The Covid-19 pandemic has forced firms to adapt their work processes to the infectious dynamic and the public health measures to contain it. Using survey data of almost 2,000 establishments in Germany, this column shows that the pandemic has accelerated the diffusion of digital technologies, especially in combination with working from home. Investments are particularly prominent in large establishments, while small and medium-sized establishments are less likely to invest in digital technologies and more likely to face financial or logistic barriers to investment. Investments vary a lot across sectors, but are less influenced by the current economic condition of the establishment.
Productivity and Innovation
Many countries turned to use contact-tracing apps to help control the spread of COVID-19. Despite public policy efforts, however, tracking apps have not been a success because of public concerns over data privacy. This column compares nine countries to explore the conditions behind the successful use of digital technologies and AI for public purposes. Individuals give over personal data to internet companies but are wary of sharing their data for the public interest. Citizen trust in public interventions and commitment to social goals need to be nurtured in normal times to be effective in emergencies.
International trade is a key determinant of firm profitability and survival, so it is natural to expect it to influence both incentives to innovate and the rate of creative destruction. This column highlights four key mechanisms through which international trade affects endogenous innovation and growth: market size, competition, comparative advantage, and knowledge spillovers. Each of these mechanisms offers potential static and dynamic welfare gains. Discriminating between alternative mechanisms for these dynamic welfare gains and strengthening the evidence on their quantitative magnitude remain exciting areas of ongoing research.
The use of telemedicine rose sharply under the COVID-19 pandemic, and in the coming years we are likely to see more healthcare delivery that mixes in-person with remote care. But concerns remain over whether remote care might reduce care quality or increase costs. This column examines the effect of increased access to telemedicine on care cost and outcomes using data from Israel around the country’s first lockdown in March and April 2020. Access to telemedicine results in a slight increase in primary care use and no significant increase in overall costs. There is no evidence for decreased accuracy or increased likelihood of adverse events.
Although epidemics are frequently cited as inducing changes in economic behaviour and accelerating technological and behavioural trends, there may be important differences across socioeconomic groups in ability to utilise such new technologies. This column studies these issues in the context of fintech adoption and finds strong evidence of epidemic-induced changes in economic and financial behaviour, of differences in the extent of such shifts by more and less economically advantaged individuals, and of a role for IT infrastructure in spreading or limiting the benefits of technological alternatives. The results highlight both the behavioural response to epidemics and the digital divide.
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Hoekman, Tu, Wang, 12 July 2021
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10 - 10 August 2021 / Columbia University / Private Sector Development Research Network and the Center for Development Economics and Policy, Columbia University
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23 - 24 August 2021 / Palais Coburg, Vienna, Austria / WU Vienna - Research Institute for Capital Markets
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25 - 27 August 2021 / Online /
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26 - 27 August 2021 / Lecce, Italy /
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29 August - 1 September 2021 / Castello di Gargonza, Tuscany, Italy / Centro Studi Luca d’Agliano, LEAP – Bocconi University, Centre for Economic Policy Research (CEPR), DEMM – University of Milan, DEMS – University of Milan Bicocca, Cattolica University, Vilfredo Pareto Doctoral Program in Economics of the University of Turin.
