product innovation were the highest for globally engaged firms in the services sector, especially knowledge-intensive services, followed by manufacturing driven mainly by food and beverages and textiles, apparel, and other related sectors.

_Sixth_ , during the recovery phase, globally engaged firms had better access to support programs than domestically-oriented firms but this access varied by the type of engagement, with the most global firms exhibiting the highest probability of accessing public support. Public support for globally engaged firms was higher in manufacturing and in countries with lower severity of the initial lockdowns in response to the pandemic.

While the objective of our paper is to provide a set of descriptive stylized facts on the impact on and response of globally engaged firms during the COVID-19 pandemic that should not be interpreted as causal, it is useful to point to potential endogeneity concerns. One of the mechanisms we identify for the stronger resilience of globally engaged firms to the COVID-19 pandemic, relative to domesticallyoriented firms, is their better capabilities. Firms may have better capabilities as a result of their global engagement but more importantly stronger firm capabilities, in the form of structured management practices, technological sophistication and so on, are known to allow them to engage in trade and GVC participation. While global engagement makes firms more resilient, the direction of causality is not always easy to disentangle. Since we have no valid instrument for firms’ global engagement, we present our stylized facts as robust correlations, obtained within sectors and countries and controlling for differences in firm characteristics.

Our study makes several contributions to the emerging literature on the impact of the COVID-19 pandemic on globally engaged firms described in Section 2. _First_ , while existing studies examine the direct disruptive effects of the pandemic on trade at an aggregate level or on a limited sample of exporting firms, ours is one of the first that provides extensive evidence on globally engaged firms based on a large sample of nearly 65,000 firm-observations in 45 developing countries. _Second_ , our work shows not only the initial impact of the pandemic but also documents the differences in recovery patterns of globally engaged firms, comparing them with domestically-oriented firms, using three rounds of BPS data with nearly 27,000 panel firms. _Third_ , while samples in the BPS data are not stratified by global integration status, our results are validated using customs data from the Exporter Dynamics Database (EDD), which covers the universe of exporters and importers in a large sample of countries. _Fourth_ the initial impact and recovery are measured for a range of performance metrics of firms, including not only total sales but also financial fragility, employment, trade outcomes (exports and imports, trading partners), as well as digitalization, product innovation, and access to public support. _Finally_ , our work highlights the critical heterogeneity in the response of globally engaged firms by their internal and external traits, the attributes of the sector that they operate in, and the characteristics of the country of their location.

The rest of the paper is organized as follows. Section 2 discusses the related literature and Section 3 describes the data and methodology. Using the BPS data, Section 4 presents evidence that globally engaged firms are indeed more capable, which sets them apart during the COVID-19 crisis period.

4