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The Great Lockdown and the Small Business: Impact, Channels and Adaptation to the Covid Pandemic

Author

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  • Le, Minh-Phuong
  • Chauvet, Lisa
  • Marouani, Mohamed Ali

Abstract

In this paper we estimate the effects of the pandemic on Tunisian small and medium-sized enterprises (SMEs) and examine their adaptation processes during the first lockdown. Three simultaneous shocks are examined employing a Difference-in-Differences (DID) framework applied to the national firm census: the labor input shock, the demand shock and the intermediate input shock. We show that SME performance in the first year of the crisis was heavily affected by a combination of labor input, demand and intermediate input shocks, but only the effects of the demand and intermediate input shocks persisted in the following year. Using our own firm survey, we examine three kinds of adaptation strategies: workplace and process adaptation, and trade credit. We find that firms in non-essential sectors were less able to adapt during the first lockdown, suggesting that firm adaptation seems to be more driven by capability than by necessity.

Suggested Citation

  • Le, Minh-Phuong & Chauvet, Lisa & Marouani, Mohamed Ali, 2024. "The Great Lockdown and the Small Business: Impact, Channels and Adaptation to the Covid Pandemic," World Development, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:wdevel:v:182:y:2024:i:c:s0305750x24001438
    DOI: 10.1016/j.worlddev.2024.106673
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    Keywords

    Crisis; Covid-19; Lockdown; SME; Adaptation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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