Wish you were here: how the pandemic harmed tourism-dependent economies


In 1950, at the dawn of the jet age, just 25 million people took foreign trips. By 2019, that number had reached 1.5 billion, and the travel and tourism sector had grown to almost too-big-to-fail proportions for many economies.

The global pandemic, the first of its scale in a new era of interconnectedness, has put 100 million jobs at risk, many in micro, small, and medium-sized enterprises that employ a high share of women, who represent 54 percent of the tourism workforce, according to the United Nations World Tourism Organization (UNWTO).

Tourism-dependent countries will likely feel the negative impacts of the crisis for much longer than other economies. Contact-intensive services key to the tourism and travel sectors are disproportionately affected by the pandemic and will continue to struggle until people feel safe to travel en masse again.

“There is no way we can grow our way out of this hole we are in,” Irwin LaRocque, secretary-general of the Caribbean Community (CARICOM), said at a virtual event in September.

From the white sand beaches of the Caribbean, Seychelles, Mauritius, and the Pacific to the back streets of Bangkok, to Africa’s sweeping national parks, countries are grappling with how to lure back visitors while avoiding new outbreaks of infection.

The solutions range from wooing the ultrarich who can quarantine on their yachts to inviting people to stay for periods of up to a year and work virtually while enjoying a tropical view.

Tourism receipts worldwide are not expected to recover to 2019 levels until 2023

Thailand’s deserted beach. Surin beach in Phuket. Photo : Khaosod

In the first half of this year, tourist arrivals fell globally by more than 65 percent, with a near halt since April—compared with 8 percent during the global financial crisis and 17 percent amid the SARS epidemic of 2003, according to ongoing IMF research on tourism in a post-pandemic world.

The October World Economic Outlook projected the global economy would contract by 4.4 percent in 2020. The shock in tourism-dependent economies will be far worse. Real GDP among African countries dependent on tourism will shrink by 12 percent. Among tourism-dependent Caribbean nations, the decline will also reach 12 percent. Pacific island nations such as Fiji could see real GDP shrink by a staggering 21 percent in 2020.

Nor is the economic hit limited to the most tourism-dependent countries. In the United States, Hawaii saw one in every six jobs vanish by August. In Florida, where tourism accounts for up to 15 percent of the state’s revenue, officials said it will take up to three years for the industry to recover.

Among G20 countries, the hospitality and travel sectors make up 10 percent of employment and 9.5 percent of GDP on average, with the GDP share reaching 14 percent or more in Italy, Mexico, and Spain. A six-month disruption to activity could directly reduce GDP between 2.5 percent and 3.5 percent across all G20 countries, according to a recent IMF paper.

Tourists at Suvarnabhumi airport
Thailand, a “Covid star” in 2020 with almost zero local transmissions, is battling second-wave surge in 2021
Tourists at Suvarnabhumi airport

Managing the revenue gap

In Barbados and Seychelles, as in many other tourism-dependent nations, the pandemic brought the industry to a virtual standstill.

After successfully halting local transmission of the virus, the authorities reopened their island countries for international tourists in July. Still, arrivals in August were down almost 90 percent relative to previous years, drying up a vital stream of government revenue.

Barbados had gone into the crisis with good economic fundamentals, as a result of an IMF-supported economic reform program that helped stabilize debt, build reserves, and consolidate its fiscal position just before the crisis struck. The IMF augmented its Extended Fund Facility program by about $90 million, or about 2 percent of GDP, to help finance the emerging fiscal deficit as a result of plummeting revenues from tourism-related activity and increasing COVID-related expenditures.

“The longer this lasts, the more difficult it gets to maintain,” says Kevin Greenidge, senior technical advisor to Barbados Prime Minister Mia Mottley.

“What we don’t want to do is operate policy-wise in a manner that will jeopardize the gains in terms of the fundamentals that we have made.”

On the other side of the world, Seychelles, a country that entered the crisis from a similar position of strength, will still be challenged to return to medium-term fiscal sustainability without significant support. Just before the crisis struck, the government had rebuilt international reserves and consolidated its fiscal positions. Even so, the ongoing pandemic struck the Indian Ocean island nation very hard as tourism revenues fell while COVID-related expenditures increased.

“It is too early to determine whether the crisis represents a permanent shock and how it will shape the tourism industry going forward,” says Boriana Yontcheva, the IMF’s mission chief to Seychelles. “Given the large uncertainties surrounding the recovery of the sector, innovative structural policies will be necessary to adapt to the new normal.”It is too early to determine whether the crisis represents a permanent shock.

All over the world, tourism-dependent economies are working to finance a broad range of policy measures to soften the impact of plummeting tourism revenues on households and businesses. Cash transfers, grants, tax relief, payroll support, and loan guarantees have been deployed. Banks have also halted loan repayments in some cases. Some countries have focused support on informal workers, who tend to be concentrated in the tourism sector and are highly vulnerable.

An analysis of the tourism industry by McKinsey & Company says that multiyear recovery of tourism demand to 2019 levels will require experimenting with new financing mechanisms.

The consulting firm analyzed stimulus packages across 24 economies totaling $100 billion in direct aid to the tourism industry and $300 billion in aid across other sectors with significant involvement in tourism. Most direct stimulus was in the form of grants, debt relief, and aid to small and medium-sized enterprises and airlines.

The firm recommends new ways to support the industry, including revenue-sharing mechanisms among hotels that compete for the same market segment, such as a stretch of beachfront, and government-backed equity funds for tourism-related businesses.

Development challenge

The crisis has crystallized the importance of tourism as a development pathway for many countries to decrease poverty and improve their economies. In sub-Saharan Africa, the development of tourism has been a key driver in closing the gap between poor and rich countries, with tourism-dependent countries averaging real per capita GDP growth of 2.4 percent between 1990 and 2019—significantly faster than non-tourism-dependent countries in the region, according to IMF staff.

Smaller, tourism-dependent nations are in many ways locked into their economic destinies. Among small island nations, there are few, if any, alternative sectors to which they can shift labor and capital.

Seychelles, for example, has benefited from increases in tuna exports during the COVID-19 period, which have somewhat offset tourism losses, but these additional earnings remain a fraction of tourism receipts. The government is also carrying out a plan to pay wages to displaced tourism-sector workers while offering opportunities for retraining.

Meanwhile, the government in Barbados is trying to maintain social spending and reprioritize capital spending to create jobs, at least temporarily, in nontourism sectors such as agriculture and infrastructure development.

The Caribbean Hotel and Tourism Association has projected that as many as 60 percent of the 30,000 new hotel rooms that were in the planning or construction phase throughout the Caribbean region will not be completed as a result of the crisis.

Still, the crisis is being viewed as an opportunity to improve the industry in the medium and long term through greater digitalization and environmental sustainability. The UNWTO has encouraged support for worker training in order to build digital skills for harnessing the value of big data, data analytics, and artificial intelligence. Recovery should be leveraged to improve the industry’s efficient use of energy and water, waste management, and sustainable sourcing of food.

“In a sector that employs 1 in 10 people globally, harnessing innovation and digitalization, embracing local values, and creating decent jobs for all—especially for youth, women, and the most vulnerable groups in our societies—could be at the forefront of tourism’s recovery,” says UNWTO Secretary-General Zurab Pololikashvili.

Adjusting to a new normal

As the immediate impact of lockdowns and containment measures eased during the second half of 2020, countries started looking for a balance.

Thailand, Seychelles, and other countries approved programs that would admit tourists from “lower-risk” countries with special quarantine requirements. Fiji has created “blue lanes” that will allow seafaring visitors to arrive on yachts and quarantine at sea before they unleash “the immense economic impact they carry aboard,”

Prime Minister Frank Bainimarama declared on Twitter. St. Lucia requires a negative COVID-19 test no more than seven days before arrival. Australia created a “travel bubble” that will eliminate quarantine requirements for travelers from New Zealand. CARICOM countries have also created a “regional travel bubble” that eliminates testing and quarantine for people traveling from countries within the bubble.

In a new era of remote work, countries and territories such as Barbados, Estonia, Georgia, Antigua and Barbuda, Aruba, and the Cayman Islands offer new long-term permits, lasting up to 12 months in some places, to entice foreign visitors to bring their virtual offices with them while spending in local economies.

Japan, which had seen its international arrivals triple from 2013 to 2018, started lifting border closures for travelers from certain countries at the end of October. To accommodate a post-pandemic tourism rebound, an IMF Working Paper recommends that the government continue a trend of relaxing visa requirements, draw visitors away from urban centers to less populated regions of the country, and complement a tourism comeback with improvements to labor resources and tourism infrastructure.

The World Tourism and Travel Council in a report on the future of the industry said the pandemic has shifted travelers’ focus to domestic trips or nature and outdoor destinations. Travel will largely be “kickstarted by the less risk averse travelers and early adopters, from adventure travelers and backpackers to surfers and mountain climbers,” the report says.

Leisure travel will lead the comeback in the tourism and travel sector. Business travel, a crucial source of revenue for hotels and airlines, could see a permanent shift or may come back only in phases based on proximity, reason for travel, and sector.

In the end, the return of tourism will likely hinge on what will be a deeply personal decision for many people as they weigh the risk of falling ill against the necessity of travel. The private sector backed by some tourism-dependent nations is developing global protocols for various travel industries, including a call for more rapid testing at airports to boost confidence in traveling.

“The fact is people do not feel comfortable traveling. We have not put in the necessary protocols to give them that comfort,” St. Lucia Prime Minister Allen Chastanet said at a September virtual event. “After 9/11, the TSA [Transportation Security Administration] and other security agencies around the world did a fantastic job of developing protocols that regained the public’s confidence to travel, and sadly with this pandemic we haven’t done that.”

ADAM BEHSUDI is on the staff of Finance & Development.

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Tech billionaires pump up their fortunes as COVID shatters economies


Amazon’s stock, on the other hand, has risen around 70 per cent this year, a figure that is modest only in comparison to Tesla’s gains. Much of Amazon’s performance is due to homebound Americans turning to the e-commerce giant to order products they would have otherwise purchased at retail outlets shut down by the pandemic. Amazon Web Services, a big profit generator for the company, has also experienced increased demand during the pandemic.

All told, the two men increased their net worth by a staggering $US200 billion ($259.4 billion) last year, a sum greater than the gross domestic products of 139 countries. A billion dollars – a radically life-changing sum in nearly any other context – becomes just “an entry in a database,” as Musk recently characterised his Tesla assets.

Such a rapid accumulation of individual wealth hasn’t happened in the United States since the time of the Rockefellers and Carnegies a century ago, and we as a society are only just beginning to grapple with the ethical implications.

What does it mean, for instance, that two men amassed enough wealth this year to end all hunger in America, with a price tag of $US25 billion ($32.4 billion), according to one estimate eight times over?

Or that the $US200 billion ($259.3 billion) accumulated by Bezos and Musk is greater than the amount of coronavirus relief allocated to state and local governments in the Cares Act?

Elon Musk’s Tesla, a favourite of retail investors, is up 691 per cent this year, giving it a market value of more than $600 billion.Credit:Getty

Of course, the wealth of Bezos and Musk exists largely on paper, as it’s mostly tied up in the company stock they own. In order to convert that stock to tangible assets, they would have to sell it, which could potentially crater the stock’s value on top of incurring tax obligations.

Beyond that, the task of ending hunger or plugging state budget holes is a lot more complicated than simply writing a check. If you have the money on hand, the challenge is delivering it in a useful form to the myriad places that need it. It’s a lot harder to spend billions in practice than it is in theory, or at least billionaires often say it is.

In 2018, for instance, the 10 wealthiest people donated an average of less than 1 per cent of their net worth to charitable causes, according to an analysis by economist Gabriel Zucman.

Bezos last year announced he would give $US10 billion ($13 billion) to fight climate change, and in November he announced the recipients of the first $US800 million ($1 billion) in spending on Instagram. A Washington Post analysis in June of charitable spending by the wealthiest Americans – when Bezos’s fortune totaled $US143 billion ($185 billion) – showed he gave $US100 million ($130 million) to Feeding America and up to $US25 million ($32 million) for All in WA, a statewide relief effort in Washington state. For the median American, Bezos’s giving was the equivalent of donating $US85 ($110) at that time.

Musk has given at least $US257 million ($333 million) to his own charitable foundation, or less than one-fifth of 1 per cent of his estimated wealth since founding it in 2002, according to an analysis by Quartz.

Representatives from Amazon declined to comment, while representatives from Tesla did not respond to a request for comment.

The evident difficulty of getting billionaire wealth to trickle down to everyone else is a challenge for policymakers in our new gilded era. The runaway accumulation of riches at a time of widespread deprivation and hardship is one of the widely recognised drivers of democratic decline. Most political scientists believe the erosion has already started.

Our ability to reverse that erosion will depend, in part, on whether the staggering amounts of money flowing to the top of society can be put to work to improve the lives of those at the bottom.

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Which Economies Showed the Most Digital Progress in 2020?


Over the last year, the pandemic has caused the global economy to contract by 4.4%. At the same time, one trend has accelerated worldwide: digitalization. As countries face repeated lockdowns, school closures, and shutdowns of entire industries, digital capabilities — whether for remote schooling, e-commerce, or working from home — have become more essential than ever. But how exactly has this played out around the world — and what do governments, businesses, and investors need to do to come out on top?

To explore these questions, our colleagues at Tufts University’s Fletcher School partnered with Mastercard to develop a third edition of the Digital Evolution Scorecard (following earlier editions published in HBR in 2015 and 2017). The 2020 edition is accompanied by an interactive policy simulator, and offers analysis of 90 economies based on a combination of 160 indicators across four key drivers: Supply Conditions, Demand Conditions, Institutional Environment, and Innovation and Change. Specifically, we used a combination of proprietary and public data from more than 45 different databases, as well as analyses conducted by the Fletcher School’s Digital Planet team, to explore the following questions across our core subject areas:

  • Supply Conditions: How developed is the infrastructure — both digital and physical —required to facilitate a digital ecosystem? This could include bandwidth availability, quality of roads necessary for e-commerce fulfillment, etc.
  • Demand Conditions: Are consumers willing and able to engage in the digital ecosystem? Do they have the tools and skills necessary to plug into the digital economy?
  • Institutional Environment: Do the country’s laws (and its government’s actions) support or hinder the development of digital technologies? Are governments investing in advancing digitalization? Are regulations governing the use and storage of data enabling growth, or creating barriers?
  • Innovation and Change: What is the state of key innovation ecosystem inputs (i.e., talent and capital), processes (i.e., collaborations between universities and industry), and outputs (i.e., new, scalable digital products and services)?

The scorecard takes in all this data and then assesses economies along two dimensions: the current state of the country’s digitalization and the pace of digitalization over time (as measured by the growth rate of the digitalization score over 12 years, 2008-2019). As shown in the graphic below, the resulting “atlas” for the digital planet segments economies into four distinct zones: Stand Out, Stall Out, Break Out, and Watch Out.

Stand Out Economies

This zone includes economies with both high levels of existing digitalization and strong momentum in continuing to advance their digital capabilities. Three economies are particularly notable: South Korea, Singapore, and Hong Kong. These, along with others, such as Estonia, Taiwan, and the United Arab Emirates, are consistently top performers in this index, and have demonstrated both adaptability and institution-led support for innovation. Interestingly, the U.S. also shows remarkable momentum for an economy of its size and complexity, scoring second in digital evolution after Singapore.

So what does it take to be a Stand Out economy? While every case is different, our analysis suggests that the most successful of these countries prioritized:

  1. Expanding adoption of digital consumer tools (e-commerce, digital payments, entertainment, etc.)
  2. Attracting, training, and retaining digital talent
  3. Fostering digital entrepreneurial ventures
  4. Providing fast, universal, terrestrial (e.g. fiber optics) and mobile broadband internet access
  5. Specializing in the export of digital goods, services, or media
  6. Coordinating innovation between universities, businesses, and digital authorities

Break Out Economies

This zone is characterized by economies with limited existing digital infrastructure, but which are rapidly digitalizing. China is a noteworthy outlier in this group: Its digital evolution is significantly higher than that of all other economies, due in large part to its combination of rapidly growing demand and innovation. Indonesia and India are also notable members of this group, ranking third and fourth in momentum despite their large economies. In addition to these large emerging economies, midsize economies such as Kenya, Vietnam, Bangladesh, Rwanda, and Argentina have all displayed increasing digital momentum, suggesting the potential to rapidly digitalize for both post-Covid economic recovery and longer-term transformation.

Based on our analyses, we found that successful Break Out economies prioritized:

  1. Improving mobile internet access, affordability, and quality to foster more widespread adoption
  2. Strengthening institutional environments and developing digital regulations
  3. Generating investment in digital enterprises, funding digital R&D, training digital talent, and leveraging digital applications to create jobs
  4. Taking steps to reduce inequities in access to digital tools across gender, class, ethnicity, and geographic boundaries (though many access gaps still remain)

Stall Out Economies

This zone is characterized by economies — many of which are in the EU — that have mature digital landscapes, but which exhibit less momentum for continued advancement. In part, this is likely to due to the natural slowing of growth that accompanies maturity. Many in this zone have also intentionally chosen to slow their growth in order to ensure that they grow responsibly and inclusively. To regain momentum (without sacrificing these values), these countries should prioritize:

  1. Safeguarding against “digital plateaus” by continuing to invest in robust institutional foundations, regulatory environments, and capital markets to support ongoing innovation
  2. Continuing to use policy tools and regulation to ensure inclusive access to digital capabilities and to protect all consumers from privacy violations, cyberattacks, and other threats (while still keeping data accessible for new digital applications)
  3. Attracting, training, and retaining professionals with digital skills, often through reforming immigration policies
  4. Identifying new technological niches and fostering environments friendly to innovation in those areas

Watch Out Economies

Finally, this zone — which includes countries across Africa, Asia, Latin America and Southern Europe — is characterized by shortcomings in both existing digital capabilities and momentum for future development. Countries in the Watch Out zone can look to Break Out economies as role models and benchmarks for how to use digital growth as a lever for economic resilience. Particularly for those that demonstrate emerging or sustained digital demand, Watch Out economies should prioritize:

  1. Making long-term investments to address basic infrastructure gaps
  2. Creating an institutional environment that supports safe, widespread consumer adoption of digital products and services, especially those that enable productivity and job creation
  3. Promoting initiatives (particularly through public-private cooperation) that invest in digital access to historically disadvantaged segments of the population
  4. Promoting applications that solve pressing needs and could therefore act as catalysts for widespread adoption of digital tools (such as mobile payment platforms)

Understanding the 2020 Digital Evolution Scorecard in Light of the Pandemic

Of course, an analysis of global technology and economic trends over the past year would be incomplete without an examination of the impact of the Covid-19 pandemic. Most interestingly, while a high Digital Evolution score has generally correlated with greater economic resilience to the disruptions of the pandemic, it hasn’t been a guarantee.

To explore this question, we mapped countries’ Digital Evolution scores against their percentage decrease in GDP growth from Q2 2019 to Q2 2020 (adjusted for inflation). As expected, we found that overall, the level of digital evolution helped explain at least 20% of a country’s economic resilience — or cushioning — against the pandemic’s economic impact. This cushioning comes from many sources: For example, more digitally-evolved economies tend to derive a larger share of their GDP from high tech sectors, where the workforce can shift to remote working more readily. In addition, digitally-evolved economies tend to be better at delivering public services online due to superior infrastructure, experience with digital transformation in much of the public sector, and accessible, affordable internet. Some even leveraged their superior digital evolution for contact tracing, exposure identification, data collection, and public health messaging that significantly minimized economic disruptions (South Korea and Taiwan offer excellent examples).

That said, this effect was not universal. Vietnam scored low on our digital evolution scorecard, but the impact of the pandemic on its economy has thus far remained smaller than expected. Vietnam is the only South East Asian country on track for economic growth this year, largely because the government was able to keep the virus under control through aggressive preemptive measures. In addition, the recent economic boom from Chinese manufacturing shifting to the more affordable Vietnamese market also helped the country to maintain its economic growth through the crisis.

On the opposite end, we also saw that the UK — a highly digitally-evolved economy — experienced an economic decline on par with India or Rwanda. Not only was the government response to the pandemic less than optimal, the composition of the UK economy also caused it to suffer disproportionately from social distancing and lockdowns: Services (which are are disproportionately reliant on in-person activities) make up around three quarters of the UK economy, and 10.9% of the country’s GDP comes from travel and tourism — all of which were severely curtailed due to social distancing requirements.

Overall, digital evolution is an essential contributor to economic resilience, but it is no panacea. The government’s Covid response, as well as the unique composition of its economy, can make a big difference as well.

***

Aside from the impact of the pandemic, this analysis also illustrated several more long-term trends around how the most successful countries are pursuing digital evolution:

1. More data privacy, less data protectionism.

Economies that provide secure, frictionless digital experiences nurture the most positive, engaged consumers, creating the most active digital ecosystems. These ecosystems then generate more data, which is the lifeblood of a competitive digital economy, enabling a virtuous cycle of growth. Economies such as Singapore, Japan, Canada, and the Netherlands illustrate this approach well, with a combination of open data flows and strong privacy protections.

Meanwhile, economies such as China, Russia, Iran, and Saudi Arabia represent a paradox: While significant state investment and control over their digital ecosystems can lead to higher digital momentum, these economies also impede the free flow of data, resulting in missed opportunities to further boost that momentum through digital products and applications that rely on widely accessible data. The growing popularity of data localization laws (i.e., regulations that limit the transfer of data across international borders) is ultimately making data less accessible, which not only hinders global growth, but often also diminishes countries’ own competitiveness by raising costs for digital businesses, reducing competition, and encouraging rent-seeking behavior among domestic actors.

To start to address these challenges, policymakers would do well to measure, monitor, and understand the value of what we call the “New GDP”: a country’s Gross Data Product. Once they’ve begun to understand their New GDP, economies can begin to unlock its full value by encouraging open data flows while providing adequate privacy protections for their citizens.

2. Mobile internet access is necessary — but not sufficient.

Mobile internet access has been a strong driver of momentum for Break Out economies, and it is the fastest route to getting the third of the global population that doesn’t yet have internet connectivity online. India is the preeminent example: Its internet connectivity has doubled in the last four years, and the country is on track to add 350 million smartphones by 2023.

However, mobile phones are merely the first step in unlocking the benefits of digitalization. The pandemic has illustrated how the quality of both access (i.e., reliable broadband versus sporadic satellite connections) and devices (i.e., laptops and tablets well-suited to learning and working versus low-end mobile phones) is a key component of economic resilience in a time of heavy reliance on digital technologies. For example, when the pandemic shut down in-person schooling in India, many children had to resort to WhatsApp to communicate with their teachers. Although the messaging app was certainly better than nothing, the limited growth of India’s digital ecosystem beyond mobile phones created major inequalities in access to essential education.

Given these considerations, less digitally-advanced economies would do well to focus on improving access to affordable mobile internet — but should not lose sight of the need to also invest in better devices and faster, more reliable access. This strategy has contributed to the high momentum demonstrated by Break Out zone economies such as Kenya, India, and Vietnam. And of course, China leads the pack globally when it comes to mobile adoption, thanks to a combination of massive investments in 4G infrastructure and a competitive mobile device marketplace including Xiaomi, Oppo, Huawei, and Vivo.

While investing in mobile is a great first step for economies with limited existing digital infrastructure, policymakers should endeavor to expand their gaze beyond simply increasing the number of mobile devices, recognizing that longer-term growth will depend on the quality of internet access, the devices, and the overall consumer experience.

3. The innovation-inclusion tradeoff.

Once economies reach a higher level of digital evolution, they often encounter a tradeoff between maintaining their rapid momentum and fostering institutions that prioritize digital inclusion — that is, the equitable distribution of digital development across class, gender, ethnicity, and geography. While smaller economies such as Singapore and Estonia may have an easier time maintaining their innovative edge while still ensuring an inclusive digital environment, larger, more complex economies can struggle to balance innovation with the bureaucracy needed to responsibly regulate that innovation.

For example, European economies — most of which fall into the Stall Out zone — hold six of the top 10 spots on our Digital Inclusion index. These economies have pioneered inclusive public policies such as ensuring affordable internet access, providing assistive technologies for the disabled, and investing in workers’ digital skills, and they are at the forefront of developing regulations for data governance and privacy. Many of these initiatives have (rightly) become a standard for the rest of the world — but that focus on inclusion has somewhat slowed slowed the pace of new digital development in many of these economies. These tradeoffs may well be worth making, but governments and citizens alike will benefit from clearly understanding and planning for their potential impact on digital momentum.

***

There is much that decision-makers from every country can learn from their positions on the 2020 Digital Evolution scorecard. But they can also learn from other countries — as benchmarks, role models, or even cautionary tales. For example, Singapore, Estonia, Taiwan, and the UAE have all established effective, self-reinforcing digital ecosystems through a combination of strong institutions and investment into attracting global capital and talent. They have also successfully leveraged these digital strengths to adapt to the challenges of the pandemic, demonstrating the importance of digital development for building economic resilience. Despite their small size, economies like these can serve as models for leaders around the world.

In addition, large economies with high digital momentum such as China, India, and Indonesia can serve as role models for other large developing economies, such as Brazil and Nigeria, that  may be looking to step up their digital momentum in the coming years. And smaller developing economies can look to midsize “leapfrog” nations such as Kenya, Vietnam, Bangladesh, Rwanda, and Argentina for examples of how digital momentum can rapidly transform an economy.

There are no one-size-fits-all solutions to digital evolution. Every country is unique, and the factors that enable one economy to succeed are far from certain to work in another. But despite these limitations, the 2020 Digital Evolution Scorecard can still offer clarity around the current state of both digital development and digital momentum around the world — as well as the impact of that digital evolution on countries’ responses to the pandemic. Insight into how the nations of the world have fared (and what policy choices helped them get where they are) is the first step for anyone interested in fostering digital growth and economic resilience — in their own community and around the globe.

The authors are grateful to Griffin Brewer, Christina Filipovic, and the Digital Planet team at the Fletcher School, and Paul Trueman at Mastercard.

Editor’s note: Every ranking or index is just one way to analyze and compare companies or places, based on a specific methodology and data set. At HBR, we believe that a well-designed index can provide useful insights, even though by definition it is a snapshot of a bigger picture. We always urge you to read the methodology carefully.



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Mastercard’s Digital Intelligence Index reveals digital trust and resilience in APAC economies


  • Stand Out economies in APAC include Singapore, Chinese Taipei and Malaysia
  • Quality of access, accountable institutions, among factors in digital competitiveness

The Fletcher School at Tufts University in the US, in partnership with Mastercard, recently unveiled the Digital Intelligence Index, which charts the progress economies have made in advancing their digitalisation, fostering trust and integrating connectivity. While there is no country analysis, an interactive version allows for quick comparison of up to five economies.

The once in three years index builds upon earlier editions in 2014 and 2017. 2020’s index paints a picture of global digital development, sheds insight on key factors driving change and momentum, and unpacks what this means for economies facing the challenges of a global pandemic and post-pandemic future. 

Notably across Asia Pacific, Singapore, Hong Kong SAR, South Korea and Chinese Taipei are amongst the most digitally dynamic economies. South Korea and Chinese Taipei have significantly outperformed the OECD growth rate in Q2 2020 amidst the global lockdown.

These economies feature high levels of available talent, active R&D collaboration between industry and academia, and a strong record of creating and bringing digital products into the mainstream.

“The pandemic may be the purest test of the world’s progress towards digitalisation. We have a clearer view on how dynamic digital economies can contribute to economic resiliency during a time of unparalleled global turmoil and can be positioned for recovery and change,” says Fletcher’s Dean of Global Business Bhaskar Chakravorti.

Other key findings include:

  • With nearly two thirds of the world’s population online today, we are entering an ‘after access’ phase, where access alone is not enough. Aspects such as the quality of access, effective use of digital technologies, accountable institutions, robust data governance policies and fostering trust are greater factors in determining digital competitiveness and sustainability.
  • Young people in emerging economies are demonstrating high levels of digital engagement, a bright spot for governments attempting to expand digitalization in their economies.Mastercard’s Digital Intelligence Index reveals digital trust and resilience in APAC economies

Mastercard’s president of Cyber & Intelligence Ajay Bhalla (pic) says: “Never before has there been such an acute need to understand the factors that drive digitalization and digital trust. With that knowledge, businesses and governments can work together to help all 7.6 billion people around the world benefit from the vast opportunities a digitally advanced economy can bring. 

“Whilst much remains uncertain today, it is clear that digital success will be a key building block in our collective recovery.”

Malaysia's digital economy outperformed those of its ASEAN neighbours, Singapore aside.

Digital evolution

This year’s index, Mastercard notes, looks at two components: Digital Evolution and Digital Trust. Digital Evolution captures an economy’s historical momentum from the physical past to the digital present. Digital Trust is the bridge that connects its journey from the digital present to an intelligent and inclusive digital future.

Mapping 95% of the world’s online population and drawing on 12 years of data, the Digital Evolution scorecard measures 160 indicators in 90 economies across four key pillars: institutional environment, demand conditions, supply conditions, and the capacity for innovation and change. These segment into four categories:

  • “Stand Out” economies in Asia Pacific are Singapore, Hong Kong SAR, South Korea, Chinese Taipei, and Malaysia. They’re in this category alongside the United States, Germany, Israel, and others because they’re both highly digitally advanced and exhibit high momentum. They are leaders in driving innovation, building on their existing advantages in efficient and effective ways.
  • “Stall Out” economies in Asia Pacific are Australia, New Zealand and Japan. These are noted as mature digital economies with a high state of digital adoption despite slowing digital momentum. They tend to trade off speed for sustainability and are typically invested in expanding digital inclusion and building robust institutions.
  • “Break Out” economies in Asia Pacific include mainland China, India, Vietnam, Indonesia, and Thailand. These are evolving rapidly with momentum and significant headroom for growth that is highly attractive to investors.
  • “Watch Out” economies – such as the Philippines – have a number of infrastructure gaps. Despite this, young people are showing enthusiasm for a digital future with increased use of social media and mobile payments.

Mastercard’s Digital Intelligence Index reveals digital trust and resilience in APAC economies

Digital trust

The Digital Trust scorecard, on the other hand, measures 198 indicators in 42 of the index’s economies across four key pillars: behaviour, attitudes, environment, and experience.

  • Economies such as Singapore, Hong Kong SAR, Chinese Taipei and South Korea provide citizens with a near seamless experience, delivering the holy grail of advanced infrastructure, broad access and unparalleled interaction. This experience is also matched by high levels of engagement, offering these economies a clear advantage in a ‘beyond access’ future.
  • Economies such as mainland China, Indonesia and Vietnam have increasingly favorable attitudes about their digital future, buoyed by rapidly expanding digital adoption and opportunity. 
  • Overall, digitally advanced economies with higher levels of socio-economic equity expressed more positive attitudes towards digital technologies, while fast-moving Break Outs are more optimistic than their Watch Out peers.

“Covid-19 has advanced digitalisation across Asia Pacific by at least five years in as many months, only serving to further accelerate the development of the digital ecosystems across the region. With rising levels of consumer trust and engagement and growing digitisation in the small business segment, all deeply supported by proactive enabling actions from governments, the opportunities ahead for the region’s digital economy are immense,” comments Matthew Driver, Executive Vice President, Services, Asia Pacific, Mastercard.

“With Asia Pacific poised to recover quickly from the pandemic, the strong performance in the two components of Digital Evolution and Trust will only serve to further support Asia’s leadership in digital.”

Mastercard’s Digital Intelligence Index reveals digital trust and resilience in APAC economies



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Antivirals, spaceflights, hyperloops among 20 markets to transform economies: WEF


The World Economic Forum on Wednesday released a list of the 20 markets of tomorrow that will transform economies in an inclusive and sustainable way, and named India among the countries that present solid technological systems for such a transformation.

However, several countries, including India, will need development in the social and institutional fabric to deliver these markets, the Geneva-based organisation said in a white paper released at its ‘Jobs Reset Summit 2020’, which is being held online.

These 20 ‘markets of tomorrow’ include broad-spectrum antivirals, spaceflights, skills capital, water rights and quality credits, genes and DNA sequences, precision medicines and orphan drugs, ed-tech and reskilling services, artificial intelligence, satellite services, greenhouse gas allowances, reforestation services, and hydrogen.

Besides this, electric vehicles, plastics recycling, care, data, digital financial services, hyperloop-based transport services, new antibiotics, and unemployment insurance have also been included in this list.

The WEF said some of these new markets will rely particularly on advances in technology, while others will require radically new social and institutional set-ups. Some markets will emerge from a combination of both the elements.

These markets can help societies protect and empower people, advance knowledge and understanding, and protect the environment, among other benefits.

The WEF said countries with advanced technological capabilities, strong social capital and future-oriented institutions are more likely to create a broader range of new markets needed for economic transformation.

ALSO READ: World trade rebounding slowly, outlook uncertain: UN report

Post-Covid growth

“As the world grapples with the socio-economic consequences of the Covid-19 pandemic, there is an increasing demand to shape a new economy that addresses broader societal and environmental challenges while generating economic growth,” it said.

According to the report, a preliminary mapping of countries’ potential for breakthrough technological and socio-institutional innovation indicates that those with advanced technological capabilities, strong social capital and future-oriented institutions are likely to succeed in developing a broader set of new markets.

In particular, the Netherlands, Luxembourg, Denmark, Germany and Norway have the highest potential for socio-institutional innovation, while Japan, Germany, the US, the Republic of Korea and France have the highest potential to generate breakthrough technological development.

While most advanced economies score highly across both these dimensions, a few advanced economies — Czech Republic, Israel, Italy, Japan and Spain — as well as four BRIC countries (Brazil, Russia, India and China) and some other emerging economies (Hungary, Poland) “present solid technological systems but need development in the social and institutional fabric to deliver these markets,” the WEF said.

It added that India, Spain and Japan are just below the bar in terms of socio-institutional innovation, while the economy of Taiwan, China, is just above.



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Ernst and Young report lists regional economies worst hit by COVID-19, suggests conservation and land management stimulus


A report has identified Australia’s local government areas worst affected by the coronavirus pandemic and modelled the impact of green stimulus measures, saying they could create 50,000 jobs nationally over four years.

Tourist hotspots like Port Douglas in Queensland, Spring Bay in Tasmania, the Snowy Monaro region in New South Wales as well as Coober Pedy and Kangaroo Island in South Australia were marked as some of the areas hit hardest in the nation.

Shark Bay and Broome in Western Australia, and the Surf and Bass Coasts in Victoria were also found to be feeling the pinch.

The Ernst and Young (EY) report modelled the effect of a scalable government stimulus investment of between $500 million and $4 billion.

It found funding geographically targeted landcare and conservation programs could raise economic output by up to $5.7 billion while avoiding up to $620 million in welfare costs.

The report, titled Delivering economic stimulus through the conservation and land management sector, found even a lower-end $500 million “impulse” spend on worst-hit zones could avoid an extra $80 million spent on JobKeeper.

Jobs funded under the proposed stimulus package could include the management of environmental threats through pest control, funding for Indigenous rangers, as well as native revegetation programs, building fences, repairing infrastructure after bushfires, and for local councils.

The report noted a key strength of this type of investment:

“The ability to temporarily transfer workers who have lost their job into different industries may prevent displacement of people to other regions.”

The proposed jobs were also noted as being largely COVID-safe because of their physical nature.

The report estimated nearly 70 per cent of the roles in such a program could employ workers with no experience in the conservation and landcare sector.

Chief executive of the National Landcare Network Jim Adams said the report showed the spending could help regional communities.

“The labour-intensive nature of the work, combined with low capital costs, results in a high proportion of investment flowing to the employees and contractors delivering the work and, in turn, to their families and businesses in their local community,” he said.

A collection of landcare and environmental groups commissioned EY to independently assess the proposed stimulus, on behalf of 70 farming and conservation organisations, including the National Farmers Federation (NFF) and Conservation Council, who backed the plan.

‘Hotels, pubs hit hardest’

Jayden Hay, an IT worker in Coober Pedy, said he had seen a huge drop in his work since the pandemic and he was not the only one.

A man stands in front of a desert landscape.
Many of Jayden’s clients are local Coober Pedy businesses.(Supplied.)

“Hotels and pubs; those have been hit the hardest and the work hasn’t been very steady.”

Mr Hay said he thought many people in the town would jump at the opportunity for paid work, even if they had not worked in landcare before.

The Federal Government says it is open to considering the measures.



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Australia and NZ plan to open economies as USA courts disaster


Australia and New Zealand prepare to open their economies safely but the U.S. is courting disaster if it eases restrictions now. Alan Austin assesses the situation.

AUSTRALIA is currently an intriguing place to observe. And not just because of its first-ever winter without Aussie Rules and NRL football dominating the discourse.

Some Australian states are about to return to work having apparently managed the coronavirus outbreak better than have most countries. Observations of Australia’s progress have been published in Mexico, France, Spain, Indonesia, Japan, Canada and elsewhere.

At the outset of the pandemic, scientists predicted most countries would experience a steep rise in infections, followed by a plateau, then a steady decline, in a bell-shaped curve. Australia has been a textbook case.

There is still a tail, but with just 84 new cases reported in the seven days to May 2, it’s pretty slender.
Switzerland, Austria and New Zealand are among the small number of other countries with near-perfect bells.

New Zealand recorded just 24 new cases in the week to May 2, which is slightly higher than Australia’s relative to population, but still satisfactory.

South Korea appeared to be leading the world when it hit peak infections on 3 March – much earlier than Australia’s on March 22 or New Zealand’s on March 28 – and then declined steeply. But the tail of its bell has proven frustratingly long. South Korea recorded 62 new cases in the week to May 2, more than eight weeks after the top of its bell.

Germany has been touted as one country which appeared to have won against the virus but then opened its economy too soon. Its chart shows a pattern of several steep declines in infections after its 27 March peak, each followed by a surge of new cases.

Germany would seem to have a way to go yet before declaring victory, with 8,454 new cases recorded in the last week. Even with more than three times Australia’s population, that’s a huge discrepancy in infections added.

America’s apocalypse

Germany is a magnificent success story, however, when compared with the United States, which has stacked on a staggering 200,123 new cases in the last seven days — with no end in sight.

Plans by the U.S. President and some state governors to open the economy would seem doomed to catastrophic disaster if they proceed now. Any number of statistical comparisons confirm the United States has handled the pandemic extraordinarily badly and is nowhere near controlling it.

Here’s one. There are 51 very highly developed major countries as classified by the United Nations Development Program. These include all G7 nations, all NATO members except Albania and most OECD members. We find at Worldometers the number of active infections for all these nations, updated daily.

The United States is not only at the top of this list of 51 countries but, wait for it … it has more active cases than the other 50 nations combined. That’s despite having only about a quarter of the total population.

Here’s another. Since the pandemic started the USA has recorded 27.6% of all deaths, at 67,444 as this is written. That percentage is rising by 1% every two days. That’s despite having just 4.25% of the world’s population.

There is no excuse or reasonable explanation for this. In early February, Italy realised it had a major outbreak of infections in the Lombardy region. But by then thousands, maybe tens of thousands, of infected visitors had driven or hitch-hiked or taken a bus or train to neighbouring countries. Six countries are only a few hours drive away. Western Europe’s fate was sealed.

The rest of the developed world watched Europe’s calamity aghast and rapidly implemented preventative measures. These included restrictions on air travel from Europe, quarantining new arrivals, testing for infections, contact tracing and telling citizens what was happening. Well, most did. The USA did not. Not until far too late. And some of these things – such as telling Americans the truth about the infection and widespread testing – it still hasn’t done.

Countries ready to return to normal

If Australia and New Zealand are close to opening their schools, shops and restaurants, which other countries might be able to join them? How can we tell?

Every day Worldometers updates active infections, recoveries, deaths, total infections and tests completed for the entire world. It also provides ratios of some of these to the population. So we have a heap of helpful numbers.

One useful indicator we can calculate ourselves is the ratio of recovered patients to people still ill, which we can show as a percentage — recovered patients divided by active cases multiplied by 100.

Australia, for example, has 5,789 recovered patients and just 901 active cases, so its percentage is an impressive 643.

Of our 51 major highly developed countries (above one million inhabitants) 17 now boast more recovered patients than current cases – that is, a percentage above 100 – and another 12 have the ratio of recoveries to active cases above 50%.

The leading nations are Austria, South Korea, Australia, Switzerland, New Zealand and Hong Kong, all with more than five times the number of recoveries than people still suffering. They are followed by Germany, Denmark, Croatia, Malaysia, Uruguay and Ireland — all with twice as many recoveries. This is good. These countries may now be in a position to ease the restrictions which have enabled this progress.

At the other end of the chart are those who shouldn’t be opening up any time soon. These include the United States, Saudi Arabia, Russia, Portugal and Sweden. Countries in between are shown on the blue chart, above (which shows just 48 countries as three do not provide recovery data).

So we shall watch with great interest – and a certain amount of trepidation – as Australia and others progressively end the self-isolation and return to some semblance of normalcy. We might even get a few rounds of footy in after all.

Alan Austin’s defamation matter is nearly over. You can read the latest update here and help out by contributing to the crowd-funding campaign HEREAlan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001.

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6 southern states form coalition on reopening economies


Florida Gov. Ron DeSantis responds to a question at a news conference at the Urban League of Broward County, during the new coronavirus pandemic, Friday, April 17, 2020, in Fort Lauderdale, Fla. (AP Photo/Lynne Sladky)

OAN Newsroom
UPDATED 3:27 PM PT — Wednesday, April 22, 2020

The governors of six southern states have teamed up to reopen their economies.

“It’s obviously prudent to start thinking about and planning for people getting back to work, getting society functioning in a more healthy way,” said Governor Ron DeSantis (R-Fla.).

The newly formed coalition includes Florida, Georgia, Alabama, South Carolina, Tennessee and Mississippi.

“We are growing more and more confident that we have flattened the curve to the point where victory is within reach,” stated Governor Tate Reeves (R-Miss.).

Mississippi Gov. Tate Reeves discusses how the state is responding to the continuing growth of unemployment demands and assistance for self-employed, church employees, gig workers, and others who were previously ineligible for unemployment assistance during his afternoon news conference in Jackson, Miss., Tuesday, April 21, 2020. Reeves also discussed the continued development in the state’s dealing with COVID-19. (AP Photo/Rogelio V. Solis)

After the governors held a meeting, they stated they share the same ideas and want to reopen their economies in a responsible safe way. Tennessee Governor Bill Lee has said he will not extend his state’s “safer at home” order, allowing a majority of businesses to reopen on May 1st.

“For the good of our state, social distancing must continue, but economic shutdown cannot,” said Lee.

Georgia Governor Brian Kemp announced phase one of his state’s reopening plan, which will permit businesses like gyms, hair and nail salons, and bowling alleys to reopen their doors this Friday.

This came after President Trump announced plans for opening America again.

“20 states, representing 40 percent of the population, have announced they are making plans and preparations to safely restart their economies in the near future,” stated the president.

A protester gathers outside of the Ohio State House in Columbus, Ohio Monday, April 20, 2020, to protest the stay home order that is in effect until May 1. (AP Photo/Gene J. Puskar)

Thousands of people in multiple states have protested stay-at-home orders and voiced their support for getting people back to work.

“We have to open up the economy again, the coronavirus can be handled,” stated one protester.

Others have raised concerns over opening their economies too soon.

“My biggest concern right now is that we will see an even worse scenario than what we’ve already had,” explained Atlanta Mayor Keisha Bottoms. “I think a lot of the success we’ve seen in the city and, quite frankly, throughout the state is because we were very aggressive in shutting things down.”

The governors have decided to reopen given favorable data and enhanced testing, but will keep some health measures in place. They have committed to constantly monitor the situation and provide adequate support.

RELATED: Poll: 72% Of Americans Say Reopening Economy Too Soon Is ‘Risky’





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Oil Prices: Crude Oil price plunges to 22-year low on concerns over storage, weakening economies | International Business News


NEW YORK: The US benchmark crude oil price sank to its lowest level ever on Monday, falling below $5 a barrel amid an epic supply glut and the coronavirus pandemic’s hit to demand.
After twice beating the record low, dropping to $4.04, West Texas Intermediate (WTI) for May delivery had recovered slightly at about 1720 GMT (10:50 pm), and was trading at $5.18 a barrel in New York.
The plunge defied a deal reached last week by OPEC and independent producers to slash output by nearly 10 million barrels per day starting May to boost prices. It also showed the enduring power of the pandemic, which has forced people to stay indoors to stop the spread of COVID-19, bringing much of the global economy to a halt.
A price war between Saudi Arabia and Russia had accelerated the slide prior to the production deal, hurting US shale producers. And storage capacity is becoming scarce in the United States, with the main WTI facilities in Cushing, Oklahoma filling up.
Wall Street was trading lower amid the turmoil on oil markets, with the Dow down 1.3 percent to 23,930.97.
The broad-based S&P 500 lost 0.8 per cent to 2,851.58, while the tech-rich Nasdaq dipped 0.1 per cent to 8,641.94.
Oil company shares were predictably battered in the downturn, with Chevron down 1.8 percent and ExxonMobil losing 3.2 per cent.



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