Our project aims to assess government support for SMEs during the COVID-19 pandemic to identify which responses were effective in helping secure SME solvency and employment during the crisis, and in turn support general economic wellbeing even when confronted with pandemic countermeasures like lockdowns and social distancing. We will focus on SME policy as a whole in keeping with the Organization for Economic Cooperation and Development’s (OECD’s) SME Policy Index, a benchmarking tool to assess SME policy frameworks in different economies and monitor progress in policy implementation. As many financial firms and venture funds are currently trying to understand which policies are most successful given the relatively unprecedented nature of the current crisis, we expect this project to be timely and of interest to a variety of stakeholders.
People over the world are now facing a serious global issue, COVID-19, which has been bringing numerous
patients and deaths, as well as the threat of massive economic disruption. Small and medium-sized enterprises (SMEs) are especially vulnerable to massive economic shocks like the ongoing crisis resulting from the COVID pandemic. Though controlling the outbreak of the virus and its deadly consequences is essential, the economic impacts have been massive worldwide as employment skyrockets to levels not seen since the Great Depression, consumer demand has cratered, and supply chain disruption threatens to upend commerce. SMEs are especially exposed to the economic consequences of this crisis and the OECD estimates around 50 percent of SMEs worldwide will collapse in the coming months. This would be disastrous for employment, services, and severely undermine the chance for a rapid economic recovery.
Countries are now undertaking measures to support SMEs through the crisis through payment deferrals or grants or loan guarantees, but these are largely reactive measures. While few could have predicted the scale of the current pandemic or its economic impact, there is a real and significant chance that disruptions like this will continue in the future, especially given the increasing impact of climate change, making it imperative to understand which policies are successful or not. While measures like insurance are frequently unavailable for pandemics, there may be some historical examples of measures that are relevant even if not directly applicable.
We will measure the impact of each government’s decision in terms of its mitigation of economic harm during COVID-19 countermeasures. It also enables us to compare each country’s decision-making and prepare economically for the next wave of COVID-19 or for another pandemic. Governments’ decisions include not only policy makings but also announcements/warnings from the governments. Negative impacts of decision-making will also be taken into consideration, e.g., fiscal deficit, market distortions, and so on.
Government policy will be the target of our analysis as we evaluate which measures were successful or not in both containing the pandemic and mitigating economic hardships. While government policy and economic measures will be the focus, we will also investigate specific economic sectors as necessary in order to provide illustrative case studies and an on-the-ground perspective that economic data may not capture. In addition, we may use data regarding SME solvency and employment and the decision making of Japan. The following steps will be performed toward the completion of our project.
Interview and survey We will begin with a survey of government policy responses to the COVID outbreak in order to identify topics and countries for a more thorough investigation. We will complement this survey with illustrative case studies that will provide more on-the-ground insight beyond abstract policy measures and economic data. Furthermore, we will try to get as much data as possible through web surveys. We will have surveys twice.
Review possible governments’ decisions and SMEs’ management policies The roles of border control and self-quarantine will be clarified. If we find the difficulty to focus on border control, we will re-select the types of decisions. We review government decisions from January 2020 – August 2020
Statistical analysis of the impact of contact ration on patient numbers in each country and economic impacts Using the existing mathematical models of infectious diseases, we will calculate how the values of parameters in the models changed, e.g. contact ratio among people. In so doing, we will attempt to cross-compare economic impact with the success in containing the outbreak - in other words, trying to measure how successful a government was in both combating the pandemic and ensuring economic stability. By utilizing the existing mathematical models, we will be able to work on the estimation more fastly. The impact of contact ratio on patient numbers will mainly be evaluated. We will come up with a new proposal for SME management. Then, the effect of the proposal will be evaluated based on the calculations.
Also, we will model the economic impacts on SMEs using the data regarding solvency, bankruptcy rates, and layoffs. Used data depends on availability, so we are now trying to find what kind of data is appropriate by contacting an organization.
Review of detailed governments’ decision related to SME policy The timing of decisions, strictness, and other effects will be checked.
Root cause analysis We will integrate the results of the analysis into the review of governments’ decisions with differentiating the impacts of the government’s decisions with other factors, e.g., population and cultural background. Reliability of data or other factors should be considered for the interpretation of the results.
Analysis of negative impacts of decisions We will consider negative impacts, especially for foreign people and education. We will make a survey to grasp the problems and find solutions.
Assess the impact of each government’s decision using the findings of the mathematical simulation and systems analysis to develop the analytical framework The results will be released on the web page, and we will interview the government to get feedback.
Expected Results and Deliverables
We expect to build on the existing research into the ways can create a successful environment for SMEs (entertainment business), while also interpreting the findings and lessons learned during the ongoing coronavirus, in order to provide a current understanding of the challenges that systemic risk poses to SMEs as well as some potential policy solutions to help support SMEs in these situations.
The expected deliverables are as follows.
The 10-page report which describes the nature of the problem and suggests possible options for policymakers and SMEs for implementation. The report will be complemented by a brief PPT containing the findings which may also be distributed to interested stakeholders.
Established models will be useful for predicting the future trends of COVID-19 and other new pandemics.
A web page will be updated to show people over the world the results.
Proposal for making effective policies will be achieved.
Workshops will be held to get feedback
The topic of this project covers engineering (using mathematical and statistical models to analyze trends) public health (understanding the spread and control of pandemics), economics (the impact of structural shocks on business), finance (the availability of liquidity to SMEs), social policy (the role of SMEs in local economies and communities), risk analysis (the ways people understand and respond to risk), and sociology (how societies respond to crises), and public policy (how governments can best support SMEs). We may be able to address further disciplines depending on the case study selection.