The analysis using the customs data, which helps validate the results from BPS data, estimates a simpler version of Equation (1) described in Appendix B. The results of this estimation are represented graphically, as before showing marginal effects along with 95% confidence intervals. There are two important differences across the BPS and the customs data analyses. _First_ , monthly customs outcomes are aggregated and the analysis is conducted with data at the country-firmquarterly level. _Second_ , since the customs data comprise only trading firms, only trade-related outcomes from BPS data are compared using the customs data. Further, when drawing comparisons with the customs data, we restrict the sample of BPS data to include only exporters or importers.

To capture the global engagement of firms, we construct several measures using the BPS data. Two standard measures are indicator variables, one for whether the firm exports and one for whether the firm imports before the pandemic in 2019. These two measures capture firms’ direct engagement in global markets. Another measure is an indicator variable for firms that both export _and_ import, that are designated as GVC firms. The final and more novel measure captures firms’ indirect engagement in global markets through an indicator variable for whether the firm sold to domestic exporters or multinationals in 2019 but did not directly export or import. We refer to these firms as suppliers of GVC firms. Since these four measures may not be mutually exclusive, we also construct four mutually exclusive categories of global engagement to contrast with firms that had no engagement at all: only indirect engagement; only direct engagement (export or import); both indirect and direct engagement (with direct engagement being measured with either export or import), and finally firms that are indirectly engaged and are also a GVC firm in 2019. Except for the indicator variable for firms that export, other measures of global engagement are only available for the countries surveyed in round 3 including the trade module. Hence, the analysis using these measures is based on a restricted sample. Appendix Table A2 shows summary statistics on the firm global engagement measures (and on other firm-level variables used in the analysis). For the customs data we define GVC firms as those engaged in both exports and imports.

# **4. Capabilities of Globally Engaged Firms**

It is widely known that global integration is associated with superior firm capabilities, as evidenced in their larger size, higher productivity (Melitz, 2003; Wagner, 2007), better management practices (Grover and Torre, 2019; Tanaka, 2020; Bloom et al., 2021) and technological readiness (Bustos, 2011).<sup>8</sup> Self-selection of more capable firms into global trade could possibly explain their resilience and recovery from crises (Duchek, 2014; Ahn et al., 2018).

Before delving into the impact of the COVID-19 pandemic on globally engaged firms, we provide evidence based on the BPS data that better firm capabilities are, in fact, associated with patterns of global engagement. To this end, we regress an indicator for pre-pandemic firm export status on measures of firm capabilities (see Appendix A.4 for details). The fact that globally engaged firms

> data. They show that results remain robust to re-weighting the sample using the inverse of the probability method in (Wooldridge, 2002) or the bounds approach (see Kling et al., 2007; Blattman et al., 2020). 8There is also evidence of ‘learning-by-exporting’, whereby global engagement increases firms’ technical efficiency (Atkin et al., 2017).

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