COVID-19 Impact on Developed and Developing Nations by: Bridget Sheerin

The COVID 19 pandemic has had lasting effects on the economies of low, middle, and high-income countries. Despite the pandemic being around for less than a year, its impact will last for many years to come. This blog post will examine the background of COVID 19, how COVID has impacted the economies of various countries, and how countries have attempted to rectify economic damage that has resulted from COVID. 

I. Background

COVID 19 began around November of 2019 and is believed to have originated in Wuhan, China.[1]The virus is believed to have been transmitted from an animal source and is now rapidly spreading between humans via airborne droplets.[2] The virus has spread globally since November of 2019 and has infected millions of people.[3] COVID can vary in its intensity, ranging from asymptomatic to severe pneumonia and death.[4] Pertinent statistics relating to the serious of COVID include:

[T]he incidence of respiratory failure in Wuhan was 54% overall; of those patients who died, 98% had respiratory failure compared to 36% of those who survived. All of those who succumbed had sepsis, and 93% had acute respiratory distress syndrome (ARDS), while 42% of survivors had sepsis and 7% had ARDS. Also noted in this Wuhan cohort was a 48% prevalence of comorbidities in those who died, most commonly hypertension, diabetes mellitus, and coronary artery disease. Increasing age was also associated with increased risk of death. Overall, in-hospital mortality rate was 28%, and for those requiring medical ventilation, it was 97%.[5]

II. Impact on Low Income Countries 

Low income developing countries (LIDCs) are in a very difficult position as a result of the COVID 19 pandemic.[6] Without international aid for LIDCs it will be difficult for these countries to prosper in the future.[7] Since the beginning of the COVID 19 pandemic, LIDCs have been impacted by a decrease in exports, lower export prices for many goods most importantly oil, less influx of capital, and a large decrease in tourism.[8] For example, “remittances, for example, that exceeded 5 percent of GDP in 30 (out of 59) LIDCs in 2019. Between April and May, they fell by 18 percent in Bangladesh, and by 39 percent in the Kyrgyz Republic, compared to the previous year.”[9] Such economic repercussions will likely be felt for many years to come. 

One major issue for LIDCs that has resulted from the COVID 19 pandemic is food shortages.[10] According to a recent survey, conducted across 20 African countries, over 70 percent of individuals in these countries are at risk of running out of food if a lockdown were to last more than two weeks.[11]Another large issue that may occur in LIDCs as a result of the COVID pandemic is “scarring” which is “the permanent loss of productive capacity.”[12] Scarring has resulted after previous pandemics and leads to a decrease in health and education, a depression of future earnings, a decrease in production, and economic debt.[13] An example of scarring was shown in Sierra Leone after the 2013 Ebola pandemic when the country did not return to its pre-crisis economic growth path.[14] If scarring results from the COVID pandemic it would result in major setbacks in global Sustainable Development Goals and greater global inequality.[15]

In order to avoid a spike in COVID cases, which would thus lead to a food shortage and scarring, researchers recommend social distancing and contact tracing.[16] “As a broad-based containment becomes difficult to sustain, LIDCs should transition to more targeted measures, including social distancing and contact tracing­– Vietnam and Cambodia are good examples. Policy support should focus on supporting the most vulnerable, including the elderly, and on limiting the health crisis’s long-term fallout.”[17]

III. Impact on High Income Countries

High Income Countries (HICs) have generally responded to COVID 19 with similar tactics.[18] First, HICs entered a suppression phase typically referred to as “flattening the curve.”[19] The goal of phase one is to avoid an overflow of COVID patients in the hospitals, which was seen in Wuhan when the virus began.[20] The next phase commonly followed by HICs is maintaining the initial suppression.[21] Maintenance of the initial flattening of the curve has been done through continued social distancing, identifying cases quickly, and isolating such cases.[22] While these methods of decreasing COVID outbreaks have found success in HICs the next question is whether such methods would be successful LIDCs. 

IV. HIC COVID response in LIDCs

Assistance from the international community will be key to preventing vast COVID outbreaks in LIDCs. Key aspects of support include:

(1) guaranteeing essential health supplies, including cures and vaccines when they are discovered; (2) protecting critical supply chains, especially for food and medicines; (3) avoiding protectionist measures; (4) ensuring developing economies can finance critical spending through grants and concessional financing; (5) ensuring LIDCs’ international liquidity needs are met, which requires international Financial Institutions to be resourced adequately; (6) reprofiling and restructuring debt to resort sustainability where needed, which, in many cases, may require relief beyond G20/Debt Service Suspension Initiative; and (7) keeping sight of the United Nations’ SDGs, including by reassessing needs which the  crisis subsides.[23]

The International Monetary Fund has committed $10 billion interest-free loans for LIDCs fighting COVID.[24] Also, the World Economic Forum has created a COVID action plan in order to engage public and private partnerships in taking action in regards to the pandemic.[25] In addition to financial aid, it is recommended that Nongovernmental organizations (NGOs) contribute with additional support.[26]  For example, “the Lifebox Foundation, partnering with Smile Train and Gradian Health Care, has secured 1650 pulse oximeters for distribution to countries most in need . . . . Massive efforts will be needed to improve oxygen availablility.”[27] In order to ensure against massive fallout for LIDCs as a result of COVID 19 the previously mentioned suggestions should be put in place as soon as possible.

[1] Will the Higher-Income Country Blueprint for COVID-19 Work in Low-and Lower Middle-Income Countries?, GLOBAL HEALTH: SCIENCE AND PRACTICE(Oct. 12, 2020), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7326511/

[2] Id. 

[3] Id. 

[4]  Id.

[5] Id. 

[6] COVID-19: Without Help, Low-Income Developing Countries Risk a Lost Decade, IMF BLOG (Oct. 12, 2020), https://blogs.imf.org/2020/08/27/covid-19-without-help-low-income-developing-countries-risk-a-lost-decade/

[7] Id. 

[8] Id. 

[9] Id. 

[10] Id. 

[11] Id. 

[12] Id. 

[13] Id. 

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] The COVID-19 Pandemic: Effects on Low- and Middle-Income Countries, Anesthesia & analgesia(Oct. 12, 2020), https://journals.lww.com/anesthesia-analgesia/Fulltext/2020/07000/The_COVID_19_Pandemic__Effects_on_Low__and.13.aspx

[19] Id. 

[20]Id. 

[21]Id. 

[22] Id. 

[23] IMF Blog, supra note 6. 

[24]GLOBAL HEALTH: SCIENCE AND PRACTICE, supra note 1.

[25] Id. 

26Id. 

27 Id. 


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