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Nordine Abidi, Mehdi El Herradi, and Sahra Sakha
The COVID-19 pandemic has resulted in an unprecedented shock to firms with adverse consequences for existing productive capacities. At the same time, digitalization has increasingly been touted as a key pathway for mitigating economic losses from the pandemic, and we expect firms facing digital constraints to be less resilient to supply shocks. This paper uses firm-level data to investigate whether digitally-enabled firms have been able to mitigate economic losses arising from the pandemic better than digitally-constrained firms in the Middle East and Central Asia region using a difference-in-differences approach. Controlling for demand conditions, we find that digitally-enabled firms faced a lower decline in sales by about 4 percentage points during the pandemic compared to digitally-constrained firms, suggesting that digitalization acted as a hedge during the pandemic. Against this backdrop, our results suggest that policymakers need to close the digital gap and accelerate firms’ digital transformation. This will be essential for economies to bounce back from the pandemic, and build the foundations for future resilience.
Nordine Abidi, Mehdi El Herradi, and Sahra Sakha
Nordine Abidi, Mehdi El Herradi, and Sahra Sakha

The COVID-19 pandemic has resulted in an unprecedented shock to firms with adverse consequences for existing productive capacities. At the same time, digitalization has increasingly been touted as a key pathway for mitigating economic losses from the pandemic, and we expect firms facing digital constraints to be less resilient to supply shocks. This paper uses firm-level data to investigate whether digitally-enabled firms have been able to mitigate economic losses arising from the pandemic better than digitally-constrained firms in the Middle East and Central Asia region using a difference-in-differences approach. Controlling for demand conditions, we find that digitally-enabled firms faced a lower decline in sales by about 4 percentage points during the pandemic compared to digitally-constrained firms, suggesting that digitalization acted as a hedge during the pandemic. Against this backdrop, our results suggest that policymakers need to close the digital gap and accelerate firms’ digital transformation. This will be essential for economies to bounce back from the pandemic, and build the foundations for future resilience.

Mr. Christoph Duenwald, Mr. Yasser Abdih, Mrs. Kerstin Gerling, Vahram Stepanyan, Abdullah Al-Hassan, Gareth Anderson, Ms. Anja Baum, Mr. Sergejs Saksonovs, Lamiae Agoumi, Chen Chen, Mehdi Benatiya Andaloussi, Sahra Sakha, Faten Saliba, and Jesus Sanchez
Climate change is among humanity’s greatest challenges, and the Middle East and Central Asia region is on the frontlines of its human, economic, and physical ramifications. Much of the region is located in already difficult climate zones, where global warming exacerbates desertification, water stress, and rising sea levels. This trend entails fundamental economic disruptions, endangers food security, and undermines public health, with ripple effects on poverty and inequality, displacement, and conflict. Considering the risks posed by climate change, the central message of this departmental paper is that adapting to climate change by boosting resilience to climate stresses and disasters is a critical priority for the region’s economies.
Mr. Christoph Duenwald, Mr. Yasser Abdih, Mrs. Kerstin Gerling, Vahram Stepanyan, Abdullah Al-Hassan, Gareth Anderson, Ms. Anja Baum, Mr. Sergejs Saksonovs, Lamiae Agoumi, Chen Chen, Mehdi Benatiya Andaloussi, Sahra Sakha, Faten Saliba, and Jesus Sanchez

Climate change is among humanity’s greatest challenges, and the Middle East and Central Asia region is on the frontlines of its human, economic, and physical ramifications. Much of the region is located in already difficult climate zones, where global warming exacerbates desertification, water stress, and rising sea levels. This trend entails fundamental economic disruptions, endangers food security, and undermines public health, with ripple effects on poverty and inequality, displacement, and conflict. Considering the risks posed by climate change, the central message of this departmental paper is that adapting to climate change by boosting resilience to climate stresses and disasters is a critical priority for the region’s economies.

Mr. Christoph Duenwald, Mr. Yasser Abdih, Mrs. Kerstin Gerling, Vahram Stepanyan, Abdullah Al-Hassan, Gareth Anderson, Ms. Anja Baum, Mr. Sergejs Saksonovs, Lamiae Agoumi, Chen Chen, Mehdi Benatiya Andaloussi, Sahra Sakha, Faten Saliba, and Jesus Sanchez