Digitalization, Remote Work and Firm Resilience: Evidence from the COVID-19 Shock

Ileana Cristina Constantinescu, Arti Grover and Gaurav Nayyar

No 10949, Policy Research Working Paper Series from The World Bank

Abstract: Using Business Pulse Survey data for 61 countries during the COVID-19 pandemic, this paper presents novel findings on remote work, enabled by digitalization, as a source of resilience for firms. The results suggest the following. First, firms in sectors with greater amenability to remote work experienced a smaller adverse impact of the pandemic in countries with better digital infrastructure. Second, these effects apply to both exporting and non-exporting firms. Third, there are differences across sectors. Among firms in the manufacturing sector, the benefits of remote work in countries with better digital infrastructure accrue more to exporters relative to non-exporters, thereby reflecting a premium to exporting. This exporting premium is not observed in the service sector, which largely comprises firms in non-knowledge intensive services in the sample. Fourth, the effects of the amenability to work remotely in countries with better digital infrastructure do not dissipate over time.

Date: 2024-10-15
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