Failing to pull together : South Africa’s troubled response to COVID-19

Abstract: Purpose – This paper aims to provide a country case study of South Africa’s response during the first six months following its first COVID-19 case. The focus is on the government’s (mis-)management of its nonpharmaceutical interventions (NPIs) (or “lockdown”) to stem the pandemic and the organized business sector’s resistance against the lockdown. Design/methodology/approach – This paper makes use of a literature review and provides descriptive statistics and quantitative analysis of COVID-19 and the lockdown stringency in South Africa, based on data from Google Mobility Trends, Oxford University’s Stringency Index, Johns Hopkins University’s COVID-19 tracker and Our World in Data. Findings – This paper finds that both the government and the business sector’s responses to the COVID-19 pandemic have been problematic. These key actors have been failing to “pull together,” leaving South Africa’s citizens in-between corrupt and incompetent officials on the one hand, and lockdown skeptics on the other. This paper argues that to break through this impasse, the country should change direction by agreeing on a smart or “Goldilocks” lockdown, based on data, testing, decentralization, demographics and appropriate economic support measures, including export support. Such a Goldilocks lockdown is argued, based on available evidence from the emerging scientific literature, to be able to save lives, improve trust in government, limit economic damages and moreover improve the country’s long-term recovery prospects. Research limitations/implications – The pandemic is an unprecedented crisis and moreover was still unfolding at the time of writing. This has two implications. First, precise data on the economic impact and certain epidemiological parameters was not (yet) available. Second, the causes of the mismanagement by the government are not clear yet, within such a short time frame. More research and better data may be able in future to allow conclusions to be drawn whether the problems that were besetting the country’s management of COVID-19 are unique or perhaps part of a more general problem across developing countries. Practical implications – The paper provides clear practical implications for both government and organized business. The South African Government should not altogether end its lockdown measures, but follow a smart and flexible lockdown. The organized business sector should abandon its calls for ending the lockdown while the country is still among the most affected countries in the world, and no vaccine is available. Social implications – There should be better collaboration between government, business and civil society to manage a smart lockdown. Government should re-establish lost trust because of the mismanagement of the lockdown during the first six months of the pandemic

Competitive selection, trade, and employment:The strategic use of subsidies

We thank Holger Görg, Philipp Schröder, Fredrik Sjöholm, participants at the Danish International Economics Workshop, seminar participants at Aberdeen, Sheffield and Loughborough, three anonymous referees and the Editor of the journal, for helpful comments and suggestions. Funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration under grant agreement no 290647 is gratefully acknowledged.Peer reviewedPostprin

Global Capital Market Volatility and the Developing Countries: Lessons from the East Asian Crisis

Summary The emerging global economy is characterised by the virtually free movement of capital, while labour is still essentially confined to the nation state. The East Asian crisis has revealed the extent to which international financial ‘architecture’ does not yet correspond to this reality – let alone resolve its inconsistencies. The consequent public action problem is analysed in this article by first addressing the global causes of emerging market volatility and the failure of international financial institutions (such as the IMF) to contain it. The current attempt to extend multilateral bank regulation towards emerging markets is shown to suffer from severe limitations, as do proposals for mutual regulatory recognition and a global credit insurance system. The prospects for establishing a binding set of rules for global investment, with logical consequences for both multilateral capital taxation and international debt resolution, are improving, but remain problematic due to the ‘missing institutions’ required to create an orderly global capital market. The article concludes with an unexpected implication for the concept of citizenship itself

Getting real about food prices

The 2008 price spike in world grain prices had serious impacts on food security and poverty but analysts have consistently described these real food prices as low in historical terms. The inconsistency between the severity of the food crisis and low real prices results from the use of advanced and global economy price indices to calculate real prices. This ignores the high share of food in poor people’s expenditures and indirect effects of income growth on expenditure patterns of rich and poor consumers. Poor consumers have not experienced the same falls in real food prices as those with growing incomes and are more vulnerable to price shocks. As high and fluctuating international grain prices appear to be a feature of the current world economy, food price and policy analysis must recognise this, and develop and use different price indices that take account of differences between consumer groups

Exploring the financial and investment implications of the Paris Agreement

A global energy transition is underway. Limiting warming to 2°C (or less), as envisaged in the Paris Agreement, will require a major diversion of scheduled investments in the fossil-fuel industry and other high-carbon capital infrastructure towards renewables, energy efficiency, and other low or negative carbon technologies. The article explores the scale of climate finance and investment needs embodied in the Paris Agreement. It reveals that there is little clarity in the numbers from the plethora of sources (official and otherwise) on climate finance and investment. The article compares the US$100 billion target in the Paris Agreement with a range of other financial metrics, such as investment, incremental investment, energy expenditure, energy subsidies, and welfare losses. While the relatively narrowly defined climate finance included in the US$100 billion figure is a fraction of the broader finance and investment needs of climate-change mitigation and adaptation, it is significant when compared to some estimates of the net incremental costs of decarbonization that take into account capital and operating cost savings. However, even if the annual US$100 billion materializes, achieving the much larger implied shifts in investment will require the enactment of long-term internationally coordinated policies, far more stringent than have yet been introduced.</i

Growth in densely populated Asia: implications for primary product exporters

Economic growth and integration in Asia is rapidly increasing the global economic importance of the region. To the extent that this growth continues and is strongest in natural resource-poor Asian economies, it will add to global demand for imports of primary products, to the benefit of (especially nearby) resource-abundant countries. How will global production, consumption and trade patterns change by 2030 in the course of such economic developments and structural changes? We address this question using the GTAP model and Version 8.1 of the 2007 GTAP database, together with supplementary data from a range of sources, to support projections of the global economy from 2007 to 2030 under various scenarios. Factor endowments and real gross domestic product are assumed to grow at exogenous rates, and trade-related policies are kept unchanged to generate a core baseline, which is compared with an alternative slower growth scenario. We also consider the impact of several policy changes aimed at increasing China's agricultural self-sufficiency relative to the 2030 baseline. Policy implications for countries of the Asia-Pacific region are drawn out in the final section

Recent reforms in Spanish housing markets: an evaluation using a DSGE model

After a long academic debate, Spain finally repealed in 2012 the deduction for home purchase. The abrogation took effect in 2013. In parallel, the VAT for the purchase of new housing was increased after a short period in which it had a reduced rate. The aim of this paper is to assess the macroeconomic effects of these two relevant housing market reforms. In order to do that, we use a dynamic stochastic general equilibrium (DSGE) model calibrated to capture the key ratios of the Spanish economy. The model includes a housing market, covering both the rental market side and the property market side and credit-constrained agents. We find that these measures drive down housing prices and have a negative impact on output and employment in the construction sector. However, in the long run, this last effect is offset by the benefits of a reduction in distortionary taxes