Are the Happy Few still happy? Exporter heterogeneity during the COVID-19 pandemic in Italy

Gloria Allione () and Claire Giordano
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Gloria Allione: Bank of Italy

No 816, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: By using highly granular monthly customs data and firm balance sheets, we document how firm heterogeneity mattered significantly in explaining Italy's 2020-21 goods export dynamics. Via a trade margin decomposition, we show how the exporters in the top 1 per cent of the export distribution (the ‘Happy Few’) were responsible for both the 2020 pandemic collapse and the slowdown in the second half of 2021 triggered by global input shortages. These firms operated mainly at the intensive margin and only partly by exiting some countries during the first wave of the pandemic. The relatively weaker performance of the Happy Few is confirmed when controlling for product and geographical specialization via econometric shift-share regressions. One possible explanation is the high share of top exporters participating in global value chains (GVCs). Exporters strongly integrated in GVCs were indeed hurt more by the two shocks than non-GVC firms were. Moreover, the exports of GVC firms that resorted more intensely to just-in-time business models with low inventory levels were more adversely affected by the 2021 supply chain disruptions.

Keywords: firm heterogeneity; global value chains; inventory management; trade margins; shift-share decomposition (search for similar items in EconPapers)
JEL-codes: D22 F14 (search for similar items in EconPapers)
Date: 2023-11
New Economics Papers: this item is included in nep-eec and nep-int
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