"In the midst of every crisis, lies great opportunity." - Albert Einstein
Times of upheaval are always periods of radical change. Some economists believe the pandemic is a once-in-a-generation chance to reconstruct economic systems and build a better future. Others fear it may only make processes more sophisticated within the conventional economic system. In this article, we'll formulate a multidimensional approach to comprehend the essence of recent and upcoming issues with the focus on the specific sectors.
Our recent history is rich in various cases that have threatened humanity. Currently, humankind is facing a global pandemic as well, which conditions a totally new situation on our planet. In a limited time period, the pandemic turned to a worldwide crisis. In order to retain this crisis at a manageable level, with the directives of the World Health Organization, governments closed their borders, diminished international trade, and declared special quarantine. Undoubtedly, in the light of these inhibitive measures, our daily routines and habits have been majorly changed and transformed.
Economies are heavily dependent on our consumption habits. In this context, sometimes it takes time for the economies to react to the changes in the habits of the majority, as they are structured institutions. Furthermore, if we would consider that several contemporary theories are emphasizing production within the core competencies to gain a competitive advantage in the global markets, we can say that at times, even some economies don't have enough resources to convert and orient itself with respect to the changes in consumption habits. Simply, the remedy to this problematic issue is to import demanded goods or to let someone enter the market (if it is a service). Interestingly, due to the pandemic, global economic activities dramatically diminished, which have eliminated the import option. This notion opened a new debate regarding the diversification of the economies, especially in the days of the pandemic.
Source: Dcode EFC Analysis
In the figure above, the potential winners and losers of this pandemic are demonstrated accordingly to sectors. This figure is one of the best to comprehend the essence and the importance of diversification in economies. Undoubtedly, mono-cultural dependence on a specific sector is disastrous at the moment. Additionally, prominent scientists are widely discussing the second wave of the virus, which means that the current situation won't last early. So, a natural question arises: What's next? Let's have a glance at the arguments of mine regarding this issue:
1. An Increase in Robotization
Even before the pandemic, in the light of Industry 4.0 robots became an integral part of the industrial processes. However, there was an impedance to robotization with the belief that robots still not like a human. In a nutshell, coronavirus triggered robotization, significantly. Within the scope of this new situation, we'll observe the transformation of the industry in the near future. So, what does it mean? In simple terms, the necessity for human labor will decrease dramatically, which will provide a tremendous chance for non-stop production. Additionally, this process will be a remedy to the gap between the decreased human population and increased production volumes. From my point of view, with the transformation industrial spheres will be more flexible and resilient for the new crises.
2. Digital Transformation or Digitalization
Digitalization already gained actuality for the planet in recent years. Withal, the volume of e-commerce was dynamically growing, and the digital integration process was widespread. Notwithstanding, the restrictions came with the coronavirus initiated a process that has facilitated the digital transformation process almost in all sectors. For instance, online education was considered an inessential alternative to formal education. However, the pandemic emphasized the necessity for innovative variations, which brought online education into prominence. On a large scale, digitalization also affected numerous processes in the business cycle. Distance working, online business meetings, and conferences are apparent examples of this. In my opinion, even after the pandemic, we'll observe massive changes in the style that businesses operate, as they're less costly.
3. Upward Trends in Localization
After 2015, the demand for localization visibly increased. The attitude of the U.S after presidential elections and in the EU the commotion in the light of Brexit drew attention within this process. As it's known the battle with the virus requires inhibiting measures, such as the closure of the borders, special quarantine regimes, etc. Undoubtedly, these factors will have an enormous impact on the diminishment of international trade. This indicator tells us that the countries will be obliged to focus on the fundamental needs, (Namely, self-sufficiency) which will trigger the development in the spheres, such as agriculture, food retailing and processing, medical supply, and healthcare.
So far, we had a quick glance at the sectors and their future perspectives with solid arguments. It can be obviously seen that this pandemic is a chance for the transmutable economies. Simultaneously, in this context, the consequences can be grievous for conservatives and economies with mono-cultural dependence. In a sense, we can say that the situation created by the pandemic prepared the world economy for the possible crises in the near future, from the perspective of sustainability, resiliency, and robustness.