COVID-19 response: What can developing countries do differently?

 

By Farai Chigaru

The prevalent responses to the COVID-19 pandemic across different countries seem to be similar. A lot of countries, both developed and developing, are copying from the developed countries’ reaction towards the pandemic.

As second movers, this is commendable. It is, however, not sufficient. 

It is commendable in a sense that developing countries do not need to ‘re-invent the wheel’ in trying to identify what works against the fight against COVID-19. It is not sufficient because of differing initial conditions between the first movers and the second movers. 

The first movers, developed countries, are capital abundant countries while the second movers are labor abundant countries. The first movers therefore have an upper hand on capital intensive strategies towards COVID-19 fight, which becomes readily affordable to them- as capital is relatively cheap. 

Second movers — being labor abundant — would find these capital intensive strategies expensive and unsustainable over time. Its unsustainability would lead to continued subsidization and intervention by government, which would provide more room for rent seeking by politicians- corruption.

These strategies will seem to be sustainable over a longer period and would not provide room for rent seeking as no subsidies would be involved.

Comparative Advantage Following (CAF) strategies, therefore, provide a better chance for countries to fight COVID-19 in a sustainable, affordable manner over a longer term. 

Expensive, capital intensive strategies are working for capital abundant countries because they have a comparative advantage in capital intensive industries. 

For example: accessibility of more ventilators; stimulus packages; nationwide lockdowns. Capital intensive strategies are however ‘Comparative Disadvantage Following (CDF)’ strategies for developing countries. 

Developing countries can, therefore, not copy the strategies of the developed countries; one size does not fit all.

Developing countries, like Malawi, need to develop labor intensive strategies towards the fight for COVID-19. These strategies need to tap into the advantage of having a high labor supply, which implies cheaper labor that is contrary to developed countries. 

These strategies may include the following: Recruitment of more health workers; training of more health workers in rural areas; Mass light manufacturing of home-made face masks; Mass awareness of individuals on COVID-19 etc. 

All these strategies have in common the focus on using labor to mitigate the impact of COVID-19.

Mass production of home-made masks could help Government inject a high supply of masks on the market, and eventually sink the market price; making them affordable to everyone. 

Home-made masks may not be as effective as clinical masks; in which case we may require the intervention of the Ministry of Health for quality assurance.

Informal employment in Malawi is around 89%; with 61% of the employed individuals being self-employed. The efficacy of Stay at Home policies are therefore small — people need to make a living. 

There is, therefore, a need for an incentive for people to reduce mobility while taking this statistic into account.

People respond to incentives. The government needs to create a significant demand for home-made tailored masks (with measures to assure quality certainty) — this provides an incentive for people to venture into mass production of home-made masks. 

This will, therefore, act as an incentive for people to #StayAtHome#, at their tailoring stations that can be established indoors. This would help meet the Government’s plea for people to stay at home. 

In so doing, this will create more jobs, enhance skilled labor, and increase economic activity — while at the same time reducing people’s mobility and increasing a supply of masks on the market (reducing its price and making it affordable), and thus curbing the spread of COVID-19.

This intervention will create a snowballing effect for further labor intensive endeavors post COVID-19; since the skills will be transferable.

Home-made masks are being encouraged in several parts of the world due to the global shortage of clinical masks. Cameroon, a developing country, has made it mandatory to use masks (both clinical and home-made) as a condition for using public transport.

*The Author is a PhD Candidate in Economics at Peking University, China (feedback: chigaru2@gmail.com)