Pandemic responses for developing countries

Spending time in self-isolation in foreign land has naturally triggered me to quietly observe the variety of pandemic responses being executed, either directly through my own observations (in Indonesia) or indirectly through regular conversations with colleagues who come from different parts of the world. These days, my way to show my care for someone that I know, by starting a conversation, often starts with the following question: How is it going in Japan? or South Korea? Thailand? Pakistan? India? the UK? the US? The conversations would then usually commence with an outpouring of criticism of their respective governments, before inhaling toward more personal content about our own experiences with navigating through the pandemic.

I have entered the third month of working from home and my daily duties have remained busy, if not more. I have particularly been efficient with reading books that had been queuing for my attention for a while. Since the virus outbreak took off in Indonesia from early March, I have completed reading two books: (1) Good Economics for Hard Times (2019) by Abhijit Banerjee and Esther Duflo, and (2) Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay (2019) by Emmanuel Saez and Gabriel Zucman. In the former book, although I personally prefer their previous works, it is worth paying attention to their summary of the current economics literature on sticky labour markets, especially in relation to the contested debate about the economic impacts of migration and trade on industrialized societies. In the latter book, which depicts US tax history and its recent divergence away from its more progressive past as the authors argue, pay attention to the evolution of the labour and capital income shares of national income in order to fully understand which social groups form the bulk of tax payers in many industrialized societies today.

Moving away from the industrialized world, here’s a list of articles that I have picked on pandemic responses more relevant to the contexts and challenges facing the developing world, including where I am.

  1. On the virus and poor people in the world” by Martin Ravallion (Economics & Poverty)

So far, this has been among the most detailed reflections about the peculiar trade-offs facing governments in developing countries when it comes to executing a pandemic response strategy. It is worth taking note of the bullet points made below the section: “Is the case for isolation weaker in poor countries? No. But the case for lockdown is weaker. Lockdown can pose new threats in some poor places.”

Indonesia is one of the few developing countries in the world that was not only relatively late with imposing larger-scale restrictions of movements across its archipelagic territories, but also among the few countries that have decided to go with rather “soft” restrictions. Critics, from experts to viral social media users, have called for its government to impose strict forms of lockdown as observed in many parts of the world. A popular hashtag on Indonesian twitter went as far as saying “lockdown or die”.

Emergency responses are fortunately different to viral responses. As the economist Ricardo Reis shared in a recent editorial: “There is no right or wrong way for governments to deal with the financial impact of coronavirus – only trade-offs“. Another timely reminder in response is the book: “Hard Head, Soft Hearts: Tough-minded Economics for a Just Society” (1988), whose overall message is that “if one has a soft heart for the under-privileged, one also has to have a hard head in discussing policies”.

I believe that there is nearly an unanimous consent to the “test, track and isolate” strategy recommended by the WHO for countries to protect COVID-19 patients and suspects. In terms of the pandemic’s impact on the broader society, or in economics jargon “negative externalities”, Indonesia’s trade-offs are real and with consequences of disproportional scale if the country’s containment measures aren’t well-targeted to the social groups that need to be protected the most. The government warned against the consequences of imposing a strict and less well-thought of lockdown measures that have unfolded most devastatingly in India, another populous country. For a more detailed assessment of India’s large-scale lockdown so far, I recommend reading “An Interim Report on India’s Lockdown” by the economists Arvind Subramanian and Debraj Ray.

In current writing, there are 22,750 positive cases and 1,391 dead from COVID-19 in Indonesia. The island of Java, the most densely populated region of 141 million people, is the epicenter of the virus outbreak in the country. As of September 2019, the national poverty rate was 9.2%, amounting to around 25.1 million Indonesians still living below the poverty line. However, the regional inequalities are vast, with several provinces and cities of Java having poverty rates well above the national average. Indonesia’s finance minister, Sri Mulyani Indrawati, has explicitly stated that the ongoing pandemic may have wiped out as much as a decade of poverty reduction efforts in the country. On a macro level, a balance of payment crisis may be looming in the country.

The number of infections and deaths are believed to be much higher, due to the fact that Indonesia remains as having one of the lowest testing rates in the world. In fact, this brings further into question Indonesia’s state capacity, specifically its lack of a more structural preparedness for a pandemic and political will to increase its abysmal spending into public health, which I do not aim to elaborate on, for now.

2. Social Protection Response to the COVID-19 Crisis: Options for Developing Countries by François Gerard, Clément Imbert and Kate Orkin (Economics for Inclusive Prosperity)

In similar spirit as above, by considering various pandemic response strategies on the terms of social protection, this policy brief document provides a more comprehensive overview of how developing countries in particular can: (1) expand their social insurance system, which typically covers a much smaller share of the labour force than in higher-income countries, (2) build on existing social assistance programs, which reach a large share of households in many developing countries, and (3) involve local governments and non-state institutions to identify and assist vulnerable groups who may not be reached by 1) and 2).

When it comes to taking advantage of existing social programs and their facilitating structures in place, South Asian countries (especially India) stand out as the most resourceful in their abilities and potential to take this suggested strategy into account, given by their relatively high population coverage of existing social programs (nearly 80%).

3. Poor Countries Need to Think Twice About Social Distancing by Ahmed Mushfiq Mubarak and Zachary Barnett-Howell (Foreign Policy)

This opinion piece warns developing countries against adopting pandemic response strategies from more wealthy countries without caution, underscoring the very reality that such strategies could backfire against the righteous and urgent aim of saving lives, particularly economically vulnerable lives.

Its cautionary tale toward a typical lockdown in a developing country setting is based on preliminary evidence from the authors’ ongoing research into “the comparative benefits of imposing social distancing guidelines in rich versus poor countries”, which so far point to significant differences in the value of social distancing in various countries:

“Our estimates may even overstate the value of social distancing in poor countries, where such policies may also exact a heavier economic toll, especially on the poorest and most vulnerable. Workers in these countries are more likely to be employed doing hands-on work that cannot be conducted while social distancing. They are also likely to in the informal sector and rely on a daily cash wage—without access to a social safety net. In the short term, social distancing prevents them from working and generating an income; in the long term, this can lead to hunger, malnutrition, other non-coronavirus-related health problems, and death.”

4. How microeconomics can help devise evidence-based policy responses to COVID-19 by Ahmed Mushfiq Mubarak (OECD)

For those interested in the relevance of applied microeconomics like myself, this is the piece to read for a brief overview of not just what governments can do in the future, in terms of investing more into data collection as to thoroughly map out the ways and to what extent that people have been affected once the pandemic is over, but also for what can be immediately done now jointly by economists and epidemiologists, including phone-based surveys with evidence steadily being generated in the process of situating and designing the least damaging pandemic response strategies for developing country societies.

“A coordinated, international response among epidemiologists, medical practitioners, policymakers, and economists is essential to combat this unprecedented crisis. In particular, the economics community can contribute in several key ways to the short-term response. These include: (1) collecting data on COVID-19 prevalence and attitudes, as well as on economic conditions, (2) developing models that combine epidemiological and economic insights, (3) guiding implementation with pre-existing data and evidence, and (4) deploying, evaluating, and adapting disease-prevention interventions.”

In relation to something that I have been involved in myself lately, in the border areas of Indonesia and Timor-Leste, UNDP in both countries immediately switched from conducting field to phone-based quantitative and qualitative surveys of farmers once the virus outbreak worsened. As up-to-date evidence on how the pandemic is hitting farmers and rural households are being collected, field staff have also been able to to protect themselves by abiding with physical distancing measures. This is what we at least can do to map out the current situation and lay out plans for more long-term solutions, as most government ministries and local authorities remain pre-occupied with fighting the immediate, short-term impacts of the pandemic.

5. India: the millions of working poor exposed by pandemic by Amy Kazmin and Jyotsna Singh (Financial Times)

For a more ethnographic take on the every-day human toll and experiences of the strict pandemic response as being imposed in India, this is the piece to read. Prior to this pandemic, India’s economy was already in a bad shape at a magnitude not seen since the 1980s. The Delhi riots earlier this year, driven by politically-motivated religious bigotry, had already set the stage for further predicted episodes of communal violence, as a symptom of the poor state of the economy and overall government performance nationally.

With the economic impact of the pandemic set to be far worse than the 2008-09 global financial crisis for most countries, it is difficult to comprehend how deep India’s recession will be, and how it will play out in terms of the already scarred communal relations within politically salient parts of the sub-continent. In the long-term, I am always an optimist, but not necessarily so in the short and medium-term.

6. Testing Capacity: State Capacity and COVID-19 Testing by Robyn Klingler-Vidra, Ba Linh Tran and Ida Uusikyla (Global Policy Journal)

To end my post on a more positive note, this piece lays out the factors behind Vietnam’s success story for controlling the virus outbreak. Considered to be an economically feasible model for other developing countries to potentially learn from, in comparison to other successful but more wealthy countries, Vietnam has so far only recorded 300 positive cases and 0 deaths in a population of almost 100 million people. In response to common concerns about the credibility and transparency of its data and statistics, independent verifications by foreign academic epidemiologists based in some of the country’s largest hospitals have confirmed that there seems to be little indication of “excess deaths”. A separate investigation by Reuters journalists with local funeral services companies in the country reached the same conclusion, which is in stark contrast to another of their similar investigation done in Indonesia. Alongside Taiwan, Vietnam as had one of the highest test rates per confirmed case in the world, much thanks to its domestic capacity to produce its own testing kits.

In addition to adhering to WHO’s recommended strategy of “test, track and isolate”, Vietnam has been politically, socially and culturally (not in terms of Confucianism, if you mind) resourceful enough to rapidly mobilize its academia, military, public and private sector suppliers, and broader society in “fighting the virus as fighting the worst enemy“. In return, this has rejuvenated public trust in the government, which has in turn made it possible for the government and civil servants on the frontline to earn their legitimacy to perform even more effectively and timely. Trust in the government and public institutions, as well as trust within the population, plays out critically on the effectiveness of policies. And this is where many less successful countries so far have shared a common denominator. This has paved the way for a vicious cycle of a lack of trust and poor pandemic response turning rather self-fulfilling to each other.

In a rare manner, during a recent broadcasted interview with BBC World News, when asked directly the question on whether Vietnam’s success makes the case for “single-party, very authoritarian regime” as described by the news presenter, the country’s former UN envoy, the diplomat Nguyen Phuong Nga, responded very frankly in the following way: “It is not really a matter of regime type. There are a lot of factors contributing to Vietnam’s success. Among them is the humanitarian policies, a strong determination to protect public health and people’s lives in spite of having to sacrifice short-term economic gains, and the full support and trust from the people. Social unity is our strength, as we have been able to mobilize the whole system, the whole society in fighting the pandemic as fighting the worst enemy”.

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