A Regional Economy’s Resistance to the COVID-19 Shock: Sales Revenues of Micro-, Small-, and Medium-Sized Enterprises in South Korea

Abstract

The coronavirus disease 2019 (COVID-19) is a global pandemic that has heavily impacted not only the health sector, but also the economic sector in general. Many countries have projected a negative economic impact, and the effect on micro-, small-, and medium-sized enterprises (MSMEs) is predicted to be significantly large. This study estimated the regional resistance of MSME sales revenues and identified the regional economic factors that affect resistance by analyzing South Korea, a country with one of the lowest economic impact projections from COVID-19. Resistance was estimated by comparing sales revenues and changes in resistance observed during the early COVID-19 period to those recorded in the same weeks (weeks 6 to 9) of 2019. The factors that affect regional resistance were determined by conducting robust regression and spatial regression analyses. The results show that the number of confirmed COVID-19 cases, a direct risk factor, is negatively related to regional resilience, while diversity is positively related to regional resistance. To improve the regional resistance against uncertain events, this study recommends increased diversity among regional industrial structures to reduce the duration of the early shock of an unexpected adverse event.