COVID-19’s Impacts on Sales Volume of Commercial Districts in Seoul: Empirical Evidence from Spatial Panel Data Analysis

The COVID-19 pandemic has adversely impacted on human lives, especially local economies. However, our understanding of the relationship between COVID-19 and local economies is still limited due to the lack of empirical evidence. The objective of this study is to explore COVID-19’s impacts on sales volume of local commercial district by focusing on the city of Seoul, South Korea. To identify the spatial spillover effects among commercial districts, we conducted a spatial panel data analysis by employing spatial panel models. Our results show that the unexpected COVID-19 pandemic has negatively affected sales volume in commercial districts in Seoul. However, COVID-19’s impact on sales volume varies by business type and district type. For example, among the restaurant, retail, and service sectors, the business most negatively affected by COVID-19 was retail, while restaurants were the least affected. Our spatial panel models also show that spatial spillover effects exist among commercial districts, indicating that neighboring commercial districts interact spatially. Particularly, negative spatial spillover effects have appeared in traditional markets during the pandemic. It is suggested that high priority for policy support should be given to the firms and districts that have experienced the most financial damage from COVID-19, and place-based policies that consider spatial spillover effects should be carefully designed and promptly implemented.