Estimating the Impact of COVID-19 on International Trade: Cases of Major Countries Using the SUR Model

Abstract

This study examined the intricate effects of the COVID-19 pandemic on international trade complexity. Focusing on major international trading entities such as Hong Kong, Korea, China, Japan, and the U.S., we evaluated how confirmed COVID-19 cases and government responses influenced trade patterns, particularly in exports and imports. We employed a seemingly unrelated regression (SUR) analysis with cyclic regression coefficients to scrutinize changes in trade relationships between 2020 and 2021. Korea serves as the central country for this analysis, and the findings extend to other nations. The results revealed the varied impact of COVID-19 on trade across countries. Exports from Korea to China were correlated with COVID-19 case numbers and government actions in both countries. Additionally, imports from China, Japan, the U.S. and Vietnam—excluding Hong Kong—were significantly influenced by confirmed COVID-19 cases in Korea, reflecting the demand dynamics. Government interventions also played a substantial role in shaping trade patterns. Previous studies have primarily focused on financial markets and supply chains, whereas our study analyzed the changes in trade with Korea’s five largest trading partners: China, the U.S., Japan, Vietnam, and Hong Kong. Notably, we utilized long-term data and changes in major trading partners in Asia over time.