COVID‐19 Test‐kit Trade and Trade Policy: Implications for Developing Countries

At the centre of the multi‐dimensional impact of the COVID‐19 pandemic, the shortage of medical supplies in countries with weaker healthcare systems significantly reduced the effectiveness of national and international public health interventions. Using a database of test‐kit trade flows and barriers, we estimate the price responsiveness of test‐kit demand in a global sample of countries. These estimates allow us to investigate the degree to which import tariffs by leading producers could result in a disruption in global supply chains, price increases, and welfare loss. Simulation experiments indicate that the combination of rising demand for test kits and import dependence magnifies the impact of trade barriers on consumer welfare and this impact is more profound for developing countries.