Abstract:

The study analyzes the early impact of the Covid-19 crisis on the production of sectors in Türkiye by considering the international production chains. To investigate this, we employ a two-tier strategy. In the first step, we calculate the shock values of trade variables by subtracting realized values from estimated values. The realized values are taken from International Trade Center (INTRACEN, 2021) database. In the second step, the last available EORA26 Multi-Regional Input-Output (MRIO) table (Lenzen et al., 2012, 2013), the year 2015, is utilized to decide the change in the production of each sector as a result of demand and supply shocks, separately. The I-O analysis indicates that there is approximately a 23 billion USD loss in production and almost half a million decreases in employment owing to the trade shocks (8% reduction in production/employment). Investigating the effect in the framework of production chains with the inter-country input-output tables enables researchers and policymakers to understand the dynamics of potential shocks so that they can take the necessary precautions to ensure the stability of supply chains, the availability of products, and the well-being of individuals. As far as we know, there is no study analyzing the effect of Covid-19 through demand and supply shocks in the framework of international production chains for Türkiye. Hence, our study carries a crucial understanding and provides solid policy recommendations to be well-prepared for possible external shocks.

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