The impacts of lockdown policies on trade margins in the Philippines

Abstract

The Philippines was among the most infected countries in Southeast Asia at the onset of the COVID-19 outbreak. This study analyzes how the export and import trade margins (extensive and intensive) of the Philippines were affected by the lockdown policies of trading partners. Using a quarterly series of product-by-country data for 20 quarters (quarter one of 2018-quarter four of 2022) and an event-study design, the paper shows that lockdown measures did not affect or mildly affected the intensive margin of exports and the import margins. Instead, the extensive margin of exports was most affected. It declined by 27% in the first quarter and by an average of 46% between the fifth and eleventh quarters of the lockdown. This was largely influenced by the closure of workplaces, stay-home requirements and controls on international travel. Export and import margins of intermediate goods were more resilient to the lockdown shocks. Overall, preventing disruptions in the supply chain networks can help countries adjust better and contribute to a speedy recovery and possible resilience to future shocks.

KEYWORDS:

• Lockdown
• exports
• imports
• Philippines
• global value chains

JEL Classifications:

• F10
• F14
• O53

Acknowledgment

The authors are grateful to the anonymous reviewers, Shafaat Yar Khan and Natnael Simachew Nigatu for their helpful and comprehensive comments. This paper is among the background papers for the report “A New Dawn for Global Value Chain Participation in the Philippines”. The paper has benefited from support from the Umbrella Facility for Trade trust fund financed by the governments of the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and do not necessarily represent the views of the World Bank and its affiliated organizations, or those of the Executive Directors or the countries they represent. All errors are our responsibility.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 A dummy variable signaling whether a trading partner of the Philippines imposed one of these policies in a specific quarter: workplace closure, closure of public transport, stay-at-home requirements, restrictions on internal movement, and international travel controls.

2 See Figure A2 which shows that the number of COVID-19 deaths in the Philippines rose consistently and the country was second, after Indonesia, in terms of COVID-19 fatalities in Southeast Asia between 2020 and 2022.

3 Mendoza (2021) has studied the effect COVID-19, proxied by stringency and spread, in Southeast Asia and a case study of the Philippines. Nonetheless, the study does not focus on lockdowns as we do and does not cover aspects such as trade margins that are done in this study.

4 For instance, β_j= (exp β_j-1)*100. Refer to Clarke and Tapia-Schythe (2021) for a guide on conducting event-study analysis in Stata.

Additional information

Funding

This work was supported by Umbrella Facility for Trade trust fund.