The onset of the COVID-19 pandemic has unexpectedly changed the usual shape of the world routine. Precisely, its spread has had an enormous impact on the businesses and economies of countries across the globe. To curb the further spread of the virus, countries across the globe imposed an array of non-pharmaceutical measures such as lockdowns, travel restrictions, social distancing, mandatory mask-wearing, hand sanitizing, curfews, hygiene, public health emergency concern, school closures, and many more. While anecdotal evidence indicates that these government stringency measures worsened the impact of COVID-19 on international trade, this study attempted to systematically explore this phenomenon by employing the Difference in Differences (DID) technique to assess the impact of COVID-19 on Taiwan's net export using secondary data. To estimate the unobserved counterfactual level of Taiwan’s net exports had the country imposed stringent COVID-19 measures, we employed five other Asian trading partners (all of which imposed lockdowns in 2020) to constitute the pool of treatment units.
The study used data collected from the Our World in Data website for the period from dating January 2018 to June 2021. Stata 15 was used to analyze the data. By and large, the DID model results established that Taiwan’s net exports significantly increased during the time that it did not implement stringent COVID-19 measures relative to the unobserved counterfactual scenario for those countries which adopted such stringent measures. More crucially, our baseline results remain robust to several sensitivity tests, vindicating our identification strategy.
Keywords: COVID-19; pandemic; lockdown; treatment group; control group; the difference in difference model; international trade; net exports

TABLE OF CONTENTS
ACKNOWLEDGEMENT I
ABSTRACT II
LIST OF TABLES V
LIST OF FIGURES VI
CHAPTER 1 INTRODUCTION 1
1.1 Background 1
1.2 Research Motivation 2
1.3 Research Objectives 3
1.4 Research Gap 4
1.5 Research Procedure 5
CHAPTER 2 LITERATURE REVIEW 7
2.1 Review of International Trade and its Response Due to Pandemics 7
2.2 COVID-19 in Taiwan 13
2.3 Governments’ Stringency Index 15
2.4 Impact of Governments’ Stringency Measure on International Trade 16
CHAPTER 3 RESEARCH METHODOLOGY 19
3.1 Research Hypothesis 19
3.2 Research Framework 20
3.3 Difference in Differences Model 20
3.4 Research Estimation Equations and Variables 23
3.5 Data Sampling 25
CHAPTER 4: DATA ANALYSIS 27
4.1 Descriptive Statistics 27
4.2 Baseline Results 28
4.3 Robustness checks 29
4.3.1 In-time Placebo Test 30
4.3.2 In-space Placebo Test 1 31
4.3.3 In-space Placebo Test 2 32
4.3.4 Leave-one-out Technique 33
CHAPTER 5: DISCUSSION AND CONCLUSION 37
5.1 Research Conclusion 37
5.2 Examination of the Research Results 37
5.3 Contribution of the Study 38
5.4 Research Limitations 38
5.5 Areas for Further Study 39
REFERENCES 40
APPENDIX A: OVERVIEW OF THE GOVERNMENT STRINGENCY INDEX IN THE CONTROL (TAIWAN) AND TREATED GROUPS 45
APPENDIX B: TRENDS OF NET EXPORT (2019-2020) 46
APPENDIX C: GOVERNMENTS’ STRINGENCY 47
APPENDIX D: IN-SPACE PLACEBO TEST 3 FOR JANUARY 2019 TO APRIL 2020 48
APPENDIX E: IN-SPACE PLACEBO TEST 4 FOR JANUARY 2019 TO APRIL 2020 49
APPENDIX F: IN-SPACE PLACEBO TEST 5 FOR JANUARY 2019 TO APRIL 2020 50

List of Tables
Table 2-1 COVID-19 Estimated Economic Impact 10

Table 4-1 Descriptive Statistics 28
Table 4-2 Baseline Results 29
Table 4-3 In-time Placebo Test 1 31
Table 4-4 In-space Placebo Test 1 32
Table 4-5 In-space Placebo Test 2 33

List of Figures
Figure 1-1 Research Procedure 6

Figure 2-1 Influential treatment throughout pre and the post-SARS period 2002-2005 11
Figure 2-2 Cumulative and confirmed COVID-19 cases for Taiwan and New Zealand up to August 2020. 14
Figure 2-3 Overview of government stringency measures 16
Figure 2-4 Overview of net exports in the treated (Taiwan) and the control group 17
Figure 3-2 The concept of the difference in differences (DID) 22
Figure 4-1 leave-one-out technique 34

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