Regional resilience to the Covid-19 shock in Polish regions: how is it different from resilience to the 2008 Global Financial Crisis?

Abstract

The world economy has experienced two major economic shocks over the past 15 years: the Global Financial Crisis of 2008–09 and the Covid-19 pandemic. The purpose of this study is to link regional economies’ resilience to these extreme events while investigating the regional determinants of resistance to the Covid-19 shock and accounting for spatial spillovers. A total of 380 Polish NUTS-4 regions are analysed using spatial modelling techniques. Our primary finding is that the regional economic resistance to the 2008–09 global crisis and that of the Covid-19 pandemic are positively related. Specifically, the regions that were less affected by the first wave of the global crisis in 2009 were also more resistant to the Covid-19 shock in 2020, despite the fundamentally different anatomies of these shocks. Moreover, we find that the regions with higher production per capita were less resistant to the Covid-19 shock. This result could be attributed to the fact that industrial clusters are often integrated into global value chains, which were severely affected by the 2020 pandemic. Finally, we show that regions with a higher share of agricultural employment were generally more resistant to the Covid-19 shock, although the specifics of this sector in the eastern parts of Poland reduced the resistance to some extent. Generally, our results support the rationale behind the explicit modelling of spatial spillovers in the context of investigating regional resilience. We find that spatial spillovers in the resistance to the Covid-19 shock are significant and positive.