How trade affects pandemics? Evidence from severe acute respiratory syndromes in 2003

Abstract

This paper investigates whether the rapid expansion of international trade after China's WTO entry in 2001 promotes the spread of severe acute respiratory syndromes (SARS) in 2003. Examining the relationship is helpful to distinguish the hidden costs of trade openness. This paper uses Frankel and Romer (1999, The American Economic Review, 89, 379) framework to construct the geography-based instruments by applying province-country gravity relation for causal identification. Utilising cross-section data of SARS cases of 31 provinces in China, our two-stage least squares regression results show that international trade accelerates the spread of SARS. Cross-country evidence also suggests the causal relation. In addition, we find that the people's inter-provincial mobility driven by trade expansion drives the spread of epidemic diseases.