Global Value Chain Disruptions and Firm Survival During COVID-19: An Empirical Investigation

Despite the rapid acceleration of countries participating in global value chains (GVCs) over the last three decades, global GVC participation rates have plateaued since the global financial crisis (GFC) and worsened with the onset of the coronavirus (COVID-19) pandemic. As countries around the world emerge from the shadows of the pandemic, there is growing academic and policy interest in deciphering how they should build effective strategies that facilitate firm survival, especially viewed from the lens of resilience and robustness. In this paper, we propose to make a two-fold contribution to this growing literature: First, we undertake a comprehensive firm-level investigation-in a cross-country setting-to ascertain whether firms engaged in GVCs relative to those that are not exhibited better survival instincts during the COVID-19 pandemic. Second, we uncover the heterogeneity of the shock across sectors and industries, considering the varied sectoral/industrial exposure to the pandemic. We document that GVC firms showcased greater robustness and resilience during the pandemic relative to other firms, while also highlighting the significant variations in the degrees of resilience and robustness by industry.