Governance Quality and Export Performance: A Lesson from COVID-19

The COVID-19 pandemic has had a severe negative impact on the healthcare system and economic development process globally, and trade has been adversely impacted, even now since then. Until the second quarter of 2021, the situation was very horrible for the existence of economic activities globally; however, the distribution and effectiveness of the vaccination played a crucial role in putting the situation under control. Looking at the data, a notable export boom was noticed, so we ran the econometric estimation using the gravity modelling technique in monthly trade data covering the period from January 2020 to June 2021. The results for this period suggest that the COVID-19 cases, when the lockdowns were imposed, had a positive impact on exports, indicating that governance quality is a major responsible variable for Nepal’s export performance. Therefore, another estimation for the longer period, from 2010 to 2022, is conducted and found that governance is the most important factor for the export performance of Nepal. During the pandemic period, Nepal has a substantial progress in exporting processed foods with light-weight-to-value, such as herbs, spices, tea, coffee, juice, and drinks, medicines with different methods, and health care and hygiene products. These may be good avenues for Nepal’s exports for a few years. Focusing on these products will help at the easy time boost exports and in difficult times including the pandemic, this will help to sustain the economy and minimize the risk of being without food, medicines, and garments during the difficult time.