• In early 2020, a panel of experts was convened to consider what the long-term impacts of the pandemic might be on our economies, societies and lives.
  • They anticipated that businesses would regionalize production – which is only partly bourne out by experience.
  • Discussions about a democratic recession and increased online activity proved more accurate.

When the global pandemic hit in early 2020, there was a scramble to understand what the long-term impacts might be on our economies, societies, and our lives. Using an approach from the field of futures studies known as the Delphi method, we asked a panel of thought-leaders within futures studies, business, economics, and politics to collectively evaluate and seek consensus on a series of statements.

Two years later, it's time to look back and see how the panel’s collective ideas have held up.

Making supply chains more resilient through regionalization

It remains unclear whether COVID-19 will mark a decisive transition from “peak globalization” as we have known it. One major issue that quickly became apparent as the world locked down was the fragility of global supply chains. Accordingly, the thought-leader panel anticipated that businesses would reconfigure supply chains in permanent ways to become less exposed to the weaknesses of predominantly globalized setups, in an acceleration of an existing trend.

Two years later, the signals are somewhat mixed. One survey initially found that up to 65% of businesses were planning to invest in supply chain regionalization, but a more recent study showed that many businesses are far more likely to raise their inventories to reconfigure more resilient supply chains, than they are to actually regionalize capacity. Still, we have seen significant supply chain regionalization, and in the US alone, businesses have invested a combined $200 billion in shifting production back home just in 2021.

Some governments have directly supported regionalization efforts by offering significant incentives to shift production back home. Japan specifically supports reshoring production capacity in the form of subsidies in its COVID-19 relief program. France announced incentives worth $500 million to companies that are reshoring. The rising strategic importance of more resilient regional supply chain setups also functions as a hedge against future shocks. As the memory of this crisis fades, maintaining this focus will be vital.

The panel also reached a strong consensus that the COVID-19-related recession would serve as a trigger to accelerate labor market automation as businesses push to revamp their operations. This is supported by the World Economic Forum's most recent Future Jobs report, in which 50% of employers indicated that they expected to accelerate automation, while over 80% expected to accelerate the digitization of work processes as well as expand the use of remote work.

In the Future Jobs Survey 2020, 50% of employers indicated that they expected to accelerate automation in response to the pandemic.
In the Future Jobs Survey 2020, 50% of employers indicated that they expected to accelerate automation in response to the pandemic.
Image: World Economic Forum

A democratic recession

The social and political consequences of the pandemic are not yet well understood. Two years ago, the panel anticipated that many governments would be hesitant to give up their newly acquired emergency powers, which could lead to a democratic recession and declining trust.

Freedom House finds that the pandemic has clearly contributed to an accelerated global democratic recession, mainly accounted for by struggling democracies and authoritarian states. The proportion of “Not Free” countries (scoring low in political rights and civil liberties) is now the highest in the past 15 years. Only very strong democracies saw less vulnerability to democracy erosion. Yet, even strong democracies are now acting more authoritatively in relation to public restrictions and vaccine mandates. For example, Canada’s parliament decided to extend and broaden its emergency powers that enabled police to stop “dangerous and unlawful” anti-vaccination protests, to now also allow the freezing of protesters’ bank accounts.

The pandemic has contributed to an accelerated global democratic recession, mainly accounted for by struggling democracies and authoritarian states.
The pandemic has contributed to an accelerated global democratic recession, mainly accounted for by struggling democracies and authoritarian states.
Image: Freedom House

The thought-leader panel was hopeful that strong solidarity would prevail long term. Today, however, there are clear signs that public restrictions coupled with pandemic fatigue challenge the social fabric. While remembering gestures of support for frontline workers and balcony sing-alongs, many news headlines today point to decreasing levels of solidarity and trust between different groups in society. In particular polarization is evident when it comes to the intense debates and sharp rhetoric around vaccination and vaccination mandates. A recent study found a strong antipathy across vaccination groups, with vaccinated people exhibiting high antipathy towards the unvaccinated, deeming them untrustworthy and unintelligent.

Day-to-day activities moving online

New social behaviors and ways of life acquired during COVID-19 may stick. Two years ago, the panel agreed that the pandemic would serve as a trigger towards a more permanent transition towards much more of life being online. This included remote work, and online education, also for organizations and individuals who would not have otherwise made the change.

Online shopping as a share of total retail is now significantly higher that it was before the pandemic. Hybrid and remote working appears to have stuck to a significant degree: a recent study expects 20% of work hours to be supplied from home long term, mainly due to better-than-expected work-from-home experiences and a surge in technologies that support remote working. Educational institutions around the world have adopted online teaching instead of traditional classroom teaching, but not without challenges, including initial lower-quality teaching, lack of social interaction, and technical difficulties. These problems may be mitigated as educators adopt new technologies and improve online formats.