The impacts of the COVID-19 crisis based on regional and historical-political factors

18 November 2020, 08:29

by LECTURA GmbH (Europe, International)

Covid Special, part 7

While analyzing our COVID survey data, we found out the results vary depending on the country. These results are roughly discussed in the full research report. However, the main objective of this article is to provide the audience/readers with more in-depth analyses. The economic and historical-political factors are considered.

Since the end of World War II., Europe experienced a large transformation. Whereas after World War I., many states got independence after World War II. Some of them partly lost it because of the Cold War. The Cold War was a period of geopolitical tension between the Soviet Union and the United States and their respective allies, the Eastern Bloc and the Western Bloc. The Western Bloc, also known as the Capitalist Bloc, was a coalition of countries that were allied with the United States, a member of NATO, the Eastern Bloc (also known as the Communist Bloc, the Socialist Bloc, and the Soviet Bloc) on the other hand, was the group of communist states of Central and Eastern Europe. The Western-Bloc countries consolidated their capitalist economies, while the Eastern-Bloc countries established centrally planned communist economies. Despite the aim of Soviet leaders to express economic and political maturity, after the disintegration of the Soviet Union, lots of newly independent states must take steps to recovery to reach at least the level of their western counterparts. Some of them subsequently joined newly formed formations – mainly the European Union - a political and economic union consisting nowadays of 27 member states which developed an internal single market through a standardized system of laws. Despite the aim to reduce inequalities and ensure the prosperity of newly formed states after the disintegration of Eastern and Western Blocs, some differences may remain. In the current article, we are curious to explore whether the historical issues and current attitude towards European integration have some influence on the way the respondents from our survey experienced the coronavirus crisis.

Comparison of results from former Eastern bloc member states and former Western states

After World War II., the allies of the United States formed the so-called Western Bloc, whereas the allies of the Soviet Union formed Eastern Bloc. Although the blocs consisted of not only European states, the current analyses focus only on the results obtained from the European sample of Covid survey respondents. We compare results from the states which used to be part of those blocs and provide the results for every field of business.

Beginning with the comparison of impact of the coronavirus crisis on machine owners, we found statistically significant differences (p < 0,001). The results are presented in the graph below. However, it is important to note the effect size of the result is small (V = 0,14; p < 0,001), indicating the results are generalizable but not big at all. We also tried to compare the differences in the level of decrease in what our Covid survey focused on, too. Again, statistically significant differences were found (p < 0,05) with small effect size (V = 0,07; p < 0,05). We wonder whether these results have not been caused due to the sample size, partly due to the effect sizes being too small, and as seen in the graphs, the differences are not so striking.

Then we compared the results for contractors. The results showed the respondents from the former Eastern Bloc more often reported both increase and decrease, compared to respondents from the former Western Bloc. The results are statistically significant, too (p < 0,05), although again with small effect size. However when inspecting the potential differences for levels of decrease no other differences were found (p = 0,13 - overall, 24.2% of the respondents experiences decline up to 10%, 29.5% claimed the decline was between 10 and 30%, 23.6% reported decline between 30 and 50%, and remaining 22.8% suffered from more than 50% decrease. Therefore, only a comparison of types of impact is generalizable.

Whereas so far results showed there are some nuances between results obtained from respondents from former Eastern and western Bloc, the analyses on dealers´ sample indicated no statistically significant differences (p = 0,54). Overall, 6.5% of respondents gained an increase, 29.3% experienced no change, and the remaining 64.2% of respondents suffered from decrease. Despite the fact no statistically significant differences were found for type of impact, the analyses on levels of impact revealed more balanced distribution for results obtained from respondents from former Western Bloc (p < 0,05) but, again with small effect size (V = 0,18, p < 0,05).

However, the opposite pattern was observed when analyzing data from respondents who describe themselves as equipment rental company representatives. When comparing the types of impact, the results were statistically significant (p < 0,05; effect size: V = 0,24; p < 0,05). Whereas respondents from the former Western Bloc claimed they experienced all forms of impact – increase included, the respondents from the former Eastern Bloc did not provide us with information on whether some of them experienced experience. However, most of them (47.5% compared to 23%) experienced no change. As already mentioned, we found no statistical differences for results on levels of decrease (p = 0,14), which lead us to the conclusion only the results for types of impact are generalizable. When considering the overall results, 21.7% of the respondents experienced decrease up to 10%, 27.1% reported decline between 30 and 50%, 30.2% suffered from decline between 30 and 50%, and 20.9% claimed the decline they experienced was more than 50%.

Differences between coronavirus crisis impact in EU member states and the other European states

After that, we conducted a couple of analyses to explore whether some differences in the type and level of impact may be observed between the answers obtained from respondents from European Union member states and those from the remaining states. No statistically significant differences were found in the type of impact (machine owners: p = 0,11; contractors: p = 0,55; dealers: p = 0,50; equipment rental company: p = 0,19) Therefore, despite the fact some nuances between those two subsamples were found, they were mostly marginal and caused probably only by specific characteristics of our sample. In that case we present only charts with overall results.

However, when considering the level of decrease, we found statistically significant differences in the level of decrease in machine owners´ sample (p < 0,05; effect size: V = 0,08; p < 0,05). Although the results were significant, and therefore generalisable, the effect size was small indicating not so big differences between member and nonmember states. Therefore, the sample size probably caused the generalizability we found, despite the fact, the differences are not so markant at all.

For remaining areas of business, overall results are presented only because we found no statistically significant differences between EU members and non-members (contractors: p = 0,76; dealers: p = 0,187; equipment rental companies:p = 0,89).

Beyond EU - The European Economic Area (EEA)

The EEA includes EU countries and Iceland, Liechtenstein, and Norway. It allows its member states to be part of the EU’s single market. Although Switzerland is not an EU or EEA member, it is a part of the single market. After Brexit, there will also be changes in the UK membership. However, at least till the end of the transition period, the rights and obligations contained in the EEA Agreement continue to apply between the UK and the EEA States until 31 December 2020. Therefore in our analyses, we analyze Swiss and British data together with information provided from respondents from EEA member states.

Similar to previous analyses, we found statistically significant differences (p < 0,05) only for machine owners - this time in the type of impact indicating a higher proportion of EEA members (44.5%) compared to non-members (25%) to experience no change. On the other hand, the non-members reported both higher rates of increase (7.1% compared to 4.3%) and decrease (67.9% compared to 51.3%). However, although the result is statistically significant, the effect size of the result is small (V = 0,05; p < 0,05), again indicating the influence of the EEA membership is weak - it does not have much impact on the crisis impact.

In the case of other fields of business, no statistically significant differences between EEA members and non-members were found (contractors: p = 0,34; dealers: p = 0,12; equipment rental companies: p = 0,75). Whereas we found some nuances between the two groups, what we found were probably odds caused by specific characteristics of our sample. Because of a lack of evidence for the generalisability of the differences, the overall results (combined EEA members and non-members data) are presented.

The same strategy was applied when inspecting possible differences between EEA members and non-members in the level of decrease. Again, according to our analyses, no generalizable results were found (machine owners: p = 0,74; contractors: p = 0,80; dealers: p = 0,77; equipment rental company: p = 0,30), which lead us to present only the overall results (combined EEA members and non-members data).

Would you like to know more about the impact of COVID pandemic on the construction industry? Click here for the full report by LECTURA, ERA and CECE!

or continue reading the Covid Special ==> Part 1: The case study on German and British machine owners: similarities and differences in the coronavirus crisis management

==> Part 2: Differences between the coronavirus crisis impact according to the company size

==> Part 3: Why did some contractors suffer from the decrease during the coronavirus crisis, and others experienced the growth of their business?

==> Part 4: When facing a crisis, what type and from whom people expect to support?

==> Part 5: The influence of the coronavirus crisis on the dealers´ rental economy

==> Part 6: Areas of business for which we observe the greatest and the least impact

Source: LECTURA Verlag GmbH