Shadow Impact of COVID-19 on Economies: A Greater Depression?
Table Of Contents
- About the editors
- About the book
- This eBook can be cited
- Preface and Acknowledgments
- Table of Contents
- List of Contributors
- Introduction of Gender and the Labour Market: Key Facts and the Trends in Equal Employment (Meltem İnce Yenilmez and Ufuk Bingöl)
- Section 1 Finacial, Economic and Legal Researches for Covid-19
- Challenges for Public Financial Management During the Covid-19 Pandemic: Caveats for Developing Countries (Cansın Kemal Can and Emin Efecan Aktaş)
- Pandemic Transaction Cost and Impact on the Economy (Yıldırım Beyazıt Çiçen)
- Covid-19: It’s Effect on the Turkish Economy and the Stock Market (Dilber Çağlar Onbaşıoğlu & Timothy A. Titiloye)
- Effects of COVID-19 on Financial Reporting in Accordance with IAS/IFRS: An Assessment of the BIST Bank Index in Borsa Istanbul (Mehmet Nuri Salur)
- Effects of COVID-19 Epidemic on Inflation: The Case of Turkey (İbrahim Külünk & Esengül Özdemir Altınışık)
- As Part of the Measures to Address Global COVID-19 Epidemic Evaluation of the Regulation on Prohibitions and Restrictions on Dividend Distribution in Equity Companies (Ertan Demirkapı)
- Section 2 Sector Based Researches for Covid-19
- The Effect of Covid-19 on Turkey’s Maritime Cargo Transport (Özlem Sanrı)
- Suspected Case Management in Air Transport during the Covid-19 Outbreak (Yeşim Kurt)
- Effects of the COVID-19 Outbreak on the Civil Aviation Sector: An Econometric Analysis (Mehmet Ali Polat & Eda Fendoğlu)
- The Contribution of Renewable Energy Resources to the Economic Growth in Turkey and Opportunities for the COVID-19 Pandemic1 (Mustafa Gullu & Zeki Kartal)
- Section 3 : Social Researches on Covid-19
- Psychological and Social Impact of COVID-19 Pandemic on Young Adults: A Developmental Perspective (Petek Akman Özdemir)
- Changing Mechanisms Behind Domestic Violence Against Women During the Covid-19 Pandemic (Hakan ULUCAN)
- Covid-19 Pandemic and Social Responsibility of Companies in Turkey (Aslan Tolga Öcal & Burcu Yerlikaya)
- Individualism and Collectivism During COVID-19 Pandemic (Yasemin Özkent)
- An Individual Strength during the Unexpected Phenomenon (COVID-19): The Power of Happiness at work (Tuğba Erhan)
- Section 4 Political and Regional Researches for Covid-19
- COVID-19 Pandemic and the Attainment of Sustainable Development Goals (SDGs) in Nigeria (Panan Danladi Gwaison & Sunday Ajene Apeh & Musa Danladi Gwaison)
- European Union-China Relations in the Coronavirus Era and Its Future (Omca Altın)
- List of Figures and Graphs
- List of Tables
Dr. Emin Efecan AKTAŞ
Hatay Mustafa Kemal University, Turkey
Dr. Omca ALTIN
Kastamonu University, Turkey
Res. Asst. Esengül Özdemir ALTINIŞIK
Düzce University, Turkey
Dr. Sunday Ajene APEH
Nigeria Police Academy, Nigeria
Assoc. Prof. Dilber Çağlar Onbaşıoğlu
Girne American University, T.RN.C.
Dr. Cansın Kemal Can
İstanbul Medeniyet University, Turkey
Dr. Yıldırım Beyazıt Çiçen
Gümüşhane University, Turkey
Prof. Ertan DEMİRKAPI
Bandırma Onyedi Eylül University, Turkey
Dr. Tuğba ERHAN
Süleyman Demirel University, Turkey
Dr. Eda FENDOĞLU
Malatya Turgut Özal University, Turkey
Dr. Mustafa GÜLLÜ
Eskişehir Osmangazi University
Dr. Panan Danladi GWAISON
Nigeria Police Academy, Nigeria
Dr. Musa Danladi GWAISON
Oswald Waller College of Education, Nigeria
Prof. Zeki KARTAL
Eskişehir Osmangazi University
Dr. İbrahim KÜLÜNK
Düzce University, Turkey
Dr. Yeşim KURT
Kırklareli University, Turkey
Assoc. Prof. Aslan Tolga ÖCAL
Marmara University, Turkey
Dr. Petek Akman Özdemir
Beykoz University, Turkey
Dr. Yasemin ÖZKENT
Selçuk University, Turkey
Dr. Mehmet Ali POLAT
Malatya Turgut Özal University, Turkey
Dr. Mehmet Nuri SALUR
Necmettin Erbakan University, Turkey
Yeditepe University, Turkey
Timothy A. Titiloye
Girne American University, T.R.N.C.
Dr. Hakan ULUCAN
Pamukkale University, Turkey
Dr. Burcu YERLİKAYA
Artvin Çoruh University, Turkey
Meltem İnce Yenilmez and Ufuk Bingöl
The coronavirus has had great impacts on the health of the world’s population. As at April 16, 2021, the number of infections has risen to above 138 million globally, with 3 million deaths caused by COVID-19 (Reuters, 2021). Date-stamping the preceding statement explains to you how serious the virus is. Although several vaccines are being worked on and tested, it is difficult to tell if any of the vaccines can safeguard us from the claws of the virus considering the virus’ ability to mutate; so far the bulk of the COVID-19 cases we are having now are caused by another virus that is different from the initial virus that emanated from Wuhan, 2019.
Coupled with the terrible health consequences, the various policy measures adopted by the world to stop the virus from spreading has caused more harm to the economy than good, which has given birth to a global recession that is as bad as what occurred in the second World War and the Great Depression. The act of trying to stop the virus from spreading by shutting down borders and a good part of non-essential economic activity has been globally worrisome and incredibly quick. As the infections continue to grow, it will be too early to estimate the duration of the economic and health crises, as well as what their long-term effects could be.
The motive for writing this book was to give answers to some of these concerns. Looking at a couple of the short-term effects caused by the pandemic in the early part of 2020, we saw that there was an urgent need for the academic community to produce research results that are time-based, as well as the essence of critically assessing opportunities and policy changes. This book will be bringing all these efforts together. It’s made of a collection of book chapters that have been peer-reviewed, covering fields like resource and environmental economics and policy. It comprises theoretical models, on-time econometric analysis, as well as provoking policy concepts.
Readers will be confronted with three article types in this book: (1) regular, complete research papers; (2) straight to the point sectoral analysis of both the short and long-term of the pandemic; (3) a novel, authored by several people, article put together from other short submissions. This innovative, latter feature ←17 | 18→showcases a curated version of the relevant policy discussions of the COVID-19 impacts on various subfields regarding academics, educators, students, policymakers, and practitioners. The output paper is not technical, with an intention of making it available to policy makers, as well as the entire public.
Generally, this journal comprises various observations on the significance and breadth of the initial impacts caused by the pandemic. The book shows a collection of our policy and academic thoughts, expressing the different research perspectives of our profession. It also spots the several opportunities and challenges that the pandemic has brought to research and policy making, offering different research concepts and rich policy advice. It specifically indicates how economics around the world are shaping the conversation of COVID-19 implications, embracing health, surroundings, and the directions that should be critically looked at when responding to this global issue.
What We Have Learned from Editing This Book?
Many authors are of the opinion that even though this pandemic is deeply disturbing, it should equally been seen as a learning opportunity and a wake-up call to address certain issues. The articles take into account over 500,000 deaths around the globe, millions more affected by the illness, and the large number of people who have plunged into abject poverty, food insecurity and desperation. They noted how communities have lost their basic income source, and how shutting down of borders has reduced migration, increasing the number of people that will need to survive through nature. Simultaneously, the world-scale shutdown has offered scenarios that assist researchers in their study of social-environmental and economic relations; something that ordinarily would not have been feasible. For instance, issues like the relationships between economic production, relationship between nations, logistic, psychological as well as social COVID-19 impact; or how far sudden economic events bring about alterations in attitudes and behaviors towards government policies, can be examined through the eyes of the current situation.
Several articles within this book attempt to understand the links between COVID-19 costs and its economic impact, as well as how the pandemic macro-economic impact have coerced several people in dangerous economic situations to hope on meats in the wild for their sustenance. Considering the close relationship between wildlife and humans, the cause of the globe-based crisis reechoes the significance of research in the future to formulate a healthier understanding of the advanced relationships between livelihood methods, zoonotic diseases, and resource dependence. More developments can be rightly ←18 | 19→anticipated if economics and sociologists work together with epidemiologists and conservation scientists. That the pandemic effect on the quality of the environment and natural management of resources might not be the same for low and middle income nations than it is for richer nations, should not come as a surprise. But, it is a wake-up call that researchers as well as policy makers should focus more on distributional impacts worldwide.
Most of the papers here draw similarities to the financial crisis that happened in 2008–2009. But the depth and scope of the effects of this pandemic makes it bigger. With huge unemployment, rising government debt, increase breakdown of international cooperation, internal and international trade network disruptions, some food network disruptions; the pandemic shares several characteristics for the previous economic crises and armed conflicts, natural disasters, and political shocks. This has become a litmus test for the various political ideologies, as well as the abilities of countries to cooperate and coordinate. They can emerge to be particularly essential for the various stimulus packages geared towards getting everyone back on their feet and on track. To reduce the possibility of any rebounding effect, there needs to be a level of effectiveness in policy coordination. But, as some papers debate, cooperation or coordination has remained difficult but not elusive. As such, we cannot help but imagine if the current pandemic will resort to more individualism and protectionism, or if world leaders will want to work together. This question equally has serious repercussions regarding how nations are cooperating with one another to tackle issues like international pollution spillover or climate change. Would this pandemic help leaders understand that global challenges require a global solution?
With many nations and international organizations having shown the capability to mobilize, as well as the readiness to implement drastic measures in curbing the virus from spreading, accompanied by advanced level of economic support to those who have been affected should give us some glimmer of hope.
We agree with several authors that the need for a sustainable economic stimulus offers a chance to introduce the necessary green transition that is needed to handle the long-term environmentally related challenges like climate change which threatens people and national economies worldwide. The size of present and future fiscal interventions can be such that when fiscal policies are strategically deployed, more effective green-based economic activities are activated, and this could bring about a huge shift towards canceling out the risks posed by fisheries/ocean collapse, climate change, and habitat as well as species losses.
A lot of similarities have been noticed between climate change and this pandemic. They both involve externalities that require us to reconsider the way we ←19 | 20→handle welfare, growth, and trade. However, there are significant differences between both. No serious measures have been adopted for addressing the issue of extremely high temperatures. Rather, even with the steady warnings, actions have been somewhat delayed. As economics, we love to know the differences existing between both problems, understanding how the debate of climate change can be re-positioned to better explain the risks involved.
The calls by the society and academics for rescue efforts to be combined with green transition have been very encouraging, with everything highlighted here. But, the current economic recession succeeding the health pandemic has altered the research scene for economic policy instruments. If taxes on carbon is only perceived by the public as a way of reducing wage income as well as increasing the risks of work opportunities, it will be more urgent to advance and explore what we know regarding the real carbon pricing implications in the labor market. To get stronger social support of carbon prices and policies for environment-based transition, a more serious contract showing more involvement of citizen is needed for changes like that to be accepted and also important for giving more strengths to the social norm necessary for internalization of decentralized externalities. The issue of international cooperation regarding whether crisis will reduce, or create incentives for carbon policy internationally.
For science, economics, and sociology, such uncertainties can be troubling and highly stimulating. In the following pages, a healthy summary of research agenda and ideas awaits discovery. We are optimistic that readers will find early results that are interesting, they will be inspired to come up with new research ideas, while taking note of every policy opportunities and challenges lying ahead.
We understand that coronavirus will lose its traction, but not without leaving some economic scars and lasting concerns.
Cansın Kemal Can and Emin Efecan Aktaş
Challenges for Public Financial Management During the Covid-19 Pandemic: Caveats for Developing Countries
COVID-19 pandemic is currently challenging the public financial management in every country and apparently, it will have a permanent impact on the fiscal status all over the world. Besides, the detrimental effects of the COVID-19 on the public finances of the countries are as contagious as the virus itself. Despite the fact that almost every country in the world applied lockdown policies in every respect, the deleterious economic outcomes of the current pandemic are also viral.
In a recent study, Ma et al. (2020) have set up an econometric model to test the trajectory of the growth rates in several countries in post-health crises periods in history so as to analyze the economic effect of COVID-19 in a comparative manner. They include some epidemics such as 1968 Hong Kong flu, H1N1 (2009), Ebola (2014), Zika (2016), SARS (2003), etc. in their model. According to their findings, the COVID-19 is further-reaching than any other health crisis so far. Besides, they find out that the fiscal stimulus has a strong influence on the recovery performance of economies facing a health crisis.
For this reason, every country in the world is currently at the onset of experiencing a severe fiscal breakdown and the fiscal authorities should consider implementing a new set of policy alterations as swiftly as possible to avoid looming fiscal turbulences which might lead to further deterioration in the economic performance in each country. Skyrocketing health expenditures, government bailouts for firms, and financial aids to citizens during lockdown are the major potential sources of fiscal distress along with the maturing public debt which has to be rolled over with new funding and shrinking tax revenues as a result of slowing economic activity due to general lockdown in the countries.
According to del Rio-Chanona et al. (2020), around 81 % of the total workforce of the entire world has been influenced by the pandemic through either permanent employment losses or furloughs. In addition, according to many authors including Muellbauer (2020), consumer demand and thereby spending has fallen dramatically which is very likely to lead to a significant downturn ←23 | 24→in economic activities. Since the outbreak of the COVID-19 pandemic, fiscal troubles have appeared to be the major concern for the economies regardless of their economic status. The pandemic appears to lead to fiscal apprehension in developed as well as developing countries without exception. Healthcare systems in every country experienced unprecedented distress in the last couple of months which inevitably brings about instant and excessive fiscal burden on the economies. In other words, the pandemic has reduced the fiscal space in every country dramatically. Coupled with the fall in the tax revenues, these heightened expenditures gave rise to a deterioration in the fiscal sturdiness in every economy. In addition, the rescue packages needed to alleviate the current socioeconomic turmoil have to be implemented swiftly which is another source of immediate fiscal distress for the economies. Given the urgent nature of the current social and economic environment, the design of those rescue packages was carried out under severe financial and administrative constraints which is another hindrance for the implementation of the fiscal packages thoroughly. These challenges pertaining to the very nature of the current economic atmosphere largely prevented the governments from diverting the resources to the fields with higher productivity and higher economic multipliers which is a secondary economic impact of the recent pandemic (Hepburn et al., 2020: 3–32).
Also, as a consequence of the intensifying fiscal pressure, a severe debt crisis is very likely to unfold both at global as well as local levels. Tiftik et al. (2020) reveal that at the end of 2019 the global debt/GDP ratio hit a record high level of % 322. Apparently, at the end of 2020, the global debt ratio will reach a level well above this level due to a large fall in GDP coupled with immediate borrowing conducted by several economies in the world. Moreover, the global debt is also seemingly unsustainable since the maturities are mostly short and the credit ratings of the sovereigns are low for most countries.
In addition, diminishing fiscal maneuverability will undoubtedly have impairing effects on the debt profile of the countries as they were mostly caught off-guard by the pandemic lacking sufficient financial capacity to cover the mounting fiscal burden during the recent months. As the surge in public expenditures in every country is beyond their budgetary capacity, fiscal authorities are now confronted with the risk of excessive borrowing (Fornaro and Wolf, 2020: 1). In most countries, the accumulated debt is already way above sustainable levels, and therefore overborrowing as a result of financial pressures generated by the COVID-19 pandemic will further increase the level of indebtedness in most countries. The potential risk of default especially for developing countries will mount dramatically which might trigger a global financial crisis in the near future.←24 | 25→
The immediate need for borrowing in most countries is likely to generate a new financial environment and the international financial institutions will play a key role in the aftermath of the pandemic as they will be impelled to offer large bailout schemes to developing countries as well as intensive debt relief programs. In order to preserve fiscal stability, despite the ongoing impairing effects of the COVID-19 pandemic, the governments and international fiscal authorities should consider potential scenarios regarding near future and take actions to implement required precautions in a timely manner in order to avoid devastating economic effects of the current pandemic (Baldwin and di Mauro, 2020: 6).
In view of these arguments, it is the very purpose of this paper to overview the potential risks which are likely to impair fiscal balances once occurred and to offer some caveats regarding the possible actions and precautions which can be taken by the governments to bypass the unpleasant fiscal conditions which are likely to appear in the near future. Even though it has been only a short while since the outbreak of the pandemic, the fiscal deterioration is discernible in every country and developing countries are more vulnerable to fiscal shocks than advanced countries. According to Stiglitz (2020), in order to bypass the economic tornado of COVID-19, the governments need to implement rigorous fiscal management. Hence, in this paper, our goal is to compile caveats regarding fundamental aspects of fiscal management required to minimize the detrimental effects of impending fiscal crisis. Prior to the caveats, the emphasis is placed on the global economic outlook before and during the COVID-19 pandemic.
2 Global Economic Outlook before and during the Covid-19 Pandemic
The pandemic has brought life to a halt all over the world, and societies have been dragged into an isolated life with restricted or completely imposed lockdowns. The isolation of social life has also caused irreparable wounds in the sequence of production. Many countries find it difficult to maintain the continuity of the production chain. However, the first areas affected by social isolation are the retail and service industries. Oil prices decreased significantly at the beginning of the pandemic with the decision of Saudi Arabia, which led OPEC to increase production after a disagreement between OPEC and non-OPEC countries on cutting additional production. The world’s largest stock exchanges have experienced the biggest declines of recent years. The shares that experienced the highest decrease due to the impact of oil price shocks belong to ←25 | 26→the oil companies (Yorulmaz and Kaptan, 2020: 24; OECD, 2020a: 6–11; OECD, 2020b: 22–43).
Since the starting point of the COVID-19 is China, and especially due to the international dependence on China for intermediate production goods, production has been disrupted worldwide. Thus, the importance of diversity in the procurement of intermediate goods has proven important in order not to interrupt the production chain. The first impact of an interruption of this sort on the world markets manifested itself with the sudden loss of value in the stock markets. China’s competitive, low-cost and non-transparent economic structure which is open to public intervention makes it unrivaled in intermediate goods production in the world. The COVID-19 pandemic, which coincided with the days when the global economic system built on liberal policies was inadequate to combat such a unique system, reignited these debates with an even higher intensity and exacerbated the economic performance all over the world.
Currently, in the world economies where the destructive effects of the pandemic continue, the governments of many countries sooner or later have taken urgent and effective measures after the outbreak of the Covid-19 pandemic. Countries are currently trying to minimize the impairing effects of the pandemic with expansionary monetary and fiscal policies by announcing emergency rescue packages are trying to manage the process with the least damage (Yorulmaz and Kaptan, 2020: 24; OECD, 2020a: 6–11; OECD, 2020b: 22–43).
- ISBN (PDF)
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- Publication date
- 2021 (August)
- Berlin, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2021. 322 pp., 26 fig. b/w, 30 tables.