COVID-19 economic lessons

The COVID global crisis has had effects that have reached all areas of society and will remain in it for a long time.

But it has also provided us with lessons in the economic field that we can take advantage of to better face future crises. Let’s mention some of them here.

The importance of the technology and innovation sector

The importance of the health sector and medical research has not been stopped, but this crisis also reveals the importance of the R&D sector in general and basic research in all its fields, not just the medical one.

It is vital that we are able to see the importance of basic science since it will always have an application in daily life and obviously in economics.

The importance of the industrial sector

For decades, Europe has become a continent of services. Little by little the industry has been moving to other countries, especially China.

Starting with the heaviest or most polluting, such as the textile, machinery, etc. industry and reaching the most technological (mobile components, computers, etc).

The initial shutdown of the Chinese economy at the start of the COVID crisis left Europe short of the components its companies needed, as China has become Europe’s “factory”, causing a supply crisis.

The teaching is that you cannot leave a country or an economic unit like the European Union without industrial production.

The importance of a diverse economic plan

There are already studies that reveal that the economic crisis derived from the current health crisis will not depend on the number of deaths or sick people caused by the disease, but will depend on the weight that the tourism and hospitality sector will have in each country, which is the one that will be most affected.

The teaching here is that we must try to avoid that the economy of a country depends on a single economic sector, especially those that are especially vulnerable to a certain type of crisis.

The importance of distribution channels and international contacts

The UK is a clear example of this issue. As a country we have very strong internal food distribution channels, which have risen to the ongoing challenge caused by this virus.

This has prevented that in a situation of confinement it’s not that there has been a shortage however, in the early stages of the crisis panic buying set in causing the supermarket shelves to be stripped of many essential products.

On the other hand, several private companies have managed to defend themselves in an almost wild situation in the international market for medical supplies.

The entities that have successfully emerged from this situation of strong competition in the international medical equipment market (almost monopolized by China, which relates this point to the previous one), have been characterized by having a highly consolidated structure in international distribution channels also for having personal contacts in the countries of origin or with links to them.

In other words, it is very important not for a country, but for any company that wants to be successful in an international expansion, to have a solid position in all the phases that make up a distribution channel (negotiation, purchase and warehouse in the country of origin), transport, presence in those countries in which stopover is made and warehouse in the country of destination).

And it is also essential to have reliable contacts in the countries in which you are interested. This will be all the more important the greater the difference in culture with the country to be treated.

Lessons can be learned from any crisis, and it is very important to put into practice the lessons we can draw from this current one.