Industrial recovery in Europe and Central Asia: Accelerating digital transformat …

The COVID-19 pandemic is expected to have a major economic and social impact in Europe and Central Asia (ECA). The region was already affected by the disruptions in global trade and the sharp fall in commodity prices. Moreover, Europe and Central Asia, in particular, the Western Balkans, South Caucasus and Central Asia, will experience the biggest slump in terms of remittances, which are projected to decrease by 27.5 percent in 2020 according to the projections from the World Bank.1 Even prior to the crisis, the region faced significant challenges with respect to industrialization and digitalization.

Most of the countries in the region have to cope with major infrastructural problems, with internet penetration, e-commerce and digitally-enabled services remaining at relatively low levels. As reliable ICT services are the basic condition for enabling digital manufacturing, this naturally holds knock-on effects for firms in the region that want to reap benefits from the Fourth Industrial Revolution.

Accessing new technologies remains an issue for many domestic firms in these countries, while on the demand side significant financial and regulatory barriers continue to be a serious obstacle. Effects of the COVID-19 crisis on global risk aversion, via financial and credit markets, have made access to credit even more difficult.

However, there have been some positive developments in the region. The Eurasian Economic Union (EAEU) has found that implementation of digitalization could increase employment in the ICT sector by as much as 66 per cent regionally, with a potential increase of 74 per cent in ICT service exports.2 Yet to-date, mostly larger firms and government-backed initiatives have been the beneficiaries of the limited digitalization within Eastern Europe and Central Asia, with micro-, small- and medium-sized enterprises (MSMEs) largely still struggling to make the transition towards digital manufacturing.

The crisis caused by COVID-19 has become a perfect opportunity for MSMEs to improve the quality of their goods or services, as well as work on new strategies for promoting them. The pandemic could become an incentive for the enterprises to implement digitalization in their production and marketing.

At the same time, transformation and innovation in digital skill is necessary for ensuring sustainable business growth in the short term, as well as in the long run. Further efforts should be made to integrate MSMEs into the digital ecosystem, providing them with new tools and technologies so that they can more intensively compete in the market.

The session will explore the following issues:

• Will the pandemic impact the integration of the ECA region in the global economy and, in particular, with the EU economies?
• How can COVID-19 responses be designed to lift the regional economy quickly out of recession and put it on a course to navigate the challenges of digital transformation?
• Can the recovery process embody a transformative agenda for gender equality and a platform for the inclusion of women and young people in the manufacturing sector?
• What policy measures need to be developed to ensure accelerated uptake of digital technologies among MSMEs and their integration in value chains?
• How could financial streams be rendered more accessible to the MSME sector?
• How can digital upskilling and training initiatives enable greater entrepreneurshipand employment opportunities, combatting brain-drain to developed countries andadding value?

Confirmed Speakers

• Jacek Cukrowski, Chief Regional Coordination Division for Europe and Central Asia, UNIDO
• Naira Margaryan, Deputy Minister of Economy, Republic of Armenia
• Taras Kachka, Deputy Minister for Development of Economy, Trade and Agriculture, Ukraine
• Milena Angelova, Vice President of the European Economic and Social Committee and Secretary-General of the Bulgarian Industrial Capital Association (BICA)
• Maja Tomanic Vidovic, Director of the Slovenian Enterprise Fund