Can digitization mitigate the economic damage of a pandemic? Evidence from SARS

Katz, Raúl; Jung, Juan; Callorda, Fernando

The work presented in this paper uses empirical evidence to highlight the important role digital technology plays in mitigating a pandemic's economic disruption. As extensive datasets including the effect of the current COVID-19 pandemic are still unavailable, this study provides an assessment of the role of digitization at the time of SARS in 2003. Results are robust in pointing out that those countries with better broadband connectivity were able to mitigate some of the economic losses incurred by the pandemic. While anecdotal evidence is plentiful even for COVID-19, this study provides rigorous analysis to support that a reliable telecommunications infrastructure and a high level of digitization is crucial to keep the economy running under pandemic conditions. These results provide valuable evidence for the current context of COVID-19, which has resulted in several national lockdowns around the world. In consequence, we believe that the public and private sectors must collaborate and work together to promote the enhancement of the digital ecosystem. In the long run, a suitable regulatory framework seems crucial to stimulate private investments to close the digital supply gap, as well as promoting the digitization of business process and the training of the workforce to acquire digital skills. In the short term, we discuss several measures that can be taken to accommodate the expected increases in internet traffic in such circumstances and maintain the quality of service.