How to improve productivity in an inclusive way in the post Covid world
The International Monetary Fund (IMF) released the report “Boosting productivity in the aftermath of covid-19” , analyzing the opportunities and challenges from the economic changes produced by the pandemic, focusing on the consequences of incremental digitalization in productivity, human capital and market competition, and providing policy recommendations to enhance productivity and inclusiveness in the post covid-19 world.
The main highlights of the report are as follows
- Digitalization propelled by investment in intangibles could boost productivity. Digitalization of the economy and companies has mitigated productivity losses caused by mobility restrictions during the pandemic and could boost productivity in the future. According to IMFs estimates “a 10% rise in intangible investment is associated with about a 4.5% rise in labor productivity”. However there are some challenges for these to materialize in an inclusive and efficient way:
- Inefficient reallocation of resources: Higher productivity due to reallocation of capital and labor resources towards more digitized firms could be delayed by unprecedented “public support to help protect jobs and livelihoods which could keep resources in less productive firms”, creating “zombies firms”.
- Human capital: Next generation will be impacted by school closures and current labor force will need new skills as some jobs may never come back or will require reskilling and upskilling efforts.
- Concentration of intangible investments in a few large firms, raising their market power, could harm innovation and productivity in the long term. In fact, “in those sectors that have benefited most from the crisis, like digital services, already-dominant firms have performed better”.
- Recommendations to support post-pandemic productivity growth:
- To ensure access to financing for firms to invest in intangible capital and to design tax incentives to boost R&D.
- Gradually phasing out public support measures and having efficient bankruptcy procedures.
- To promote competition and prevent increases in market power that can harm productivity in the long term.
- Reskilling and upskilling efforts to support inclusiveness and strengthening potential growth.
Filter results
According to the OECD. SMEs and start-ups that grow rapidly contribute significantly to job creation, economic growth and competitiveness. Indeed, SMEs that grow by one-third over a three-year period, contribute about as much to job creation as large firms.
According to @McKinsey, banks must prepare for a new growth curve. Strategic precision —the ability to combine technology, capital discipline, and deep customer insight— will distinguish the leaders from the laggards.
According to Kristalina Georgeva IMF Managing Director, lifting growth requires three things: one, regulatory housecleaning to unleash private enterprise; two, deeper regional integration; and three, preparedness to harness AI.
According to The European House – Ambrosetti, the European Union has an opportunity to boost competitiveness and growth by simplifying regulatory and supervisory frameworks, particularly in the areas of sustainability and the financial sector.
According to Ramón Casilda Béjar, Spain, in today’s complex geopolitical landscape, has the opportunity to strengthen its role as a bridge and connecting country between Ibero-America and the European Union, revitalizing investment flows in both directions.
According to @ECB, in moments of acute stress, the public often turns to physical currency as a reliable store of value and a resilient means of payment, underscoring the crucial role it plays above and beyond everyday transactional convenience
According to Juan S. Mora-Sanguinetti, in Spain a 10% increase in regulatory volume leads to a 0.5% drop in employment in companies with fewer than 10 employees.
According to Hélène Rey “In a world where stablecoins, particularly those pegged to the dollar, become an important global payment tool, we must brace ourselves for substantial consequences”.
@judith_arnal proposes reforms for the EU to advance regulatory simplification, starting with consensus on its meaning, with competitiveness as a pillar, plus coordination mechanisms and a governance rethink.
According to @iee_org, Spain has one of the most demanding tax environments for businesses within the European and international context, which may have significant implications for competitiveness, foreign investment attraction, and business expansion.
According to Christine Lagarde for the euro to gain in status, Europe must take decisive steps by completing the single market, reducing regulatory burdens and building a robust capital markets union.
According to the Bank of Spain, in a context of strong growth in transactions and prices, the conditions under which new mortgage loans are granted currently show no signs of easing in lending standards.