The Economic Impact of Border Controls and Lockdowns

The Economic Impact of Border Controls and Lockdowns

Introduction

COVID-19 is a pandemic that has both social and economic effects in many nations. It has dramatically changed the perception of people and how they approach various operations within the environment. For the first time, many parts of the world have realized that working from home is possible and that people can live without a traditional work setup. In this perspective, standard work setup refers to working up in the morning to catch or board a bus, for example, to work and commit yourself to work assigned in the letter of offer. However, with COVID-19, many have realized that working from home is possible and making other human activities operational.

The rate of infections and deaths has been soaring, and this has negatively impacted the labor market. People who could contribute positively to the development and growth of the economy have succumbed. In contrast, others have been injured and can no longer operate their businesses and other employment forms. The infections digits have tripled and exacerbated, and many people have lost their jobs and other sources of their livelihood. The situation has rendered several people in the informal settlement to live below the poverty line. The impact has reduced the people purchasing power, which has trickled down to the general economic growth.

Research Essay Overview

The pandemic has weakened the health systems in many nations, and several people are negatively affected due to the inaccessibility of various health services. The other parts of the economy that have been affected include the infrastructural systems, inaccessibility to the essential commodities of life, such as clean water and sanitation aspects, among others. However, with the infectious disease at hand, several inventions and creativities have been witnessed. The innovations aim to provide immediate solutions to the affected even before a long-lasting cure of the disease is found. Within the information, communication, and technology industry, a contact tracing app was invented, and its success is depended on how adequately it is implemented to carry out its function (Thomas, Michaleff, Greenwood, Abukmail, & Glasziou, 2020).

The app invention is part of the government initiative to curb overcrowding and extreme movement of the victims. The sole purpose of the application is to trace COVID victims’ movement and reduce the chances of the affected from mingling with other individuals within the economy. It is aimed at reducing physical contact with the affected areas with significant infections. It should help identify locations with a lot of human traffic, such as recreational centers, education, and other academic institutions, social and public events. The government realized that the App was not serving its full mandate of adequate contact tracing and eliminating the affected from unsuspecting victims.

To curb the App’s inefficiencies, the government then introduced the dusk-to-dawn curfew to limit movements and discourage people from gathering and crowding in social places such as restaurants, clubs, academic institutions, and other social and recreational areas. The dusk-to-dawn curfew is also aimed at increasing the social distancing between individuals while maintaining the highest; the level of hygiene. However, dusk-to-dawn has a tremendous negative impact on the economy. This is because major contributing sectors of the economy remain closed during the curfew times. During this time, many business activities remain idle and contributing, not revenue to the government hence retarding the level of economic growth.

The precautionary measures harm many businesses’ operations, such as factories, industries, and other manufacturing institutions. Many people have been disabled and can no longer maintain their regular spending and expenditure. A lot of pay cuts have been witnessed. During the times of pay cuts, the citizens have less income to put under consumption. Less disposable income reduces the aggregate demand for goods and services, forming part of the foundations of a healthy economy. Therefore, less disposable income reduces economic growth and less gross domestic product from various nations. The economic growth can be measured through improved living standards, access to better jobs, adequate infrastructure, better educational system, better trade, and efficient monetary and fiscal policies that will enhance the wellbeing in the market (Lee, Sneddon, & Gerrans, 2020).

However, the shocks experienced due to this pandemic are short-term, and the economy is developed back to normalcy after the successful elimination of the infectious disease. Other sectors that have been affected negatively include transport, labor market, food security, financing, and the housing sector, among others (UNDP, 2020). The United Nations Development Program has therefore initiated a team of 131 country teams that are serving and responding to the needs raised due to COVID in over 162 countries globally as part of the humanitarian response plan.

Economic Models

The theoretical construct developed to analyze the movement of people using the App did not have much impact. There could be several reasons as to why the goals of contact tracing using the application did not give a lot of positive feedback. The situation could have been contributed by inadequate information and awareness about the functionality of the application. The installed and fitted model in the App might not have collected the data in the right format that could be interpreted by its users. Its esteemed users did not understand the functionality of the App. It was rendered ineffective because it could not tell the economic behaviors of the subjects accurately.

On the other hand, it appeared a bit complex for the metrics of the real-world situation. The model could represent the data in the form of computer programs, visualized patterns such as graphs and charts, mathematical expressions, and calculus equations, among others. The visualization could have the potential of providing a literal understanding of the economic data.

Other issues of great concern and how they would impact the economic situation include client data or information privacy. The application had no intention of requiring its users to sign non-disclosure agreements, which could have led to its substandard implementations across many nations of the world.

Economic Policies and Critical Analysis of Relaunching COVID Safe App

Monetary Incentive

During the App’s launch, several people had downloaded the application, but some practical issues were realized. The problems negatively affected the uptake of the application, and it provided great turmoil to the government to find an alternative of tracing the people who had contacted the disease. From an economic point of view, people expected up to have some benefits. Some of the services included monetary incentives such as tax discounts for those who had formal jobs, and even the people working in the informal sectors. The users expected the COVIDSafe App to function the same way as the Tax Break Apps or the tax registration Apps. However, the App did not meet such expectations, and therefore many people shied.  Other monetary incentives that were never met included the ability of the App to pay fines that had been accumulated in the past as well as its simulation effect on the users, for example, habit formation in the long-run (BYRNE, HOLDEN, & MILLER, 2020).

Behavioral Economics Approach (Non-Monetary Incentive)

There was a perception of change in behavior regarding the use of the App. Many people thought that their bios or personal details such as age, contact details, health statuses, names, passcodes would be disclosed to the unauthorized person. Therefore, they resorted never to use the application, and these behaviors negatively thwarted the success and goals of launching the application (Australian Government Department of Health, 2020). From the behavioral economist perspective, whether to use the App or not is based on personal initiatives. It assumes that people are rational individuals that would always consider decisions that would, in one way of the other, directly or indirectly benefit them. There are psychological issues associated with the application, and different people have diversified views as to its importance in the fight against COVID-19. Therefore, it gives citizens a nudge that makes them apply rational decisions regarding the safe App (Hawkins & Freyens, 2020).

Conclusion

The use of the COVIDSafe App can be increased by creating awareness about its importance to the intended users and explaining how effective the data collected will be fighting the pandemic. These App’s significance can be seen and felt in terms of having access to collected and processed data that can be applied to combat the lethal menace. On the other hand, it should be in a position to provide the trend, a forecast of prediction of the future numbers based on the collected and processed information (Digital Transformation Agency, 202). Increasing more awareness would enable more people to download and use the App from the current 40% to a higher percentage as predicted from an economic perspective. The understanding should revolve around ensuring that people realize the App’s primary responsibility in response to coronavirus (Meixner, 2020).

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