COVID-19 and Supply Chain Disruptions: a novel perspective using a network of payments in Brazil

The COVID-19 pandemic has profoundly disrupted global supply chains, necessitating a reconfiguration of traditional networks. This study investigates the impact of the pandemic on Brazil's supply chain by using a massive firm-to-firm payment dataset composed of identified fast payments, invoices, and wire transfers. Our analysis gauges the heterogeneous impacts across industries and reveals a marked shift towards a more diversified supply chain network following the COVID-19 outbreak. As firms redirected their connections away from heavily impacted urban centers toward inland cities, a more intricate and geographically dispersed network emerged, characterized by less negative assortativity, increased density, and reduced inequality among municipalities. The diversification allowed firms to mitigate the pandemic's effects, underscoring the adaptability and potential soundness of a more decentralized supply chain structure. The findings provide insights for public policymaking and can guide targeted industrial policy design and financial risk mitigation strategies in the face of future disruptions.