COVID-19 and Development: Effects and Consequences

Abstract

This article discusses the subject in two sections: the state of development prior to the COVID-10 pandemic and an analysis of the possible trends in development during the 2020–21 period. The pre-pandemic state of development in the international system was energized by numerous centers of economic activity in the West, Asia and the developing world. At no time in the past, countries had become so deeply integrated and interdependent. In the aftermath of COVID-19, the global economy experienced an unprecedented level of economic contraction, affecting supply chains, labor markets and investment. The decline in economic activities for millions of enterprises will mean that they can neither pay their employees nor manage their debts. The issue of development, particularly for the developing countries, will be overshadowed by the global change in the trends and behavioral patterns of consumption and employment caused by this pandemic. This change will have serious effects on the entire demand in 2021 and beyond. It seems that both households and enterprises will be inclined to increase their savings rates which will naturally have repercussions for investment and consumption. The social-class gaps, poverty, debt and budget deficits will deepen. The importance of information technology and artificial intelligence will intensify. In the post-COVID 19 international system, the role of the government will become more prominent. The interrelationships between the members of the triad “the government, the private sector and the public good” have once again returned to the focus of developmental theories.