Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective
The world is experiencing the worst pandemic crisis in one hundred years. By mid-April 2020, more than 80 percent of countries around the world had imposed strict containment and mitigation measures to control the spread of the disease. The economi...
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| Format: | Policy Note |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/799701589552654684/Costs-and-Trade-Offs-in-the-Fight-Against-the-COVID-19-Pandemic-A-Developing-Country-Perspective http://hdl.handle.net/10986/33764 |
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okr-10986-337642021-09-16T19:06:13Z Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective Loayza, Norman V. CORONAVIRUS COVID-19 PANDEMIC RESPONSE ECONOMIC CRISIS POVERTY IMPACT INFORMAL SECTOR LABOR MARKET FISCAL TRENDS GOVERNANCE LOCKDOWN SOCIAL DISTANCING SOCIAL COMPRESSION VULNERABILITY LIVELIHOODS MACROECONOMIC MODEL PUBLIC HEALTH POLICY ECONOMIC RECOVERY COMPLIANCE The world is experiencing the worst pandemic crisis in one hundred years. By mid-April 2020, more than 80 percent of countries around the world had imposed strict containment and mitigation measures to control the spread of the disease. The economic fallout has been immense, with dire consequences for poverty and welfare, particularly in developing countries. This Brief first documents the global economic contraction and its potential impact on developing countries regarding macroeconomic performance, poverty rates, and incomes of the poor and vulnerable. It then argues that the pandemic crisis may hurt low- and middle-income countries disproportionately because most of them lack the resources and capacity to deal with a systemic shock of this nature. Their large informal sectors, limited fiscal space, and poor governance make developing countries particularly vulnerable to the pandemic and the measures to contain it. Next, the Brief reviews recent epidemiological and macroeconomic modelling and evidence on the costs and benefits of different mitigation and suppression strategies. It explores how these cost-benefit considerations vary across countries at different income levels. The Brief argues that, having more limited resources and capabilities but also younger populations, developing countries face different trade-offs in their fight against COVID-19 (coronavirus)than advanced countries do. For developing countries, the trade-off is not just between lives and the economy; rather, the challenge is preserving lives and avoiding crushed livelihoods. Different trade-offs call for context-specific strategies. For countries with older populations and higher incomes, more radical suppression measures may be optimal; while for poorer, younger countries, more moderate measures may be best. Having different trade-offs, however, provides no grounds for complacency for developing countries. The Brief concludes that the goal of saving lives and livelihoods is possible with economic and public health policies tailored to the reality of developing countries. Since "smart" mitigation strategies (such as shielding the vulnerable and identifying and isolating the infected) pose substantial challenges for implementation, a combination of ingenuity for adaptation, renewed effort by national authorities, and support of the international community is needed. The lockdowns may be easing, but the fight against the pandemic has not been won yet. People and economies will remain vulnerable until a vaccine or treatment are developed. The challenge in the next few months will be to revive the economy while mitigating new waves of infection. 2020-05-18T15:20:16Z 2020-05-18T15:20:16Z 2020-05-15 Policy Note http://documents.worldbank.org/curated/en/799701589552654684/Costs-and-Trade-Offs-in-the-Fight-Against-the-COVID-19-Pandemic-A-Developing-Country-Perspective http://hdl.handle.net/10986/33764 English Research and Policy Brief;No. 35 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Policy Note |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
CORONAVIRUS COVID-19 PANDEMIC RESPONSE ECONOMIC CRISIS POVERTY IMPACT INFORMAL SECTOR LABOR MARKET FISCAL TRENDS GOVERNANCE LOCKDOWN SOCIAL DISTANCING SOCIAL COMPRESSION VULNERABILITY LIVELIHOODS MACROECONOMIC MODEL PUBLIC HEALTH POLICY ECONOMIC RECOVERY COMPLIANCE |
| spellingShingle |
CORONAVIRUS COVID-19 PANDEMIC RESPONSE ECONOMIC CRISIS POVERTY IMPACT INFORMAL SECTOR LABOR MARKET FISCAL TRENDS GOVERNANCE LOCKDOWN SOCIAL DISTANCING SOCIAL COMPRESSION VULNERABILITY LIVELIHOODS MACROECONOMIC MODEL PUBLIC HEALTH POLICY ECONOMIC RECOVERY COMPLIANCE Loayza, Norman V. Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective |
| relation |
Research and Policy Brief;No. 35 |
| description |
The world is experiencing the worst
pandemic crisis in one hundred years. By mid-April 2020,
more than 80 percent of countries around the world had
imposed strict containment and mitigation measures to
control the spread of the disease. The economic fallout has
been immense, with dire consequences for poverty and
welfare, particularly in developing countries. This Brief
first documents the global economic contraction and its
potential impact on developing countries regarding
macroeconomic performance, poverty rates, and incomes of the
poor and vulnerable. It then argues that the pandemic crisis
may hurt low- and middle-income countries disproportionately
because most of them lack the resources and capacity to deal
with a systemic shock of this nature. Their large informal
sectors, limited fiscal space, and poor governance make
developing countries particularly vulnerable to the pandemic
and the measures to contain it. Next, the Brief reviews
recent epidemiological and macroeconomic modelling and
evidence on the costs and benefits of different mitigation
and suppression strategies. It explores how these
cost-benefit considerations vary across countries at
different income levels. The Brief argues that, having more
limited resources and capabilities but also younger
populations, developing countries face different trade-offs
in their fight against COVID-19 (coronavirus)than advanced
countries do. For developing countries, the trade-off is not
just between lives and the economy; rather, the challenge is
preserving lives and avoiding crushed livelihoods. Different
trade-offs call for context-specific strategies. For
countries with older populations and higher incomes, more
radical suppression measures may be optimal; while for
poorer, younger countries, more moderate measures may be
best. Having different trade-offs, however, provides no
grounds for complacency for developing countries. The Brief
concludes that the goal of saving lives and livelihoods is
possible with economic and public health policies tailored
to the reality of developing countries. Since
"smart" mitigation strategies (such as shielding
the vulnerable and identifying and isolating the infected)
pose substantial challenges for implementation, a
combination of ingenuity for adaptation, renewed effort by
national authorities, and support of the international
community is needed. The lockdowns may be easing, but the
fight against the pandemic has not been won yet. People and
economies will remain vulnerable until a vaccine or
treatment are developed. The challenge in the next few
months will be to revive the economy while mitigating new
waves of infection. |
| format |
Policy Note |
| author |
Loayza, Norman V. |
| author_facet |
Loayza, Norman V. |
| author_sort |
Loayza, Norman V. |
| title |
Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective |
| title_short |
Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective |
| title_full |
Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective |
| title_fullStr |
Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective |
| title_full_unstemmed |
Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective |
| title_sort |
costs and trade-offs in the fight against the covid-19 pandemic : a developing country perspective |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/799701589552654684/Costs-and-Trade-Offs-in-the-Fight-Against-the-COVID-19-Pandemic-A-Developing-Country-Perspective http://hdl.handle.net/10986/33764 |
| _version_ |
1764479467468619776 |