League of Nations

Soon as competitive as the Champions League?

If the defining characteristic of the coronavirus crisis is its speed, then equally, one of its defining effects has been to expose the vast disparity in in the way countries have been affected by and dealt with the virus.

Though it is very difficult to have a true sense of numbers of infected as well as deceased, there are remarkable differences in fatality rates (per capita) if we say compare close neighbours – Ireland to England, Germany to France or even Norway to Sweden.

Whilst there are also some stark inter-state differences across the USA (Kentucky v Tennessee for instance), countries are still the best lens by which to view the effects of the coronavirus because they capture differences in laws, customs, social cohesion, institutions, political leadership and so on.

On balance, countries with good levels of human development, institutions and where the state is competent, seem to be doing a good job of containing the crisis. They are aided in this by largely obedient and well informed citizens, though the Easter weekend will test how obedient those citizens are.

So far, the crisis (beyond China) has centred largely on what we regard as the developed world (Europe, the USA and many Asian countries like South Korea and Singapore), but it is now picking up in developing countries.  

Amongst the big emerging economies (China apart), Turkey and to a lesser extent Brazil stand out in terms of the onset of new cases. By and large, the emerging world has appeared to be be spared the scale of tragedy that has struck Spain and Italy, partly because testing is done sparsely (India has done 121 tests per million people compared to 13,000 for South Korea), and partly because these countries are less intensely connected to China and other international hubs.

In the near term, there is a growing need to tend to sharply rising poverty in the developing world, and a need to ensure that they are also well served in terms of medical supplies and knowledge.

When the crisis is over, emerging economies will have much to think about in terms of the resilience of their currencies (i.e. Rand), structure of labour markets, the patterns of migration and most importantly, urbanization and the role of public health systems.

This is a time when the rise and fall of nations is being accelerated and offers countries with scope for structural growth (i.e. Bangladesh to Ethiopia) a chance to stop and rethink their paths forward. They might also rethink how they are served by the dominant world powers and by international public goods.

In a context where institutions like the World Bank and World Health Organisation are being drawn into the geo-political rivalry between the USA and China (for example, the US President has threatened to cut funding to the WHO) there is an opportunity for emerging nations to speak out and to claim the best parts of these institutions for the developing world.

One suggestion might be to move the headquarters of the World Bank to Africa, which is the one region of the world that continues to need the expertise of the Bank. Locating the experts and executives of the World Bank in Africa will arguably make them more responsive, and better informed of the economic challenges there.

Equally, the expertise of the World Health Organisation could be harnessed for a post-corona crisis wave of public health education across emerging countries and an embedding of the health lessons of the crisis into urban and economic development planning.

There is also a greater strategic consideration at play. The developing world is still condescended to by the dominant economies and in the style of Thomas Pakenham’s influential book ‘The Scramble for Africa’. For instance, the crippling debt burden associated with the One Belt, One Road project will become more clear in coming months (e.g. Sri Lanka).

Given the way in which the crisis has exposed supply chains, there is potential for emerging countries to take stock of their strategic assets – an ability to produce some pharmaceuticals and healthcare equipment cheaply, and in certain cases, they are critical producers of food.

In a word order where national identities and borders have been reinforced, emerging nations may look to strike a tougher bargain with wealthier ones in terms of their hold over agricultural commodities. If they do so, they can become part of the levelling out of geopolitical power in the post coronavirus world.

Have a great week ahead,

Mike