MENA Enterprise Survey Report Working Papers: Volume 3 - The upside of digitalisation after COVID-19

Description

The COVID-19 crisis has sparked profound concerns about the economic effects of the pandemic in developing countries. These concerns are associated primarily with the impact of COVID-19 on sales, productivity and employment. But the medium- and long-term impact will depend mainly on the speed of digitalisation and the economic gains developing countries can obtain from it. Digitalisation helps economic activity, as the COVID-19 crisis has made amply clear, but not everyone has benefitted equally from the arrival of digital technologies. Huge disparities still exist across and within countries. While more than half of the world’s population now has access to the internet, the penetration rate in the least developed countries is only 15%.

The benefits of adopting digital business solutions can be substantial for companies. The transfer of information and data over the internet helps reduce production costs and therefore expands the demand for a firm’s goods and services. This, in turn, increases factor demand as well. Reductions in search costs enable buyers and sellers of products or services to get better access to the other side of the market by increasing the speed or efficacy with which firms find workers or input suppliers.

The analysis in this working paper relies on the Enterprise Surveys, conducted by the EIB, EBRD and the World Bank. This is the third of nine working papers supporting the full report: Unlocking sustainable growth in the Middle East and North Africa private sector.