Peter Jungen: The pandemic will accelerate technological change, innovation and entrepreneurship

Peter Jungen, Chairman of Peter Jungen Holding GmbH, President of European Enterprise Institute (EEI) Founding, President of Business Angels Netzwerk Deutschland (BAND), Co-Founder and President of European Business Angels Network (EBAN), Former Member of the Presidency of the Federation of German Industries (BDI).

Certainly, Corona is effecting the world economy seriously. The world economy will shrink after a long growth period. In many European countries this is the worst post WWII contraction. The extend will depend very much on prudent government policies, not only in the shutdown but particularly in reopening the economies, loosening of the restrictions, and in keeping up international trade. The breakdown of industry chains is not a result of the virus, but a result of government shutdowns, and therefore of temporary importance.

Certainly COVID-19 will have a long-lasting effect on lifestyle and behaviour. It will certainly effect the contacts between individuals, and it will certainly effect economic behaviour and means of production. Well have to make sure that in the future we should be better prepared for such emergencies. Therefore the pandemic plans which were developed years ago by governments have to be reassessed with the view of setting up larger buffers like lifting the capital requirements for financial institutions. Globally, mayor players in the world should also have buffers in terms of emergency products and needs.

There will be soon a discussion on gradually lifting this, because there will be a debate about the trade-off between the costs of clamping down the virus dissemination, and economic growth and well-being on the other hand. It looks like China has done quite well in tackling this and in addressing the COVID-19 epidemic after the breakout. The Chinese support for the international community is certainly welcome.

There was a very short-term resource shortage in March/ early April in view of the needs of the health system during COVID-19 epidemic. Without any restrictions the global economy is able and flexible enough to cope with this challenge. Actually, this is not very difficult. There is definitely in the future an even stronger need for international cooperation, which is another word for globalisation." It is very well conceivable that ongoing structural developments in the world economy will speed up, like in the steel or the car industry. The restructuring influences of the car industry could be accelerated on the one hand, but it could also be that the present drop in energy prices could be slowing down this process. One of the most important ways to fight an epidemic like COVID-19 is innovation. More than ever before we have seen that the world economy is based on innovation and driven by innovation. Innovation is a result of entrepreneurial attitudes and of risk-taking investors. One of the overriding lessons would be to foster innovation in order to improve health conditions all over the world, to prevent diseases from spreading around, and to make life easier. So Corona could even speed up technological change, be strengthening innovation and entrepreneurship.

Human society, in historical perspective, has dealt with mayor crises, although COVID-19 is more than a normal crisis, but it is not a crisis the world is unable to cope with. There will be many opportunities in the next years to come, when certain measures of behaviour will change, for instance digitalisation of the global economy and of national economies will experience a mayor push. Maybe COVID-19 is a wake¬up call for speeding up the digitalisation of our economies. It is doing away with all impediments of international trade. We should pursue a policy for global trade without tariffs. Therefor one of the main objectives should be the abolishing of all tariffs in world trade."

The World Food and Agriculture Organization issued a warning that the global food production would be affected by the COVID-19 epidemic. Some countries have begun to stop exporting grains. The capacity for food production in the world is sufficient for the entire global population. The danger would be trade restrictions issued by governments and by trading-blocks. It is therefore very important to do everything possible not to restrict international trade. Global trade is the best approach against any food shortage.

Certainly, President Xi Jinping's proposal vis á vis the globalisation and shared destinies should be supported. COVID-19 has demonstrated, that global community is sharing its destiny, whether we want this or not. Therefore, we have to draw the consequences out of this. We are living in one world, and therefore we have to cope also with the problems in this world. Humanitarianism is at the core of a joint approach. The behaviour of all nations will have an impact on the future of all other nations. It could well be that globalisation and regional integration will retreat, but this is not necessarily so. It depends basically on the political decisions of governments and regional blocks. So we would encourage the German government, the E.U., the United States and China and the G 20, to do everything possible to speed up globalisation. Finally, globalisation has brought more to the world in terms of growth, of well-being, of reducing poverty, of longevity, and on increasing health conditions of the world population, than anything else experienced in the history of humankind. This does not necessarily mean a new version, but it could be the biggest mistake governments could make in trying to limit globalisation by restricting global trade. I don't think that the impact on national governance systems will be less than the impact on regional systems like trading blocks and economic blocks like the E.U. It will show that not only solidarity is needed, but also subsidiarity.