Developing countries need to take their own approach when reacting to COVID-19

How do optimal Coronavirus policies differ for countries across the world? Elias Papaioannou, Professor of Economics at London Business School and Academic Director of the Wheeler Institute for Business and Development was joined in conversation with Mushfiq Mobarak, Professor of Economics at Yale, with concurrent appointments at Yale School of Management and the Department of Economics, to discuss how different factors mean that countries have to adapt the policy measures they are taking to limit the impact of the pandemic.

  • Coronavirus is unusual as it started in rich countries, which means health and economic policies originated in and were designed for developed economies, rather than frontier markets; 
  • Demographic differences, age profile and limited healthcare capacity means a different approach needs to be taken based on a country’s specific circumstances;  
  • With a lack of testing capabilities in developing countries, international migration data can be used to show where the disease arrives, and internal mobility data to show where it spreads to make indirect inferences about likely sub-national disease presence and identify hotspots; 
  • Countries need to develop innovative mechanisms to identify those who are suffering as a result of the pandemic and create ways to provide them with financial support; 
  • Countries will have to work together to overcome the pandemic, with coordination between institutions and governments being the solution to a global challenge; 
  • Various types of data that businesses possess serve as a useful complement to government information; they must coordinate and collaborate with researchers and governments to help society.  

A ‘one-size-fits-all’ approach to coronavirus policies will not be effective 

Frontier economies had to adopt many of the measures that had been implemented by developed countries in Europe and America because politically it is difficult to take a different approach to countries such as the United States. However, the influential Imperial College model, which informed policymaking in the UK and US, produced very different answers when inputting data from developing economies. This is because their demographic structure and age distribution is very different, for example, elderly people having a much greater share of the population in rich countries. Furthermore, in countries with limited healthcare capacity, flattening the curve will not save lives; there will be no ventilators now, or in three months, so there is not much to gain by delaying infections.  

According to Mobarak, this means that the cost of social distancing measures across dissimilar countries is different, as economic distancing will also have a different impact on emerging economies than developed ones. For example, Mobarak has been collecting data from rural Nepal that shows a huge drop in economic activity, which leads to food insecurity and widespread hunger. Similarly, implementation policy is different across a range of countries; the ability of governments to enforce policies is different in West Africa versus in South Asia, versus US or UK or Israel or South Korea or China. Therefore, each country has to consider their situation, as well as their ability to enforce policies, before committing to an approach.  

Projections and models need country specific economic and behavioural inputs to match the needs of diverging countries  

Epidemiological models that have been used in the US and UK need behaviour patterns and economic data for them to be of greatest use when considering policy decisions. Issues such as hunger and food security matter just as much as virus risk in some of these countries, while factors such as compliance need to be taken into account to devise the optimal strategies. 

Mobarak sees data as the key to being able to understand whether to scale back lockdown measures. In particular, Mobarak sees migration links as vital. Being able to identify those who have returned from elsewhere is helpful, as this is strongly predictive of whether the disease is going to emerge and spread in certain areas. For example, Mobarak looked at disembarkation cards to see where people returning to Bangladesh had travelled from and whether it linked with anywhere the disease was particularly prevalent. Based on this information, the government can look at addresses, so it can see districts and sub-districts and where the virus was present. 

Similarly, migration permits enable the government to create a risk exposure index based on where permits have been awarded over the last decade and for which country. These methods of measurement are important as Bangladesh does not have extensive testing facilities, so they were able to compare the exposure index against where distress is highest, which correlated well. By also looking at data from telecoms service providers, Mobarak’s research can be used to create a countrywide indices of sub-district to sub-district movement, which tracks the spread of the virus. Mobarak thinks this approach could be used by different countries based on their exposure index, which would allow the WHO and other multilateral partners to identify the countries at greatest risk during the pandemic and implement policies that are tailored to their specific circumstances.  

The ‘new poor’ need to be identified and supported urgently 

Many countries do not have the infrastructure capacity to provide targeted relief to their population. Only a tiny fraction of Bangladeshis submitted a tax return last year, so there is no quick or easy way of identifying who needs support or mechanism to deliver it. There is an emerging ‘new poor’ who are suffering; people whose livelihood has been taken away and do not fall under pre-existing social benefit transfer systems. Mobarak has been working with the Bangladeshi and Nigerian Governments to devise way to identify those who need to be targeted with support; for example, migrant families and those dependent on remittance are suffering because the migration pipeline has dried up – people cannot send money because the crisis is global.  

Mobarak is working with machine learning modelers to extrapolate trends from a sample of 15,000 to a population of 150 million through mobile usage data. Consumption patterns, such as regularity of top-ups and frequency of calls can be used to predict whether an individual is likely to be poor. Using a combination of service data, economic data, machine learning modelling, computer science, cellphone providers can apply this process to their entire subscriber base so that they can see who needs support. There is some political resistance to this approach, as well as gaps, such as how to address the subset of people without a mobile phone and inadvertently missing them out from benefits, but it is a quick and effective way of pinpointing those who require urgent relief payments.  

Global coordination is key to addressing the pandemic 

The virus is spread through human to human transmission. Therefore, solving the problem in one location and letting others fend for themselves is not going to work, because the virus will eventually get re-imported and subsequently there will be another outbreak. Multilateral organisations such as the WHO, as well as the World Bank, IMF, UN will be increasingly important. Mobarak believes the world needs to reset and think hard about when we have global challenges, what are the right institutions and right coordination bodies that allows us to address those challenges. 

Businesses and government need to collaborate and coordinate to use data  

Based on his work supporting the coronavirus response in Bangladesh, Mobarak considers the types of data they have access to as a unique competitive advantage. Businesses have access to information that nobody else, including the government, has. Therefore, he believes there are many ways in which business can contribute and that it is important that business, government and researchers come together and figure out how to coordinate and collaborate.  

Elias Papaioannou’s conversation with Mushfiq Mobarak is part of the Wheeler Institute’s COVID-19 series – bringing together the expertise and experience of our extended community to understand, illuminate and offer solutions to the challenges created by COVID-19. Our differentiating factor is the role of business in addressing these challenges, with a focus on the implications and actions for those in developing countries.   

If you’re interested in following the Wheeler Institute COVID-19 series, check out our previous episode below.  

Elias Papaioannou is academic director of the Wheeler Institute for Business and Development and professor of economics at London Business School, focusing on international finance, political economy, applied econometrics and growth and development. 

Mushfiq Mobarak is Professor of Economics at Yale University with concurrent appointments in the School of Management and in the Department of Economics. Mobarak is the founder and faculty director of the Yale Research Initiative on Innovation and Scale (Y-RISE). He holds other appointments at Innovations for Poverty Action, the Jameel Poverty Action Lab (J-PAL) at MIT, the International Growth Centre (IGC) at LSE. 

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