Economic Resilience, Globalization and Market Governance: Facing the COVID-19 Test

Abstract

The lack of anticipation of a worldwide disruptive event such as the spread of the COVID-19 combined with the breakdown of market mechanisms for the most essential products needed to fight the disease left the governments of many countries unsure of how to react and, often, constrained their ability to make strategic choices. The humanitarian goal of saving as many lives as possible came, in some countries, at the cost of confining the entire population, considered the only option available given the circumstances. The economic cost of such a solution which stand-stilled the economies of these countries and disrupted global value chains is likely to be followed by several years of economic depression that will dwarf the cost of the 2008 financial and economic crisis. In the light of this experience, we revisit some of the implicit assumptions underlying the design of our economic systems and discuss some of the dilemmas and trade-offs faced during this stressful period. The lessons learned could help us better anticipate or deal with future Black Swan events.

Keywords: markets, globalization, health crisis, public policy

JEL Classification: A13, H12, I18, K21, L52, P11, P16