July 22, 2020
Four Harvard Kennedy School scholars offered a worrying picture of the current impact of the COVID-19 pandemic on developing countries and an equally daunting assessment of the medium-term outlook. In a virtual discussion on July 22, these faculty members provided examples of how individual countries are reeling from the pandemic as well as macro-economic perspectives on broader trends for regional trade and recovery from severe lockdowns. The participants were Eliana Carranza, adjunct lecturer in public policy and a senior economist at the World Bank Jobs Group; Rema Hanna, the Jeffrey Cheah Professor of South-East Asia Studies; Jeffrey Frankel, the James W. Harpel Professor of Capital Formation and Growth; and Isabel Guerrero Pulgar, adjunct lecturer in public policy and a development economist. The session was part of the Dean’s Discussion series, hosted by Kennedy School Dean Douglas Elmendorf, the Don K. Price Professor of Public Policy, and moderated by his chief of staff, Sarah Wald, an adjunct lecturer.
Jeffrey Frankel sketched a varied set of economic and public health policy responses by developing countries to the pandemic, with similarly varied outcomes. He said Latin America had been hit particularly hard, while Southeast Asia far less so, and that South Africa could be hitting a crisis stage. Heavy concentrations of populations in cities are among the explanations for negative effects for Latin America. The hardest-hit countries there, Mexico and Brazil, had suffered failures of leadership that magnified the negative effects, he said, “just as our leaders have failed us in the United States.” Developing countries are constrained by their balance of payments, as the global shock has hit their commodity exports, tourism, remittances and capital inflows.
Eliana Carranza said the policy choice during the pandemic often has been framed as either saving lives or saving economies. “We should not think about those as opposing goals,” she said, and the cost-benefit tradeoff from policy choices does not need to be as steep as it is being framed. She also said it is important to think not only about the health emergency and economic reactivation phases, but also about a longer-term rebuilding phase that addresses the structural weaknesses that have been exposed in the pandemic.
Isabel Guerrero emphasized that the pandemic has been a moving target that requires an adaptive response. There are no best practices, she said; “it needs a lot of co creation with the community on what works.” She argued that a top- down approach doesn’t work in such a fluid crisis and pointed to the successful response by some countries to the Ebola virus outbreak in which “governments were smart enough to reach out to community organizations” that helped meet challenges including getting services the last mile to reach victims. In India, she said, social enterprise organizations stepped in and helped farmers by distribution food and buying up excess crops that couldn’t otherwise get to markets in the lockdown.
Rema Hanna said the pandemic is prompting nations to develop new ways to bring people together and strengthen their economies at a time of immense uncertainty. These innovations in turn force researchers and policymakers to develop new ways of thinking about public policy. She said that in such a downturn there is a need for increased spending and social protection even as tax revenues have declined. “We are in a situation where we have to think about this tradeoff,” Hanna said. A key to making these assessments successfully is finding reliable evidence. One example: gathering evidence to assess the value of cash transfer programs requires engaging with communities to see how policy translates into action at the local level. Some research has had to shift from in-person contact to online and mobile phone surveys to collect data. Hanna has worked closely with officials in Indonesia, where local conditions vary greatly by state. The challenge becomes one of trying to move quickly to get data in real time—and “to make sure the work we are doing at HKS is relevant to the crisis at large.”