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Flexibility and digitalization are the keys to post-COVID-19 economic recovery

  computer and software

Foto: Charlein Gracia / unsplash.com

28/07/2020
Gabriel Ubieto
The stability of the recovery will depend on the ability to push through the digital transformation, a challenge that the Spanish economy has been facing for years and that has proven to be key in the coronavirus crisis

The COVID-19 pandemic is wreaking havoc on the vast majority of the world's economies, although there are countries such as Spain that have been particularly badly hit. The latest International Monetary Fund (IMF) predictions map out a worse scenario than was expected, with a fall in Spanish production that could be in excess of 12.8% of GDP. The preponderance of industries such as tourism that are in lockdown due to restrictions on movement is causing the impact to be much greater than the 4.9% fall predicted by the IMF for 2020. According to Joan Torrent, full professor of Economics at the UOC, "the balance in the United States and the eurozone will be clearly negative, while the developing areas, especially Asia, are expected to lead the post-COVID economic recovery".

Torrent commented that protecting jobs during the pandemic and restoring them during the recovery will be key factors. The problem is that according to data referring to the United States, companies do not intend to rehire a third of the workers they let go during the pandemic. The world economy has experience in managing global crises, so we already have responses on how to "protect and capitalize business tranches and the most vulnerable people". However, this is no normal crisis and it will have a series of effects that Torrent, full professor and researcher with the UOC Faculty of Economics and Business, claimed that "since they are unprecedented, we do not yet have the economic apparatus to understand them". New normality, new economy.

One of the effects that Torrent highlighted is the acceleration of economic times: the first eight weeks of the crisis took with them almost a quarter of jobs in the United States. According to the full professor, this virulence is "incomparable to any other known crisis". This deterioration, which is explained by the drastic economic stoppage and restrictions on movement, is showing that the sectors that have been more flexible as regards distance working have been the least affected by the crisis.

 

Investing in training and a new social contract

Torrent predicted that this reality denotes the "absolute importance of digital transformation as an instrument, not just for a less harsh crisis, but as an essential element to compete in the new post-COVID wave". The digital transformation milestone is a long-standing one and involves a great many challenges as it is "based on different technologies and different uses and it creates different social and economic effects". Yet the most important challenge of all is being able to mobilize every company's skills so that the digital transformation has "positive and, above all, long-lasting effects".

To achieve this milestone, Torrent claims that the "reorganization of the economy and companies is key, as digital transformation alone will not save us from the effects of the crisis". He warned that this involves culturally training and preparing society to interact with new technologies and be "sufficiently empowered to see their limits and excesses". In this new economy, a critical spirit has to be "the order of the day so that talent can flourish without hindrance, and this is only possible with a new social contract that replaces competitiveness with collaborative governance".

This skills training that Torrent proposed goes "way beyond" basic digital skills and the present organization of educational institutions. In other words, the future of digital education calls for a change in the traditional teaching models: according to the full professor, "flexibility, speed and results-orientation" are the keys that need to be applied for a good education in ICT. Otherwise, "we are not using all of technology's potential for learning".

 

Remotizing and digitizing tourism

However, if the ability to adapt to this digitalization will determine the extent of the crisis and the stability of the recovery, what will happen to the economies, like the Spanish and the Catalan ones, that are founded to a large extent on industries such as tourism and services? To begin with, Torrent assured that "technology is the instrument, not the aim, and that the range is so extensive that there is no economic activity that does not have suitable technologies for transformation".

The full professor stated that the flexibilization of tourism involves a lot of factors: "we need to start imagining models that blend on-site and online environments". In this new scenario, technologies such as virtual or augmented reality will come into play. Also considered is exploiting the link between other activities related to culture, gastronomy or sports. In other words, Torrent proposes that we cease to see tourists as "people who travel physically and start to think of them as someone who has an emotional tie with an area that can be maintained thanks to the tools that digitalization offers".

This would be a great change for the tourism industry but, Torrent claimed, "the depth of recovery depends on the depth of the digital transformation", although he warned that "to optimize the return of this digitalization, we need to get the changes and reorganizations completely right". In this vein, he noted that the Catalan and the Spanish economy need a "complete reorganization". "We need to restructure business principles, strategies and cultures to adapt them to the digital transformation process", and once we are there, we need to ensure constant innovation. This is a situation that Torrent claimed is "very far from the current reality".

This is why the full professor is not optimistic in the short term. "The havoc wreaked by the crisis will fester long after the summer, and pockets of inequality and unreliability will remain". Despite this, he puts his trust in European aid packages, which he believes to be "clearly linked to an efficient capitalization of the economy that should not repeat the mistakes of the past". We need to be aware, he says, of the economic model in which this money is invested, as "reorganization depends on us and on the ability to mobilize leaderships and agreements across the board".

 

Related article:

Economia post-COVID-19: Reestructuraci o reconfiguraci? [Post-COVID-19 economy: Restructure or reconfigure?] Blog of the UOC Faculty of Economics and Business.

 

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Photograph of Joan Torrent Sellens

Joan Torrent Sellens

Lecturer in the Economics and Business Studies Department
Director of the Master's Degree on Creation, Management and Running of Micro-enterprises

Expert in: ICT, knowledge and economic growth and development; ICT, knowledge and business and regional efficiency and competitiveness; ICT, knowledge, economic activities and social uses; ICT, knowledge and health; ICT, knowledge, people and work.

Knowledge area: Applied economics.

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