DP16885 Technology and Resilience
|Author(s):||Xavier Cirera, Diego Comin, Marcio Cruz, Kyungmin Lee, Jesica Torres|
|Publication Date:||January 2022|
|Programme Areas:||Development Economics, International Macroeconomics and Finance, Macroeconomics and Growth, Organizational Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=16885|
This paper estimates the impact of technology sophistication pre-COVID-19 on the performance of firms during the early stages of the pandemic. We exploit a unique data covering firms from Brazil, Senegal, and Vietnam using a treatment effect mediation framework to decompose the results into a direct and an indirect effect. Increasing pre-pandemic technology sophistication by one standard deviation is associated with 3.8pp higher sales. Both effects are positive, but the direct effect is about 5 times larger than the indirect effect. The total effect on sales is markedly nonlinear with significantly smaller estimates of the reduction in sales for firms with more sophisticated pre-pandemic technology. Our results are robust to different measures of digital responses and matching estimators.