The Liability of Informality and De-internationalisation During the COVID-19: International Evidence

Thang Doan, Ngoc Mai Tran, Doan Van Ha and Huong Giang Mai

Foreign Trade Review, 2026, vol. 61, issue 1, 7-30

Abstract: This author investigates the effect of the liability of informality on a firm’s de-internationalisation using cross-country firm-level data. De-internationalisation reflects an export reduction in which firms decrease their overseas sales. Firms that start operating in the informal sector but then switch to the formal sector tend to de-internationalise more than those established as registered businesses. The effect becomes pronounced for small and medium-sized enterprises and firms that do not adopt digital transformation. Our findings indicate that informality imposed a liability on firms, especially during the COVID-19 period, and this is likely to persist over time. JEL Codes : G32, O17, F23, M16

Keywords: De-internationalisation; informality; smallness; digital transformation; COVID-19 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:sae:fortra:v:61:y:2026:i:1:p:7-30

DOI: 10.1177/00157325241293176

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