The economic impact of the COVID‐19 pandemic on the Taiwanese food industry: Empirical evidence using business transaction data

Abstract

AbstractA rapidly growing literature examines the impacts of COVID‐19 on consumer spending and business operations. However, little is yet known about its effects on the food industry. We contribute to this topic by quantifying the effects of COVID‐19 on the Taiwanese food industry, including food manufacturing, wholesale, retail and service sectors. Using administrative data on the business transactions of food industry firms in Taiwan with a difference‐in‐differences model, we find that COVID‐19 reduced the total sales value of the food industry by 24%. However, the negative effects are unequally distributed among different sectors of the food industry. The negative effect is more pronounced in the food manufacturing sector. We also find a substantial impact in urban areas, high‐income areas and areas with a larger proportion of elderly population. Compared to most of the countries that implemented mandatory lockdowns to cope with COVID‐19, Taiwan maintained good control over the pandemic in 2020. The mobility of Taiwanese residents is much higher than those of other countries with severe infection rates. However, we show that there are still significant economic impacts on the food industry in Taiwan.