Countries with better digital infrastructure may be able to counteract some of the negative economic effects of COVID-19 and future pandemics, according to new research, creating increased urgency for investment in places where internet access is not equitably distributed.
Under normal conditions, digital connectivity translates to increased productivity and accelerated innovation, the researchers said. In emergency situations, it can also ensure the economy continues running with minimal interruption — individuals are able to telecommute to work or school, companies are able to utilize digitized supply chains and distribution channels and governments are able to continue providing public services without interruption.
The research, published last month in Telecommunications Policy, was led by Raúl Katz, director of business strategy research at the Columbia Institute for Tele-Information. Researchers used economic data from countries impacted by the 2003 SARS outbreak, studying the correlation between a country’s digital infrastructure and the severity of its economic downturn.
While quarantining and social distancing measures have been stricter during COVID-19 than they were in countries affected by severe acute respiratory syndrome, researchers said the measures used during the SARS outbreak still reduced face-to-face interactions and caused social and economic damage.
“Although all impacted countries did experience some negative economic effects, these were significantly less in countries with high fixed broadband penetration rates,” the researchers wrote. “This finding suggests that internet usage mitigated the economic damage by keeping the economy up and running.”
According to research from the Pew Research Center published in July 2019, more than 21 million Americans lack broadband connectivity, including 27% of people living in rural areas and 2% of city dwellers. Additionally, 40% of schools lack connectivity, as do 60% of health care facilities outside metropolitan areas.
Though the current pandemic appears to be ending as COVID-19 vaccinations are rolled out around the world, Katz said it’s not too late for governments and corporations to invest in digital infrastructure and potentially mitigate economic damage, if they have the resources.
“There are some challenges now in the sense that with the recession, there’s less of an ability to invest,” he said. “Governments don’t have the resources to invest in infrastructure, and the private sector has a little bit of a strain as well in terms of their ability to continue investing.”
Going forward, Katz and his colleagues suggest countries develop a “digital resilience plan” that serves as a kind of stress test for digitization by modeling the impact of another pandemic on businesses, schools and the labor force
“Think of it as a simulation or a war game where you say, 'OK, COVID attacks again,'” Katz said. “Is the infrastructure ready to perform under those conditions? And if not, what are the things that need to be done in order to prepare for that situation?”
Some potential government initiatives include deploying base stations for mobile connectivity; temporarily allocating additional spectrum to mobile network providers so they can handle heavier traffic loads; and requiring streaming service providers to temporarily reduce traffic by lowering the definition of video content.
“It is critical that countries begin work immediately on a Digital Resilience Plan to address future pandemic disruptions,” the researchers wrote.
This is among the first studies about how digitization can mitigate the economic impacts of a pandemic; previous research on this subject focused mainly on natural disasters, such as hurricanes, and how technology can improve resilience.
Katz has been studying digitization for nearly a decade, primarily focusing on the impact of digitization on the economy, social services and public policy. At the start of the pandemic, he began hearing anecdotally about how important digitization was as people dealt with isolation, telecommuting and remote learning.
“And so we thought it would be interesting to do something a little bit more comprehensive and more rigorous,” Katz said, using data from the SARS pandemic as a starting point.
Katz and his colleagues intend to conduct this same kind of research next year for COVID-19 when better datasets become available.
The study “Can digitization mitigate the economic damage of a pandemic? Evidence from SARS,” published November 2020 in Telecommunications Policy, was authored by Raúl Katz, Columbia University; Juan Jung, Universidad Complutense de Madrid; and Fernando Callorda, Universidad de La Matanza.