COVID-19 and Services Trade in ASEAN+6: Implications and Estimates from Structural Gravity

Anirudh Shingal

No DP-2021-02, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: Given the importance of services for economic activity in general and the salience of reducing service link costs for overcoming the economic and health challenges emanating from COVID-19, we examine the implications of the pandemic for services trade in the original group of ASEAN+6 countries that began negotiating the Regional Comprehensive Economic Partnership agreement. Our analysis reveals that with the exception of the Philippines and Viet Nam for services exports, and Cambodia and India for services imports, up to half of total services trade for all other sample countries could be adversely affected by the pandemic. In the absence of bilateral services trade data for 2020, we proxy the impact of COVID-19 on services trade using bilateral data on announced greenfield investment in services sectors from fDi Markets. Structural gravity estimates suggest that a 1% increase in COVID-19-related deaths in the source country may have reduced ASEAN+6 bilateral greenfield investment by US$0.15 million in 2020 relative to the corresponding value in 2019.

Keywords: COVID-19; services trade; ASEAN; RCEP; STRI; gravity; greenfield investment (search for similar items in EconPapers)
JEL-codes: F1 F15 F23 (search for similar items in EconPapers)
Date: 2021-04-19
New Economics Papers: this item is included in nep-int and nep-sea
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