Digitalization and Resilience: Firm-level Evidence During the COVID-19 Pandemic
IMF Working Papers, February 18, 2022
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- Digitalization and Resilience: Firm-level Evidence During the COVID-19 Pandemic
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Bibliographic details
- Authors: Nordine Abidi, Mehdi El Herradi, Sahra Sakha
- Published: February 18, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400201073.001
Summary and Research Question
- The COVID-19 pandemic generated an unprecedented shock to firms with adverse consequences for existing productive capacities.
- The paper investigates whether digitally-enabled firms mitigated economic losses from the pandemic better than digitally-constrained firms in the Middle East and Central Asia region.
- Methodology: firm-level data analyzed using a difference-in-differences approach.
- Scope: firms in the Middle East and Central Asia region.
Key Findings
- Controlling for demand conditions, digitally-enabled firms faced a lower decline in sales by about 4 percentage points during the pandemic compared to digitally-constrained firms.
- Interpretation: digitalization acted as a hedge during the pandemic, enhancing firm-level resilience to supply shocks.
Policy Implications and Recommendations
- Policymakers need to close the digital gap.
- Policymakers should accelerate firms’ digital transformation.
- Rationale: accelerating digital adoption will be essential for economies to bounce back from the pandemic and build the foundations for future resilience.
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- Working Paper