Impacts if the COVID19 Pandemic on the Economy and Livelihoods Using a Lower-Middle Income, an Upper and High-Income Country

Impacts if the COVID19 Pandemic on the Economy and Livelihoods Using a Lower-Middle Income, an Upper and High-Income Country

Introduction

The World Health Organisation (WHO) declared Covid-19 a global pandemic on March 11, 2020 (World Health Organization, 2020). Within the first six months since the first case was reported in December 2019, in Wuhan Province, China, approximately 610,000 deaths and 14.6 million cases had been confirmed globally by July 21, 2020. Moreover, other welfare costs beyond the disease-induced mortality have occurred, including massive economic shocks, triggering deep economic livelihood crises in essentially all countries globally. However, the impact of the Covid-19 pandemic varies among the economies and livelihoods of lower-middle-income, upper and high-income countries (Decerf et al., 2020). Therefore, this paper analyses the incidence rates of the coronavirus in Ghana, Mexico, and Germany and the measures taken to stop the virus in each country. Also, it analyses the outcomes of the pandemic on the economy and livelihoods of the three countries, which fall under lower-middle-income, upper-middle-income, and high-income countries, respectively.

The current incidence rate of Covid-19 in each country and measures taken to slow the spread in Ghana, Mexico, and Germany

Ghana

According to the World Health Organization (WHO), by April 30, 2020, Ghana had recorded 2,074 coronavirus cases, with 17 death cases from the virus (World Health Organization, 2020). Therefore, this shows that as of April 30, 2020, the incidence rate of coronavirus in Ghana was about 0.006%. As of May 31, 2020, the WHO data indicated that Ghana had recorded 7,881 coronavirus cases, with 36 deaths due to the virus (World Health Organization, 2020).  Thus, the incidence rate of coronavirus in Ghana as of May 31, 2020, was about 0.025%. The WHO data also indicates that, as of June 30, 2020, Ghana had recorded a total number of 17,351 coronavirus cases. Therefore, the incidence rate of coronavirus in Ghana as of June 30, 2020, was about 0.056%. The coronavirus cases in Ghana have been increasing since the first case was recorded. As of May 9, 2021, the country had recorded 93,125 Covid-19 cases (World Health Organization, 2020). Thus, going by the statistics, it is clear that the country has an incidence rate of 0.30% of coronavirus as of May 9, 2021. However, in as much as the incidence rate of the coronavirus has been increasing in Ghana, various measures have been put in place to slow the spread of the virus since the first case was reported in the country on March 12, 2020.

Disinfection and fumigation are some of the measures that have been taken to stop the spread of the coronavirus in Ghana. From April 3, 2020, more than 464 markets across the country were fumigated and disinfected (World Health Organization, 2020).  Local production of face masks commenced in April 2020 to ensure more people were targeted to stop the spread of the virus. From April to June 2020, the Government of Ghana increased the testing capacity of the country for the virus by increasing the testing facilities. Improving the testing capacities ensured that the government could monitor the cases depending on the incidence rates in different parts of the country.

The ban on public gatherings and border travels ensured that interactions between people were reduced, thus reducing infection rates. The country received a donation from World Bank on April 2, 2020, to support the long-term and short-term responses of the government towards coronavirus in the country. The government also increased the salary of frontline health workers by 50% as an incentive considering their role in stopping the virus in the country.

Mexico

The first coronavirus case in Mexico was recorded on February 28, 2020 (World Health Organization, 2020). As of April 30, 2020, Mexico had reported a total number of 16,752 coronavirus cases, with a total number of 1,569 deaths resulting from the virus. Therefore, going by these statistics, the incidence rate of the virus in the country as of April 30, 2020, was about 0.013%. The total number of coronavirus cases recorded in Mexico as of May 31, 2020, was 87,512 cases, with the total number of death cases being 9,779. Therefore, the incidence rate of the Covid-19 in Mexico as of May 31, 2020, was about 0.069%. Mexico had reported a total number of 216,852 Covid-19 cases as of June 30, 2020, with a total fatality of 26,648 (World Health Organization, 2020). The WHO data indicates that the total number of coronavirus cases in Mexico had exceeded the 2 million mark by April 30, 2021, indicating an incidence rate of about 1.57%.

From April to June 2020, various measures were adopted to stop the coronavirus in Mexico, with most of these measures initiated by the Mexican government. The preventive measures adopted were referred to as Susana Distancia, which translates to maintaining a safe distance (World Health Organization, 2020). The measures were adopted as part of a campaign to remind citizens to keep a safe distance of about 2 meters from one another.  Sixty-five-year-old individuals and high-risk individuals were prohibited from attending public spaces, work centers, and other crowded places.  The country also witnessed the closure of schools in April to stop the spread of the virus. The government embarked on massive testing to obtain a clear picture regarding how the cases were distributed in the country and undertook targeted preventive measures. Mass commuter transit was also regulated to stop the spread of the virus. Large gatherings involving large meetings and large events were also temporarily suspended to curb the spread of the virus (World Health Organization, 2020). Citizens were encouraged by the state to comply with hygiene regulations that involved regularly washing their hands, covering their mouth and nose, maintaining safe distancing, and stay at home orders or seclusion for individuals suspected or confirmed to have contracted coronavirus.

Germany

According to WHO, Germany had recorded a total number of 159,119 coronavirus cases as of April 30, 2020 ((World Health Organization, 2020). The total number of death cases resulting from the virus was 6,288. The incidence rate was about 0.20%. By May 31, 2020, the country had recorded a total number of 181,482 coronavirus cases, with the death cases from the virus standing at 8,500. The incidence rate of coronavirus in Germany as of May 31, 2020, stood at about 0.22%. By June 30, 2020, the WHO recorded a total number of 194,259 coronavirus cases in Germany, with the total number of death cases resulting from the virus standing at 8,973 (World Health Organization, 2020). The incidence rate of the Corona virus in Germany as of June 30, 2020, was 0.234%. The total number of coronavirus cases reported in Germany by April 30, 2021, has passed the 3 million mark with an incidence rate of about 4.22%.

Various measures have been taken in Germany to stop the spread of coronavirus. From April to June 2020, various measures were applied in Germany to stop the coronavirus spread. Social distancing rules were put in place to ensure minimal contact between individuals (World Health Organization, 2020). People were also required to put on face masks, for example, while on public transport or while in shops. Large public gatherings such as religious services, bars, and restaurants were also ordered to remain closed. Schools were closed to stop the spread of the virus among learners. Another measure taken to stop the spread of the virus by the German government was through imposing lockdowns—the lockdowns aimed at preventing unnecessary movements allowing movements only to essential services providers. Through various campaigns, people were also advised to maintain hygiene, such as washing hands regularly (World Health Organization, 2020). The government also increased its testing capacities to enhance targeted preventive measures in the most affected regions of the country.

Compare and contrast the outcomes on the economy and livelihoods in the three countries.

  • Livelihoods approach

The sustainable livelihoods approach is one of the most common livelihood analysis approaches (Decerf et al., 2020). The approach provides a way of thinking that focuses on priorities, scope, and objectives for development activities. The sustainable livelihoods approach highlights how livelihoods recover and cope with shocks and stresses, how they enhance or maintain their assets and capabilities without undermining the natural resources base. The figure below shows the sustainable livelihood approach framework.

Source: (DFID, 1999)

Sustainable Livelihood Approach Framework
Sustainable Livelihood Approach Framework

Figure 1: Sustainable Livelihood Approach Framework

When the covid-19 pandemic happened, it affected the economies and livelihoods of many countries (World Bank, 2020). The lower-middle-income, the upper middle income, and high-income countries have all been affected by the pandemic as far as their livelihoods are concerned. The sustainable livelihoods approach is based on how the poor and the vulnerable people live and the importance of institutions and policies in creating better outcomes.

The livelihoods and economic outcomes in Ghana, Mexico, and Germany due to the Covid-19 pandemic have been devastating (Decerf et al., 2020).  From the time the coronavirus pandemic was reported in each of these countries, they have had to deal with various work, food systems, and public health threats. These threats have brought various economic and livelihood disruptions among various groups of people in these countries. The threats posed by the Covid-19 pandemic on the livelihoods and the economies of these countries have been so disastrous (UNDP, 2020). For example, many people have sunk into poverty due to job losses; others have become undernourished due to failing food systems. Others have experienced challenges health-wise due to the health care system being overwhelmed.

In as much as all the three countries have experienced devastating economic and livelihood outcomes resulting from the Covid-19 pandemic, it’s clear that the level of these outcomes has not been the same among the three countries (World Bank, 2020). The main reason for the difference in the economy and livelihoods outcome levels among the three countries can be attributed to the difference in economic and livelihood strategies used through the institutions and policies available in each country (Decerf et al., 2020). For example, to avert the impact of the Covid-19 shock on food security and general well-being, the three countries have had interventions such as stimulus packages.

Out of the three countries, Germany has achieved more improved food security and increased general well-being outcomes (UNDP, 2020). The stimulus package released by the German government had everyone eligible to access it. However, for Mexico and Ghana, the stimulus packages released were limited to certain groups because their governments could not afford stimulus packages to cater to everyone. For Ghana, the stimulus package was for medium and small enterprises, while for Mexico, the stimulus was as a form of loans to small enterprises. Therefore, it is clear that the livelihood strategies applied by the three countries in dealing with the shocks and threats brought about by the Covid-19 pandemic to the economy and livelihoods of these countries have been different (Decerf et al., 2020). Thus, this has resulted in different economic and livelihood outcomes in the three countries.

  • Drivers and maintainers of poverty

The drivers and maintainers of poverty can also be used to compare the outcomes of the Covid-19 pandemic on the economy and livelihoods in the three countries (Decerf et al., 2020). The drivers of poverty are the things that cause households and people that were not born into poverty to fall into poverty. Shocks are the main drivers of poverty. The majority of the people and households in low-income countries live in risky and dynamic environments and therefore experience high poverty levels. People and households in high-income countries have the potential of being driven into chronic or transient poverty following a shock or a series of non-recoverable shocks. Shock can be classified as either specific or common (UNDP, 2020). Specific shocks target an individual or a household. Common shocks target the whole country, a region, or a community. Maintainers of poverty are the factors that keep an individual or a household trapped in poverty. Some examples of maintainers of poverty include small holdings of livestock or land, low levels of education, geography, and ethnicity.

In the year 2016, the poverty rate of Germany was 0.50%. The poverty rate of Mexico that same year was 7.9%, while that of Ghana was 13.3% (Decerf et al., 2020).  Therefore, this shows that Ghana had most individuals or households being poor among the three countries. Germany had close to zero poverty rates in 2016. The Covid-19 pandemic came as a shock to the economy and livelihoods of individuals and households in the three countries (World Bank, 2020). Considering that shocks are drivers of poverty, it is evident that some individuals and households fell into poverty as a result of the pandemic in the three countries.

Coping strategies are responses to adverse shocks or events. The coping strategies towards the Covid-19 pandemic shock were different in the three countries (World Bank, 2020). Therefore, these coping strategies highlight the differences witnessed in the three countries as far as the outcomes of economy and livelihoods are concerned. A majority of households and individuals in lower-middle-income countries like Ghana and upper-middle-income countries like Mexico live in risky environments, making it easier for shocks such as the Covid-19 pandemic to have adverse effects on the economy and livelihoods (Decerf et al., 2020). However, most households and individuals in high-income countries like Germany who live in secure environments cope easily with shocks such as the Covid-19 shock.

High-income countries are mostly prepared for shocks and have coping strategies already spelled out (UNDP, 2020). Maintainers of poverty such as low levels of education are mostly available in lower-middle-income and upper-middle-income countries, unlike in high-income countries. Therefore, the outcomes of the Covid-19 pandemic, for example, the outcomes on income levels, have been less adverse in Germany than in Mexico and Ghana. Germany has better coping strategies for shocks such as the Covid-19 pandemic than Mexico and Ghana (UNDP, 2020).  Unlike in Germany, the maintainers and drivers of poverty in Ghana and Mexico have worsened the effects of the Covid-19 pandemic on the economy and livelihoods in Mexico and Ghana.

 

  • Poverty traps

Poverty traps are mechanisms that make it hard for an individual, household, region, or country to escape poverty (Decerf et al., 2020). Therefore, poverty traps make it difficult for economic growth to be realized, especially in middle and low-income countries. Poverty traps can be at the micro, meso, or macro level. For the micro-level, poverty traps prevent economic growth at the individual or household level, such as possession of few assets that cannot fuel economic growth. At the meso level, poverty traps prevent economic growth from local market systems at the sub-national level (UNDP, 2020). At the micro-level, poverty traps prevent the economic growth of the national economies. Poverty traps limit opportunities for escaping from poverty.

Poverty traps are mostly experienced in lower-middle-income countries such as Ghana and upper-middle-income countries such as Mexico (Decerf et al., 2020). These poverty traps are mostly witnessed in these countries because most individuals and households in these countries live in risky environments and are prone to frequent shocks and environments that do not have proper coping strategies for the shocks. However, poverty traps are rare or minimal in high-income countries such as Germany because they have effective poverty eradication mechanisms. Poverty traps increase the effects of various shocks such as the Covid-19 pandemic through inhibiting economic growth (World Bank, 2020). The high prevalence of poverty traps in lower-middle-income and upper-middle-income countries is why Mexico and Ghana experienced adverse outcomes due to the Covid-19 pandemic on their economy and livelihoods as opposed to Germany.

 

Conclusion

            The Covid-19 pandemic is a global pandemic that has affected many countries, including Germany, Mexico, and Ghana. The total number of reported cases in each of these countries continues to rise, which is the same case with the death cases due to the coronavirus. However, various measures have been put in place by these countries to stop the coronavirus. The Covid-19 pandemic has had various impacts on the economy and livelihoods of individuals and households in these countries. Therefore, the paper looks at the incidence rates of the coronavirus in Germany, Mexico, and Ghana and the measures that each country has taken to stop the spread of the virus. Also, the paper compares the outcomes of the coronavirus pandemic on the economy and livelihoods of these outcomes through the livelihoods approach drivers and maintainers of poverty and the poverty traps.

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