Firm Recovery during COVID-19: Six Stylized Facts

Xavier Cirera, Marcio Cruz, Arti Goswami Grover, Leonardo Iacovone, Denis Medvedev, Mariana De La Paz Pereira Lopez and Santiago Reyes
Authors registered in the RePEc Author Service: Mariana Pereira-López

No 9810, Policy Research Working Paper Series from The World Bank

Abstract: Building on prior work that documented the impact of COVID-19 on firms in developing countries using the first wave of Business Pulse Surveys, this paper presents a new set of stylized facts on firm recovery, covering 65,000 observations in 38 countries. This paper suggests that: One, since the outset of the pandemic, some aspects of business performance such as sales show signs of partial recovery. Two, other aspects remain challenging, including persistently high uncertainty and financial fragility. Three, recovery is heterogeneous across firms and more sensitive to firm-level attributes such as size, sector, and initial productivity than to country-level differences in the severity of the initial shock. In particular, larger and more productive firms are recovering faster, with implications for competition policy and allocative efficiency. Four, the decline in jobs has been steeper during the initial shock than the expansion in employment during recovery, raising the risk of a "jobless" recovery pattern. Five, the diffusion of digital technology and product innovation accelerated during the pandemic but did so unevenly, further widening gaps between small and large firms. Six, businesses now have more access to policy support, but poorer countries continue to lag behind and appropriate targeting of firms remains a challenge.

Keywords: Labor Markets; Food & Beverage Industry; Plastics & Rubber Industry; Textiles; Apparel & Leather Industry; Pulp & Paper Industry; Common Carriers Industry; Construction Industry; Business Cycles and Stabilization Policies; General Manufacturing; Financial Sector Policy (search for similar items in EconPapers)
Date: 2021-10-18
New Economics Papers: this item is included in nep-sbm
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