COVID‐19, Import Relationships and New Formation: Evidence From Colombian Importers

ABSTRACT This paper examines the short‐run effects of exposure to COVID‐19 cases on monthly outcomes and new formation for Colombian import relationships in 2020. Focusing first on consistent import relationships, defined as firm–origin–product triplets that were active in all 12 months of 2019, inactivity rates are 5% higher, imported value is 3% lower and 2% fewer transactions occur when COVID‐19 caseloads in the exporting country are at the 75th percentile (2.4 cases per thousand residents) instead of the 25th percentile (0.1 cases per thousand residents). When cases in the importer's Colombian department are at the 75th percentile (7.2 cases per thousand) instead of the 25th (0.3 cases per thousand), inactivity rates are 23% higher, imported values are 6% lower and 2% fewer transactions occur. Differences in viral incidence across countries also affect the extensive margin decision of which country importers begin to source products from: higher cases in individual countries deter new relationships with exporters from those countries from forming, whereas higher case levels in traditional suppliers push importers towards less prominent source countries.