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Global Pandemic Shocks, Foreign Exposure and Firm Productivity: Evidence from Korean Firm-level Data

Author

Listed:
  • Alloysius Joko PURWANTO

    (Economic Research Institute for ASEAN and East Asia (ERIA))

  • Ridwan Dewayanto RUSLI

    (Cologne University of Applied Sciences and University of Luxembourg)

  • Hafis Pratama Rendra GRAHA

    (Bandung Institute of Technology)

  • Sirichai KOONAPHAPDEELERT

    (Chiang Mai University)

  • Reza Miftahul ULUM

    (University of Indonesia)

  • Citra Endah Nur SETYAWATI

    (Economic Research Institute for ASEAN and East Asia (ERIA))

  • Nadiya PRANINDITA

    (Economic Research Institute for ASEAN and East Asia (ERIA))

  • Ryan Wiratama BHASKARA

    (Economic Research Institute for ASEAN and East Asia (ERIA))

Abstract

This study analyses the impact of the COVID-19 pandemic on a firm's total factor productivity (TFP) using Korean firm-level data from 2016 to 2021. The study reveals that the pandemic had a heterogeneous impact on firm TFP depending on the firm's operational characteristics, specifically whether the firm is a multinational enterprise (MNE) or a pure exporter (non-MNE). Whilst the pandemic had a more significant negative impact on the TFP of pure exporters than other firms, MNEs were less affected by the pandemic shock than pure exporters. This implies that whilst both firms were exposed to negative demand shocks on a global scale, MNEs were better equipped to handle supply-side uncertainties through international diversification. The study identifies certain characteristics of MNEs that helped buffer the pandemic shock, such as shedding labour, high R&D intensity, and more diversification via foreign subsidiaries. These characteristics enabled MNEs to mitigate the pandemic shock and even increase their TFP during the pandemic.

Suggested Citation

  • Alloysius Joko PURWANTO & Ridwan Dewayanto RUSLI & Hafis Pratama Rendra GRAHA & Sirichai KOONAPHAPDEELERT & Reza Miftahul ULUM & Citra Endah Nur SETYAWATI & Nadiya PRANINDITA & Ryan Wiratama BHASKARA, 2025. "Global Pandemic Shocks, Foreign Exposure and Firm Productivity: Evidence from Korean Firm-level Data," Working Papers DP-2024-38, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2024-38
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    More about this item

    Keywords

    Global Pandemic; COVID-19; firm productivity; resource allocation; labour shedding; R&D; MNEs; international diversification; pure exporting firms;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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