The impact of the current health crisis has had a profound impact on the perception of business leaders, and many of these perceptions have been captured by the World Economic Forum’s Executive Opinion Survey. Perceptions in some areas have indicated that progress in some areas critically stalled or declined during the crisis; while in other areas leaders believe there was a marked improvement compared to previous trends. Table 6.1 shows a summary of the top five areas that experienced the most movement upward or downward within advanced and emerging economies.
Comparing the views of business leaders in 2020 with their views during the previous three years it emerges that, in advanced economies since the pandemic, there has been: 1) a marked decline in competition in services (network, professional and retail services), possibly driven by the over-reliance on platforms since the beginning of the pandemic, re-enforcing an already growing winner-take-all economy in these markets; 2) a reduction in collaboration between companies, possibly related to lockdowns that reduced exchanges and people’s movement; and 3) finding skilled workers has become more difficult, mainly because the gap in the skills required in this phase (geared towards the digital economy) has further amplified during the pandemic.
In emerging and developing markets since the pandemic, business leaders noticed: 1) an increase of business costs related to crime and violence and 2) organized crime. These changes, however, reflect a reversal of a positive trend in 2018 and 2019 and should therefore be interpreted as a partial step-back in ongoing progress on these aspects. Beyond these aspects business leaders also flag 3) a reduction in judicial independence, an ongoing negative trend since before the pandemic; 4) further reduction in competition; and 5) stagnating trust in politicians.
On the flip side, the COVID-19 crisis has triggered a positive response from different stakeholders in some dimensions. In advanced economies: 1) business leaders assessed governments’ responses to change higher than before the crisis, yet starting from a low base; 2) collaboration within companies increased, as companies had to better leverage internal resources in this context (notably, this contrasts with a reduction in collaboration with other companies; 3) venture capital availability continued to improve (in continuation with a previous trend), yet again starting from a low base; 4) business leaders perceived that social safety nets, although not optimal still, have contributed to respond to crisis; and 5) soundness of banks continued to improve this year, in continuation with previous trends, possibly also thanks to prompt policy response.
In emerging and developing countries, business leaders have similar views when it comes to 1) government response to change, 2) collaboration within companies, and 3) venture capital availability. Notably, business leaders assess government response to change in 2020 more positively compared to previous years, even though trust in politicians stalled. This signals that, while measures to respond to the first wave of the pandemic were judged positively, they did not change the fundamental level of trust in governments. In addition, in these countries, on average, 4) train services improved, a continuation of previous trends, and 5) capacity to attract talent, also an ongoing trend, albeit this year’s assessment on this aspect, is lower than it was in 2019, but higher than it was in 2017 and 2018.
Taken together, these assessment show that all business leaders are concerned by potential increase in competition and governance dynamics. Further, in countries at the technological frontier, business leaders are concerned about lack of adequate skills. These results also show that all stakeholders are adapting their behaviour to cope with the current context.
These insights from the Executive Opinion Survey, although not comprehensive, offer a unique perspective on business leaders’ views and suggest clear indications on the needs of business communities.
The 2020 pandemic has been a shock for all countries, and no economy has been untouched by losses both in terms of human lives and livelihoods.
Against this backdrop, however, it is possible to identify some common features that helped countries better manage the impact of the pandemic on their economy and their people. Based on the assessment of business leaders – through the executive opinion survey – the following dimensions emerged as particularly important to be resilient to this specific health crisis and its immediate aftermath.48
First, economic digitalization and digital skills. Social distancing has been the most immediate response to COVID-19; therefore, countries that could continue running significant segments of their economy remotely were better placed to go through the pandemic than those who could not. For instance, countries that could leverage flexible work arrangements (the top 5 include Netherlands, New Zealand, Switzerland, Estonia, and the United States) and those where digital skills are most widespread (top 5 include Finland, Sweden, Estonia, Iceland, and the Netherlands) could partially adjust by increasing the digitalization of their economic activity. Despite important disparities between sectors that could be digitalized, and those that cannot, economies that could rely on technology and the provision of digital services online were relatively less affected and were also able of using technology for monitoring the evolution of the infection.
Second, safety nets and financial soundness. Since multiple segments of the economy had to cope with full lockdowns or reduced business activity, countries that already had in place strong safety nets to support those who could not work through the pandemic, were better placed to salvage livelihoods. Denmark, Finland, Norway, Austria, Luxembourg and Switzerland, for instance, could all rely on well-established mechanisms to support households during the health crisis. Similarly, countries that could support companies with either direct subsidies or credit could prevent excessive bankruptcies and job losses. Notably, economies with strong financial systems (Taiwan [China], Finland, the United States, the United Arab Emirates and Singapore) could more easily find resources to provide credit to SMEs, which, in addition to public interventions, contributed to keeping companies afloat in the current context.
Third, governance and planning. Managing the COVID-19 crisis has proven extremely challenging for all governments. Balancing public health policies with economic and social policies requires adopting second-best solutions, which are difficult to assess. In general terms, countries that could better plan and coordinate health measures with fiscal and social policies have been relatively more successful in mitigating the effects of the crisis. Policy stability (the capacity of government to provide a steady policy framework) can be used as a proxy for government capacity to plan and coordinate. On this aspect, countries that perform relatively well include Singapore, Switzerland, Luxembourg, Austria and the United Arab Emirates.
Fourth, health system and research capacity. A health system is not only defined by the capacity of its healthcare sector (hospitals, doctors, beds) but also by the accessibility of these services by a large fraction of the population, by the protocols in place to manage public health issues and by the capacity to develop and deploy a technological response (vaccine). While a comprehensive measure of healthcare capacity is not available, the data from the Executive Opinion Survey shows that the economies that allow relatively widespread access to healthcare include Japan, Spain, Taiwan [China], Malta and the Netherlands. Not all these countries could prevent a large diffusion of the virus, yet, widespread access to healthcare could offer extensive medical support. Further, anecdotal evidence shows that economies that experienced previous Coronavirus epidemics (e.g. SARS), had better protocols and technological systems in place (e.g. Korea, Singapore, Taiwan [China]) and could contain the epidemic relatively more than others, and navigated the crisis relatively well. As this crisis has shown, vaccine development and deployment capacity are also critical. As such, countries with greater biotechnology capacity and established national and international collaborations between universities and companies (Switzerland, the United States, Finland, Israel, the Netherlands) have been able to develop solutions to the current crisis, and are better placed to cope with future pandemics.