By Ian Inkster
On September 6, 2020, officially registered COVID-19 cases exceeded 27 million, with a mortality of more than 884,000 people. Although we are still in the midst of the pandemic, thoughts increasingly turn to its latest economic impacts. Here we show that the economic impression of the virus in any nation will be closely related to the extent of virus cases and mortality and the condition of the economy before the pandemic, and to virus management policies.
However, the political economy of a country is linked to the global economy, and this is why the scale of activities in the largest economies really matters: it can be even more important to the ease of recovery of a nation than the effectiveness of its regimen to manage COVID-19.
Table 1 shows the six largest economies by GDP, with general incidence of COVID-19 since the beginning of the virus.
Row A shows cases per million, row B shows deaths per million, and row C shows deaths by number of cases in each country. Together, these six nations account for 44% of the world's population (E), 42% of COVID-19 (D) cases, and 57% of the world's GDP, making them extremely important in all respects.
It is very clear that the gross total of cases (Row D) does not say much about the real impacts. India, for example, has a huge number of cases but a much smaller case / population ratio than the United States or the United Kingdom. Indeed, Britain – with far fewer total cases than India – has a disastrous statistical record: the highest number of deaths per million and by far the highest proportion of deaths per case (Row C), often referred to as the 'death rate. observed case mortality ”, with more than 12% compared to 1.9% in Japan. Germany, often considered exemplary in the West, has a much higher case fatality rate than Japan or India. Things are not quite what they seem when compared to the “speeches for investors” and the aggressiveness of the Western press, in particular.
Poverty, age and COVID-19
Table 2 moves towards an interpretation of this data. First, the poorer the nation as measured by per capita purchasing power parity income (that is, World Bank data) the lower the incidence and morbidity of COVID-19. Moving along Row F, India has a per capita income of only 13 per cent of the USA, 15 per cent of Germany's, or 18 per cent of Japan's. Yet the presence of COVID-19 in India, despite headlines of alarm, is far lower.
Table 2 advances to an interpretation of these data. First, the poorer the country as measured by per capita purchasing power parity income (i.e. World Bank data), the lower the incidence and morbidity of COVID-19. Moving up row F, India has a per capita income of only 13% of the United States, 15% of Germany, or 18% of Japan. However, the presence of COVID-19 in India, despite the alarming headlines, is much lower.
Rows G and H explain this substantially. In a low-income country like India, the population of young people up to age 19 (G) is very high, at 35.7%, compared to 17.2% in Japan or 17.7% in Germany . As the virus has little impact on young people, this substantially reduces the proportion of the population subject to infection in India. Once again, the extremely low percentage of older adults (row H, 6.6%) compared to each of the other five countries is striking. Germany's 22.2% means that per capita death there should be three to four times higher than in India, as COVID-19 leads to much higher mortality among the elderly than among younger age groups. Even in China, where Maoist population control reduced births, targeted smaller families, and achieved greater survival among the elderly, age differences based on low income possibly explain China's good performance relative to COVID -19: We don't have to believe in the triumphalist rhetoric about the lies and mischief of the Chinese authorities.
Advantages of relative poverty
The other items in Table 2 that act as advantages for India and China compared to the other four countries are centered on much lower urbanism, less air pollution, and more distant borders (Rows J-M). Row J displays per capita emissions of carbon dioxide, methane, nitrous oxide, perfluorocarbon, hydrofluorocarbon, and sulfur hexafluoride in metric tons. The combination of high air pollution with a very high degree of urban life in the richest of the six countries is a potentially potent factor in the transmission and severity of the virus, although research is ongoing. Again, in the poorest large countries, the table shows long borders, but they are far from urban centers and mostly sparsely populated. In contrast, the United States has sizable borders in dense settlement regions adjacent to other high-COVID-19 countries: Canada with 3,479 cases per million, Mexico with its 4,372 cases per million.
The life expectancy results in row P explain the effects of low income and low health expenditures: India's life expectancy is 15 years and more below that of Japan. So while the lack of funding for health in low-income countries (Row N shows that the United States spends 20 times more and four times the proportion of its GDP, compared to India) is a depressing global fact , it is not enough to raise the levels of infection or mortality of COVID-19 compared to those of the rich countries of this group.
Complexities, economics policy of COVID-19
Table 3 takes a look at the likely economic impact of COVID-19 based on our overall analysis.
The biggest factor in the recovery will likely be the extent of the spread of COVID-19. Thus, Japan and the United Kingdom have almost identical per capita incomes, (Table 3, Row Q) but Japan has a much lower incidence of COVID-19 (Table 1, Rows AC), less than a quarter of British cases, a tiny fraction of your observed fatality rate. We can expect an easier Japanese recovery. On the other hand, generalizing, there are other factors that intervene in any economic forecast, as suggested in Table 3.
Row T shows different GDP rates across the six countries in the post-recession years, and all things being equal, fast-growing China and India have a better start to recovery. Their lower levels of national debt (row R) mean that they could have a greater shortage of public financing, that is, growth will reduce the debts of the “recovery costs”. At the same time, these two countries have a greater opportunity to borrow public funds by increasing their national debts.
By contrast, Japan has a very high existing national debt (R) but a low presence of COVID-19, so it could market its way out of the impending funding problems, Row S, showing that, like Germany, Japan has a surplus in its trade balance of exports and imports (e + i%).
Trade will be crucial. Row Y shows a high mutual dependence on trade in this group: the calculation here shows the number of the six countries listed within the top four importing / exporting countries of the nation in question; a figure of 0 would indicate a minimum dependency, a figure of 4 the maximum. Figures 2 and 3 in this entire row, therefore, show a high dependence on intra-group trade: a serious trade failure as a result of a slow COVID-19 recovery in any of the members will have a demonstrable impact on the the rest. Thus, the large countries, in a pessimistic scenario, could well lead the rest of the world to a greater economic recession through a fall in their commercial activity outside the group.
This is highlighted when we focus on the United States and China as trading countries, bearing in mind that China's total economy is growing much faster than that of the United States (Row T). In 52 of the world's 64 major economies, China ranks in the top four as an exporter or importer. In 33 cases, China is the main source of their imports. China imports 10% less than it exports, and it has been growing very rapidly for some time. By contrast, the United States has less of a global impact, trading disproportionately across its own borders with Canada and Mexico, or with China and Japan. The United States imports 20% more than it exports, and its GDP has been growing at a rate of around 30% that of China. Crucially, the share of Chinese imports going to the poorer, non-industrial countries is about double that of the United States. We can conclude that although the serious decline in trade would affect all countries, the severe decline in China would be very serious for a much broader set of nations, and especially for the poorest or developing countries.
Limitations on the choice of policy
Finally, one can only guess about the political dimension. Rows W, X, and Z provide something that approximates a comparative political economy measure for the six countries. The United Nations HDI, or Human Development Index, incorporates life expectancy, education and income, and row X adds the degree of income inequality between countries: the lower the figure, the greater the equality. India suffers a lot here from its low position on the HDI, which would make a long-term recovery from COVID-19 difficult. Surprisingly, given the variety of political systems in this group, the levels of equality / inequality are nothing to brag about, but they are relatively similar. Therefore, these nations would find it difficult to push through the economic recovery programs that dampened the high HDI levels and, at the same time, as shown in Row Z, they have very strong positions of political and economic freedom as measured by Freedom. House in early 2020. As indicated by a “*”, all countries except China are defined as “electoral democracies”, with Germany and Japan leading the way in this regard. China is the strangest nation.
Six countries and global recovery
The conclusion is uncomfortable. This immensely influential portion of our world from COVID-19 has suffered more than average from the virus, has handled it in a wide variety of ways, mostly problematic, and is economically highly interrelated.
The recovery of the United States is likely to be slow and difficult to predict, as it suffers greatly from COVID-19, has a low rate of economic growth, and as rows X and Z of Table 3 suggest, Freedom House has reasons for identifying the United States as the leader of a decline in liberal democracy and the “functioning of government, freedom of expression and belief, and the rule of law.” This judgment was made just before the COVID-19 outbreak.
India could well be a contrast, with a faster recovery due to the lower impacts of COVID-19 and the benefits derived from all the elements listed in Table 2. A rapid recovery in China coupled with reasonable growth in India could be the main optimistic combination, both have rapid growth rates in the recent COVID-19 past, and are complementary traders. China, in particular, has an impact on a wider range of less developed nations than the United States or the other Big Six countries. In addition, China has political space to move: there is no electorate that complains about the decline of democracy, a very low degree of political freedom as defined by Freedom House, (Row Z), so an ability to promote determined programs for the recovery and open trade.
Finally, in this very complex situation, we might find that the trade war between the United States and China changes its tone, from a simple dualism to a general division between the United States' pressure for global protectionism and the Chinese insistence on world free trade. .