
Exceptions were: Oman (-0.8 percent), Kuwait (-0.6 percent), Lebanon (-7.3 percent), Iran (-6.8 percent), and Turkmenistan (-7.7 percent).
G20 countries showed the following growth rates: Russia (+2 percent), Saudi Arabia (+0.3 percent), India (+4 percent), China (+6 percent), South Korea (+2.2 percent), Japan (0 percent), Indonesia (+5 percent).
In 2020, most countries in Asia presented negative GDP growth rates, exceptions were:
Iran (+3.4 percent), Uzbekistan (+1.7 percent), Tajikistan (+4.5 percent), China (+2.3 percent), Bangladesh (+3.5 percent), Myanmar (+3.2 percent), Vietnam (+2.9 percent), Taiwan (+3.1 percent).
G20 countries showed the following growth rates: Russia (-3 percent), Saudi Arabia (4.1 percent), India (-7.3 percent), China (+2.3 percent), South Korea (-0.9 percent), Japan (-4.6 percent), Indonesia (-2.1 percent).
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Figure 10: GDP Growth Rates Across Oceania - 2019 (IMF 2019)
In 2019, most of Oceania presented positive growth rates. Fiji was the exception with a negative growth rate of (-0.4 percent).
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In 2020, all countries in Oceania presented negative growth rates.
Australia, the only G20 country in the region, presented a negative growth rate of (-2.4 percent).
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Figure 11: GDP Growth Rates Across Oceania - 2020 (IMF 2020)
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The following table concisely presents the GDP growth rates across different regions and also provides a future growth forecast until 2026. In the appendix, another table containing data for all G20 members can be found.
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Table 2: Real GDP Growth in Different Regions 2019 - 2026 (IMF 2022)
2.2 The Impact on International Trade
Lockdowns imposed throughout the world to limit the mobility of people and products hampered economic flows (Socrates 2020). Global commerce flows have been impacted by policies such as workplace and border closures, as well as travel restrictions, leading in greater costs and delays, or even blocking border passage in many circumstances. (Maliszewska, Mattoo, and Van Der Mensbrugghe 2020). Lockdowns produced substantial hoarding of key supplies, which generated stronger demand for them (Kassa 2020; Banga et al. 2020; Mold and Mveyange 2020). Business closures and a general decline in economic activity increased unemployment, lowering demand for globally traded products, particularly durable goods (Verma and Gustafsson 2020; Djiofack, Dudu, and Zeufack 2020; Kassa 2020). The COVID-19 pandemic also had an impact on the financial sectors, which are critical to international trade activities (Banga et al. 2020; Demir and Javorcik 2020).
According to a study commissioned by the United States Institute of Supply Management, 75 percent of firms experienced supply chain interruptions during the pandemic (Fernandes 2020). The disruptions caused by COVID-19 impacted not only exporting countries, due to a lack of output for their local firms, but also importing countries, due to the unavailability of raw materials (Fernandes 2020). As a consequence of COVID-19, the World Trade Organization (WTO) reported a 32 percent decline in global trade in 2020 (Fernandes 2020).
According to the annual WTO trade statistical review report (2020), world merchandise trade volume declined by 0.1 percent in 2019, which was the first contraction in global trade since the financial crisis of 2008-09. The decrease was due to persistent trade tensions among countries and trading blocs as well as by lower degrees of global GDP growth, which slowed to 2.3 percent in 2019 from 2.9 percent in 2018. Concurrently, business services exports climbed by 2 percent to US$6.07 trillion.
During the pandemic, in 2020, trade in both goods as well as in services declined. The following chart shows a sharp decline during the pandemic, commercial services reached a decline of -30 percent, an unprecedented decline even if compared to the 2008-09 crisis. Trade in goods also suffered from a sharp decline, however not to the same degree as during the 2008-09 crisis (WTO 2021).
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The overall value of product exports contracted by 8 percent in 2020, while services contracted by 21 percent. As seen in the graph, the most severe effects were felt in the second quarter of the year, when services plummeted by 30 percent owing to significant restrictions on travel and transportation. Trade started to recover from the second to the third quarter of 2020, but with significantly varying rates across different countries and regions. In volume terms, Asia’s merchandise trade decreased by only -0.5 percent in 2020, a lot less if compared to the global decline of -5.3 percent. Asia's manufacturing export sector's resilience may be linked to its success in restricting viral spread since its emergence in early 2020, as well as its essential role as a key worldwide provider of consumer goods and medical supplies. (WTO 2021).
Starting from the first quarter of 2021, an increase in merchandise export volumes could be observed both in Asia and in Europe, while being slightly down in the Americas, and substantially down in Africa and in the Middle East (WTO 2021).
With regards to the manufacturing sector, the automobile sector suffered the most during the COVID-19 outbreak, with global exports plummeting by 16 percent in 2020. Simultaneously, worldwide textile exports increased by 16 percent during the same time, owing mostly to an increase in demand for personal protective equipment (PPE). Exports of medical items, pharmaceuticals, medical equipment, and personal protective equipment (PPE) increased by more than 16 percent, demonstrating how important international trade was for access to key medical supplies throughout the pandemic, particularly after the early interruptions (WTO 2021).
Higher trade resilience could be observed in the sectors of high-tech goods, pharmaceutical/medical products as well as in its value chains. In the third quarter of 2020, trade in intermediate products (i.e., goods needed to make other goods) began to recover. Trade in business services was 9 percent lower in the first quarter of 2021 compared to the same time in 2020. The travel industry was clearly the most hit, with border closures, lockdowns, quarantine procedures, and other restrictions causing worldwide travel exports to fall by 62 percent in 2020 (WTO 2021).
The move to remote working and the expansion of digital platforms continued to drive demand for computer services. Least-Developed Countries (LDCs) were severely impacted by the pandemic's first wave in 2020, as the group is particularly vulnerable to fuel prices, which fell by 60 percent between January and April 2020, as well as the impact of travel restrictions, which are a significant source of LDCs' export earnings. Fuel exports from LDCs began to recover in early 2021, although commerce remains low, owing mostly to travel and transportation limitations. (WTO 2021).
[...]
- Citar trabajo
- Erik da Silva (Autor), 2022, Building Resilience in Times of the COVID-19 Pandemic and Beyond. Strategies for Export-Oriented Industrial Small and Medium-Sized Enterprises, Múnich, GRIN Verlag, https://www.grin.com/document/1347695
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¡Carge sus propios textos! Gane dinero y un iPhone X. -
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¡Carge sus propios textos! Gane dinero y un iPhone X. -
-
¡Carge sus propios textos! Gane dinero y un iPhone X. -
-
¡Carge sus propios textos! Gane dinero y un iPhone X.