ability to continue operations in a remote environment, the intensity and type of transport costs, the strength of contractual enforcement, credit risks and so on (Brenton et al., 2022). This pattern of heterogeneous impacts across firms in their ability to cope with the pandemic depending on attributes of the sector is explored with the BPS data. Irrespective of the sectoral attribute, exporters experienced a lower drop in total sales in the initial as well as the recovery phase.

Exporters in sectors with higher flexibility to function in a remote setting had, on average, a decline in sales of 4 percentage points less and a probability of falling into arrears of 2 percentage points less than firms in sectors with less flexibility for remote work (Figure 11, panel a). Exporters in sectors including more durable products were significantly more vulnerable in the early phase of the pandemic but the differences in their sales declines relative to other exporters disappeared as the pandemic evolved, lockdowns and related factory closings stabilized, and the demand for durable goods required for working remotely in the aftermath of the acute phase of the pandemic increased (Espitia et al., 2022) (Figure 11, panel b).

Higher GVC intensity of a sector did not play a role for exporters’ sales declines in the pandemic but it did for non-exporters, significantly attenuating their sales declines (Figure 11, panel c). This finding masks variation across sub-sectors though, with higher GVC intensity playing a role for agriculture and manufacturing sectors in the early phase of the pandemic when exporters in these sectors experienced a significantly larger decline in sales than exporters in lower GVC intensity sectors, possibly due to disruptions in supply chains (Appendix Figure C10). These findings are broadly consistent with the fact that trade in complex products organized in GVCs tends to be more sensitive to global downturns than other trade, particularly that of motor vehicles, as observed during the GFC (Ferrantino et al., 2014). The fact that the decline in sales of exporters in the recovery phase does not vary by GVC intensity suggests that practices used within supply chains (just-in-time production or lean manufacturing) or the stronger capabilities associated with exporting help to even out differences in performance within a short period of time. Consistent with this finding is the fact that exporters in sectors more intensive contractual relationships experienced significantly larger sales declines at the beginning of the pandemic, as the stickiness of their links with foreign buyers may have chipped away their flexibility to adapt (Figure 11, panel d).

The dependence on external finance of sectors affected their exporters and non-exporters in different ways. The Rajan and Zingales (1998) measure of dependence on external finance captures the amount of desired investment that cannot be financed through internal cash flows and thus depends on external finance and can capture disruptions in financial markets during the COVID-19 crisis. While non-exporters in sectors with higher dependence on external finance were hit harder by the pandemic in the early phase, exporters in these sectors are actually recovering faster than those with lower dependence on external finance implying that exporters in such sectors were able to leverage their capabilities or networks to close the financial disruptions compared to exporters in other sectors or more generally other firms (Figure 11, panel e).

Another, although uncorrelated, measure of financial needs, the intensity of dependence on letter of 23