Publication: Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic: A Developing Country Perspective
Date
2020-05-15
ISSN
Published
2020-05-15
Author(s)
Loayza, Norman V.
Abstract
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.
Citation
“Loayza, Norman V.. 2020. Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic; Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic : A Developing Country Perspective. Research and Policy Brief;No. 35. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/33764 License: CC BY 3.0 IGO.”