The effects of COVID-19 on trade, production, environmental quality and its implications for green economy

Abstract

Purpose

This study examines the effects of COVID-19 on trade, production and environmental quality and provides policy implications on green recovery.

Design/methodology/approach

The two-step Heckman method is applied to estimate the structural gravity specification of trade. Besides, the two-step system GMM model is used to estimate the effects of COVID-19 on production and environmental quality. Additionally, descriptive analysis and literature review have been used.

Findings

The findings disclose that COVID-19 adversely affected the trade performance of the countries. The results further imply that the regional trade agreements (RTAs) can play a key mediating role in the post-COVID-19 trade recovery. Besides, the impact of COVID-19 on the output is substantially negative. However, the effect of COVID-19 on environmental quality is significantly positive.

Originality/value

It is the first study of its kind to examine the effects of COVID-19 on trade, production and CO₂ emissions covering panel countries. Second, it provides a detailed analysis of firms planning to engage in the export sector. Moreover, it offers policy suggestions to consider environmental quality and green recovery. Besides, it examines the mediating role of RTAs in the relationship between trade and the pandemic.

Citation

Borojo, D.G., Yushi, J. and Miao, M. (2022), "The effects of COVID-19 on trade, production, environmental quality and its implications for green economy", Journal of Economic Studies, Vol. 49 No. 8, pp. 1340-1359. https://doi.org/10.1108/JES-06-2021-0307