The Global Trade Closedness by COVID-19: The Case of EU

Abstract

This paper presents a new methodology for studying trade closedness from a global pandemic such as COVID-19. The mission of this model is to offer policy-makers and researchers' a new analytical tool to study the impact of COVID-19 in world trade from a new perspective. We propose a new model entitled "The Global Trade Closedness Model (GTC-Model)," a simple and flexible model. The GTC-Model's general objective is to analyze the impact of a global pandemic on the imports in a specific period (in the short run). The study case is the European Union (EU) COVID-19 crisis from March to May 2020.The paper is divided into three parts. The first part is the literature reviews the literature on analytical methods evaluating openness based on three approaches focusing on political economy, economic theory, and trade policy. The second part will present a new analysis model to assess the trend, vulnerability, and harmonization of trade closedness. The relationship between trade closedness and COVID-19 infected cases growth is based on a new group of indicators and a new type of graph. The GTC-Model follows a series of steps in its application to study trade closedness growth and COVID-19 infected cases: (i) the degree of closedness by production sectors (Ci); (ii) closedness average rate (Ċ); (iii) harmonization of closedness (HC); (iv) average closedness growth rate (∆Ċ); (v) COVID-19 infected cases gross rate (∆COVID-19); (vi) closedness diamond graph; (vii) closedness/COVID-19 growth rate (∆Ċ: COVID-19) sensitivity analysis chart. The third part of this paper shows the results obtained from the application of GTC-Model in the European Union.