5 devoloped countries in which covid-19 has a great impact
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The Covid-19 crisis, which first hit the developed world, is now spreading into developing countries. Experts from the United Nations (UN), United Nations Development Program (UNDP), and the World Health Organization (WHO) have stressed deep concern about the long-term impact the pandemic could have on these nations.
Developing countries tend to be poorer, working to become more advanced economically and socially––their infrastructures aren't as established as those you find in Europe and the US. They also rely on primary sector roles––all activities that consist of exploiting natural resources, like agriculture, mining, and forestry––and so they are particularly impacted by disrupted supply chains and lower demand for their goods.
If a poorer country can't sell its resources, then a huge percentage of its national businesses and workforces are going to feel the pinch. Therein lies the problem when a global pandemic hits and their richer trading partners shut their borders.
As a result, developing countries could see income losses in excess of $220 billion, according to the United Nations Development Program (UNDP).
The UNDP are putting plans in place to support them during the pandemic and beyond it, but is it too little too late?
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DEVELOPING ECONOMIES | WHY WILL BE THEY BE ESPECIALLY IMPACTED?
Developing economies are less diversified. HEC Paris professor of economics and decision science, Tomasz Michalski, says that with increased reliance on fewer industries––largely in manufacturing, resourcing, and tourism––developing countries struggle to continue generating revenue in times of market volatility. For example, with supply chains disrupted by closed borders, manufacturing companies are taking a big hit.
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Relations between international economies is something Tomasz focuses on in his teaching, leading courses in Macroeconomics and International Economics in the Grande Ecole and other MSc programs at HEC Paris.
"They have limited room for monetary or fiscal policy intervention,” Tomasz (pictured) explains. If you are wholly reliant on few industries rather than diversified across markets, then there’s less chance you are able to guarantee liquidity––essentially moveable cashflows that can help an economy remain reactive to the wider macroeconomy. If you have cash to hand, then you can move your money more quickly, investing it where it's most needed.