International assessments of countries that have done well in coping with the virus have generally included New Zealand, South Korea, Singapore and China. By contrast, observers have noted high numbers of infections in the United States, Brazil, Spain and Italy, among others. With third and possibly fourth waves looming, it is still difficult to conclusively say which countries have been hit the most by the virus: Sweden and Portugal were models, to some, of good pandemic management by the summer of 2020, only to be recast as leaders on lists of most-infected countries half a year later.
It is more straightforward to analyze the economic, not health, impact of the pandemic. The IMF World Economic Outlook 2020, in its January 2021 update, reported an estimated GDP growth of +2.3% in China (the growth champion in 2020), and mild recessions in Russia (-3.7%), Saudi Arabia (-3.9%) and Nigeria (-2.6%). In contrast, several European countries (with Spain, Italy, and UK as the worst) have seen significant contractions of their economies, sometimes larger than –10%.
What do the best (and worst) countries have in common? We know now that severe lockdowns have been really harmful. Some governments decided that everything had to be tried to contain the number of infections, so they shut down the economy, confined the population and encouraged remote working. Obviously, the countries whose economies depend on sectors that work only through physical contact (like tourism and manufacturing) were more affected by such lockdowns. Thailand derives 12.3% of its GDP from tourism, and its economy is expected to shrink by 6.6% in 2020. Argentina is, per the IMF estimates, one of the countries that has suffered the largest recession (-10.4%), and also one where services represent the least in GDP (54%, compared to, for example, 58% in Chile).
However, in some countries, lockdowns have worked pretty well
Think about China or Singapore. The case of China is interesting, since it still depends on a strong manufacturing sector: while the ratio of value-added generating by the Services sector to GDP is 54% in China, it is 70% in Singapore and 76% in the United States. The more one depends on manufacturing, the more difficult it is to confine people, since workers need to go to the factories and trucks need to move merchandise. »
What then has been the key to success? Our analysis has shown that lockdowns have worked well only in less democratic countries. We have observed that when the population is confined, tools are needed to impose restrictions that do not clash with civil liberties. Additionally, non-democratic countries may have created a culture of obedience and surrender to the common good that more democratic regimes do not have.
This idea is illustrated very well in the graph. It shows the relationship between lockdown intensity (measured with the Oxford Stringency Index) in the horizontal axis, against the change in GDP growth in 2020 relative to 2019, from the IMF World Economic Outlook estimates, in the vertical axis. Generally speaking, we observe that, the more intense the lockdown, the more harm is done to the economy. This is reflected in the negative slope of the cloud of points, each one representing a country.