Q&A on COVID-19 with Faculty Director Rema Hanna
Rema Hanna is the Jeffrey Cheah Professor of South-East Asia Studies and Chair of the International Development Area at the Harvard Kennedy School. She serves as the Faculty Director of Evidence for Policy Design (EPoD) at Harvard University’s Center for International. Her research revolves around improving the provision of public services in developing and emerging nations, particularly for the very poor.
In light of the global COVID-19 outbreak, Rema provides her expertise as a development economist to answer questions on the economic impacts of a pandemic, like the novel coronavirus, and the resulting effects for developing countries.
See below for a Q&A with EPoD Faculty Director Rema Hanna, conducted on March 25, 2020.
What is the economic impact of a pandemic like the novel coronavirus? Does this differ by country?
The economic impact may be devastating as production, retail, trade, and almost everything comes to a standstill. For developing countries, it will be particularly devastating as they have fewer resources and lower borrowing ability to raise the funds needed to provide the kinds of health and economic support their citizens need, and providing the kind of support that citizens need right now could risk debt spiraling out of control.
In particular, for developing countries, I worry that those who will bear the economic brunt of this will be those who are already poor and vulnerable. This includes small and medium enterprises for whom even a week or two of lost income can destroy their businesses; informal workers, who lack formal worker protections; and poor children who attend schools that will simply shut down rather than “going online” or rely on parents who can “homeschool them”—thus, children who are already vulnerable to dropping out of school may not go back. The list goes on.
What are typical problems facing developing countries in providing public services?
This is a time when we need government more than ever to increase services to citizens. Health services are essential, but we also need massive economic support. Developing countries face a lot of challenges even in normal times to provide public services, because lower tax revenues means fewer resources to deliver services and institutional constraints hamper service delivery.
For example, in the U.S., there is a paper trail of who has a job and how much they earn. If someone loses their job, or earns too little to cover basic needs, the government has the information to verify the employment and wage status in order to provide appropriate help—cash transfers, unemployment insurance, food support, free health insurance, etc. In fact, much of this information collection also runs through the tax system, which provides programs like the “Earned Income Tax Credit” that provides cash back to the poor.
In developing countries, however, many workers are informal or self-employed (e.g. a small business working on a family plot of land); thus, there is no formal documentation. Very few people earn enough to be in the formal tax system, so there is no natural, real-time database of information that the government could use to provide assistance to people when they need financial help the most.
“For developing countries, the economic impact will be particularly devastating as they have fewer resources and lower borrowing ability to raise the funds needed to provide the kinds of health and economic support their citizens need.”
How are these problems for developing countries exacerbated during a pandemic like COVID-19? Are there any quick fixes for governments to provide services in the short-term?
During times of crisis, many problems are exacerbated for governments because many more people need help quickly and at the same time. This is where resource constraints kick in fast. Then, there is also the issue of how to contact citizens in order to figure out who has lost their job and/or business, and how to provide fast assistance.
As for quick fixes, to help with resource constraints, funding bodies such as the IMF and World Bank need to step-up in a large way to increase financial support and loans for countries that are struggling to expand health services and keep their economies afloat.
The first priority in improving service delivery is figuring out how to expand health services and how to do so quickly. How this is done depends on the current situation in each country, as there are vast differences in the health systems across different countries, and within countries across urban and rural areas.
The second priority is ensuring that people have enough to eat and can pay their rent, that small businesses don’t collapse, and so forth. Here, rather than trying to design new programs, expanding current safety net programs might be the way to do this more quickly—agencies can increase amounts distributed and relax eligibility requirements. Governments can also provide free treatment for COVID-19 so that families who face illness don’t plunge into debt to pay for doctors and hospital stays, and they can work with banks to suspend loan payments for small business during the crisis. And, given the particular situation on the ground in each country, the government may also want to do temporary universal cash transfers or, if food shortages occur, help with food distribution.
What is happening with research projects focused on international development, given the state of the world?
Many of us work with large teams who are out in the field working with government and NGO partners, surveying citizens, and so forth. My first concern was making sure our teams were protected and that we were following public health regulation guidelines in each country where we work. This meant that we transitioned our teams to work at home and stopped all field activities.
Once we made sure our field teams were safe, we pivoted towards figuring out how we can help. For me, this means two main activities. First, as a researcher of safety nets and social insurance, I can use my expertise to assist governments that may need advice on expanding these programs during the economic downturn. Second, our research team is determining how we can collect real-time information on economic factors—e.g. job loss, reductions in hours worked, food insecurity—that can help governments make evidence-informed policies that allocate the right resources and services to citizens under these changing conditions.
Follow her on Twitter @rema_nadeem.