Written by Tom Guevara, Director, IU Public Policy Institute
Amid the ongoing COVID-19 crisis, our attention has been rightfully focused on keeping our families and communities safe from a global pandemic threatening our health, relationships, and economic well-being. Focusing on economic recovery while responding to attack from an unseen enemy is especially difficult. COVID-19 is not only changing our social and economic landscape now, it could change economies at all levels—local to global—forever.
Yet civic leaders must also find a way to focus on economic recovery planning if their communities are to bounce back from this viral threat. The first step is to build a recovery plan—a hard task when there’s no pandemic playbook to follow. Having worked in a federal agency focused on improving economically distressed areas and now leading an institute that helps communities make better economic decisions, I have seen what it takes to build an economic recovery plan.
It starts with understanding a community’s capacity to rebuild its economy and ensuring job and spending losses in one sector—such as restaurants and retailers—don’t feed further losses in the other sectors. It also takes a commitment to addressing the significant disruptions and vulnerabilities now exposed in the supply chains—such as medical supplies like ventilators and masks—while not allowing innovative thinking to be buried under the falling rubble of our current economy.
We don’t yet know how this crisis will change our economies, but we can look to natural disaster response to prepare for change. However, there are important differences between the two. Natural disasters occur on geographically localized scales, while this pandemic is a global disaster. Also, estimating when businesses may resume normal operations is guesswork right now. We can’t flip a switch and return to business as usual. Lastly, we likely will still see localized outbreaks of the virus until a cure and immunization are developed and deployed.
So, what can we adapt from disaster recovery planning?
RECOVERY EFFORT ORGANIZATION
Borrow the general approach disaster recovery experts use for localized assessment, recovery planning, implementation, and post-recovery evaluation to help communities organize their recovery efforts. For example, after major disasters FEMA sets up multi-agency teams on site to coordinate response and recovery efforts. This is an important practice for recovery planning because they know they are addressing multiple problems requiring diverse expertise. These teams also are configured to serve as a single point of contact for facilitating data gathering and needs assessment from areas impacted by the disaster.
Community leaders need to use data to truly understand their economies. Don’t rely on anecdotes or the most vocal of local story tellers to make critical decisions. For example, local economies consist of some businesses that sell mostly in their local area, and others that sell outside their region. The ones that sell outside their region—known as traded industries—generally provide higher incomes to owners and their employees. So, while saving our favorite local brewpub is important, it may be just as or more important to ensure resources are available to save a local manufacturer selling across the country and world.
Using lessons from disaster recovery provides leaders the ability to assess and plan their next steps. By having a solid human infrastructure in place, they can then turn their attention to recovery planning and supporting businesses.
ALLOCATE THE RIGHT FUNDS TO THE RIGHT BUSINESS
Small businesses and large businesses need to be treated differently. Although small businesses are credited with the majority of net new job creation, large businesses drive large employment gains and losses. Regional and local funds may be more effective in helping small businesses because their needs are a better match to local resources. While large corporations may be more financially resilient, they may need other forms of help to focus on long-term planning and adapting to new global economic realities.
When envisioning the new future of our economies, leaders must ask foundational questions to develop their recovery strategy.
ASK THE RIGHT PLANNING QUESTIONS
- What will the new economy look like? Will the 4th Industrial Revolution—i.e., AI and other technology-enabled manufacturing—be accelerated? If so, how can we adapt?
- How will supply chains be affected? If you have a large local employer, will supply chain vulnerabilities uncovered during this event force reconfiguration that benefits or hurts regional businesses and their suppliers?
- Where will funds for long-term growth through innovation and local start-ups going to come from? Research and development investment and innovation support for start-ups was already lagging in the U.S. Currently, the federal government has turned on the cash spigot to drive down interest rates and make more money available for lending, but that does not guarantee money will flow to entrepreneurs who are creating the next generation of products and services.
Local recovery planning has to be multi-dimensional in identifying not just current survival needs but also long-term growth and competitiveness needs. Leaders need to identify these needs now so that the solutions become part of the permanent landscape of any community striving to thrive after this recession.
Some communities will flourish coming out of this while others won’t. The ones that will rise to the top are innovating first around keeping their communities healthy and informed, then thinking about how they will re-position themselves in the global economy.