The Values of Export Promotion: The case of the Canton fair during the SARS epidemic

Author Name Xue BAI (Brock University) / MA Hong (Tsinghua University) / MAKIOKA Ryo (Research Associate, RIETI)
Creation Date/NO. August 2022 22-E-078
Research Project Social Scientific Studies on Self-replicating Natural and Technical Phenomenon
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An epidemic prevents face-to-face contact and increases information friction and search costs between firms. This paper analyzes the effects of attending the Chinese Export Commodity Fairs (the Canton fair) during the Severe Acute Respiratory Syndrome (SARS) on Chinese exports, using the information on exhibitors that attended the fair and the Chinese customs data. We utilize the random-shock nature of the SARS epidemic that impeded foreign buyers from attending the Canton fair and combine it with a difference-in-differences approach to solve selection issues. Our estimates suggest that firms attending at the Canton Fair during the SARS epidemic realized exports to fewer export destination countries compared to during non-SARS periods. The negative effect is particularly larger for firms with less access to foreign buyers, such as non-trading and small firms, suggesting that the absence of buyers raises information friction and search costs in the fair during the epidemic. Furthermore, the negative effect becomes insignificant a year after the fair, reflecting a short-term effect on export promotion.