By: Maya Lescano (2/21/21)
Original Source: https://www.reuters.com/article/us-global-economy/global-economy-can-shake-off-pandemic-in-2021-leaders-say-idINKBN29I1KV
Globalization has a direct impact on the integration of international trade and financial flows in the world economy. Due to the current weakened economy, wealthy countries must take on the role of older siblings in guiding developing nations through the COVID 19 pandemic.
An article on Reuters details the struggles of developing (and some developed) countries in rolling out the COVID-19 vaccine. Analysts have expressed optimism, despite new strains of the virus emerging. The article points out that the administration of vaccines will not be the cure to a weakened economy, but it is a step towards the right direction. In the past year, economies around the world have been deprived of the benefits of globalisation. Countries such as the US and France, who have the capability to vaccinate a lot of people quickly, must assist nations with less resources and capital to vaccinate their population. While this may sound absurd to some, this is in their best interest to make sure that lower income nations have access to effective COVID-19 vaccines.
This is because by assisting with vaccinations, it makes a promise of an effort to return to normalcy. Vaccination creates a stable business environment for US companies to invest in. Factories and offices are crowded workplaces, making it easy for the virus to spread. Virus remergence presents a problem to economic stability of a country, thereby affecting the global supply chain in the process. By assisting with vaccine rollouts, the US helps stabilize the business environment in developing countries, thus creating a safe environment for US companies to invest in. In a macro sense, this injects capital back into these countries, which equitably raises global flow of capital back to the pre-pandemic days. By then, developed and developing countries can, once again, feel the positive effects of globalisation. Plus, it appraises its brand around the world. Other countries such as China are using the pandemic as a diplomatic tool to better relations and gain economic and political favours. It is in the US’ best interest to fill in this void, otherwise it will further lose standing in the global political and economic stage.
I propose two steps which could propel countries such as the US and France to play the role of an older sibling. The first is the strengthening of developed countries’ vaccine rollout program in order to make the system trustworthy in the eyes of the world. Countries must swiftly and effectively vaccinate its populace in the next three months. The second is for developed countries to form a coalition and create an incentive structure that would send vaccine aids to poorer countries. For example, assistance with COVID-19 vaccine roll out can come along with other investment projects such as infrastructure programs, which are much needed in poorer countries. In short, they are more willing to accept help from developed countries when they promise to improve their infrastructure. We could borrow the philosophy behind Nike’s origin story and apply it in this case. Countries that are given assistance in their time of need will feel more inclined to help those who helped them. In return, developed countries have the option to co-develop these projects with local firms. This incentives developed countries like the US and France to help other countries and play their part in reviving the global economy.