Digitalization and Resilience

Abstract

This paper investigates the role of digitialization in improving economic resilience. Using balance sheet data from 24,000 firms in 75 countries, and a difference-in-differences approach, we find that firms in industries that are more digitalized experience lower revenue losses following recessions. Early data since the outbreak of the COVID-19 pandemic suggest an even larger effect during the resulting recessions. These results are robust across a wide range of digitalization measures—such as ICT input and employment shares, robot usage, online sales, intangible assets and digital skills listed on online profiles—and several alternative specifications.

Keywords: Resilience, Digitalization, Recessions, Firms, Local Projection, digitalization measure, macroeconomic data, balance sheet data, outbreak of the COVID-19 pandemic, revenue loss, employment share, Economic recession, COVID-19, Global

JEL Classification: E22, E32, O33, I12, O30