Measuring Vulnerabilities of Trade Blocs During the Covid-19 in the World

This paper estimates the trade vulnerability of trade blocs in the global trade system in the preand post-Covid 19 scenario. Using time series panel data sets from 2010 to 2020, the study employed Trade vulnerability index (TVI) method. Trade blocs were asymmetric in terms of size and share in the global trade system. They were affected directly and indirectly by COVID-19. Secondly, the trade blocs have performance well in the export trade in regionalism and internationalism to some extent. The EU as a big trade bloc has more export growth instability than MERCOSUR, SADC, SAFTA, ASEAN, and NAFTA. Additionally, the estimate of goods trade vulnerability shows that SAFTA (1.47), in the pre-COVID-19 was the highest vulnerable of all, whereas MERCOSUR (0.82) was the lowest. In the post-COVID-19, SAFTA (1.70) became the highest vulnerable, whereas MERCOSUR (0.82) became the lowest. The trade blocs SAFTA, SADC, EU, and ASEAN saw increase in trade vulnerability due to COVID-19 pandemic but NAFTA has not faced that. In service trade, the trade blocs SADC (1.81), MERCOSUR (1.59) ASEAN (1.01), and EU (0.93) recorded increase in trade vulnerability, but the remaining trade blocs (NAFTA and SAFTA) had a positive benefit to reduce vulnerability. Thus, regionalism in trade has not fully resolved the trade vulnerability of trade blocs. As a result, trade regionalism should take the form of reciprocal RTAs to reduce structural, functional, and procedural asymmetry among member countries, allowing regionalism to reduce trade vulnerability, while increasing the share of LDCs and DCs in global income and trade, resulting in faster economic growth and welfare. This paper contributes to the regionalism approach and principles in South Asia as well as other trade blocs around the world. This paper also helps in understanding the role of South Asian member countries in implementing macro-economic shocks for trade stability and growth, reducing trade vulnerability, and promoting trade and regional integration in the future. This paper is based on trade vulnerability index to analyze trade vulnerability.