Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth

This paper studies whether containing COVID-19 pandemic by stringent strategies deteriorates or saves economic growth. Since there are country-specific factors that could affect both economic growth and deaths due to COVID-19, we first start with a cross-country analysis on identifying risk and prot...

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Main Authors: Feng, Qu, Wu, Laura Guiying, Yuan, Mengying, Zhou, Shihao
Other Authors: School of Social Sciences
Format: Article
Language:English
Published: 2022
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Online Access:https://hdl.handle.net/10356/161627
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-1616272023-03-05T15:34:18Z Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth Feng, Qu Wu, Laura Guiying Yuan, Mengying Zhou, Shihao School of Social Sciences Social sciences::Economic theory Covid-19 Pandemic Containment Effectiveness This paper studies whether containing COVID-19 pandemic by stringent strategies deteriorates or saves economic growth. Since there are country-specific factors that could affect both economic growth and deaths due to COVID-19, we first start with a cross-country analysis on identifying risk and protective factors on the COVID-19 deaths using large across-country variation. Using data on 100 countries from 3 January to 27 November 2020 and taking into account the possibility of underreporting, we find that for deaths per million population, GDP per capita, population density, and income inequality are the three most important risk factors; government effectiveness, temperature, and hospital beds are the three most important protective factors. Second, inspired by the stochastic frontier literature, we construct a measure of pandemic containment effectiveness (PCE) after controlling for country-specific factors and rank countries by their PCE scores for deaths. Finally, by linking the PCE score with GDP growth data in Quarters 2 and 3 of 2020, we find that PCE is positively associated with economic growth in major economies. Countries with average PCE scores, such as Malaysia, would gain more GDP growth by 3.47 percentage points if they could improve their PCE scores for deaths to South Korea's level in Q2 of 2020. Therefore, there is not a trade-off between lives and livelihood facing by governments. Instead, to save economy, it is important to contain the pandemic first. Our conclusion is also mainly valid for infections due to COVID-19. Ministry of Education (MOE) Submitted/Accepted version Financial support from the MOE AcRF Tier 1 Grant RG162/18 at Nanyang Technological University is gratefully acknowledged. 2022-09-12T07:46:24Z 2022-09-12T07:46:24Z 2022 Journal Article Feng, Q., Wu, L. G., Yuan, M. & Zhou, S. (2022). Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth. Journal of Economic Behavior and Organization, 197, 221-256. https://dx.doi.org/10.1016/j.jebo.2022.02.027 0167-2681 https://hdl.handle.net/10356/161627 10.1016/j.jebo.2022.02.027 35287307 2-s2.0-85127389006 197 221 256 en RG162/18 Journal of Economic Behavior and Organization © 2022 Elsevier B.V. All rights reserved. This paper was published in Journal of Economic Behavior and Organization and is made available with permission of Elsevier B.V. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic Social sciences::Economic theory
Covid-19
Pandemic Containment Effectiveness
spellingShingle Social sciences::Economic theory
Covid-19
Pandemic Containment Effectiveness
Feng, Qu
Wu, Laura Guiying
Yuan, Mengying
Zhou, Shihao
Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
description This paper studies whether containing COVID-19 pandemic by stringent strategies deteriorates or saves economic growth. Since there are country-specific factors that could affect both economic growth and deaths due to COVID-19, we first start with a cross-country analysis on identifying risk and protective factors on the COVID-19 deaths using large across-country variation. Using data on 100 countries from 3 January to 27 November 2020 and taking into account the possibility of underreporting, we find that for deaths per million population, GDP per capita, population density, and income inequality are the three most important risk factors; government effectiveness, temperature, and hospital beds are the three most important protective factors. Second, inspired by the stochastic frontier literature, we construct a measure of pandemic containment effectiveness (PCE) after controlling for country-specific factors and rank countries by their PCE scores for deaths. Finally, by linking the PCE score with GDP growth data in Quarters 2 and 3 of 2020, we find that PCE is positively associated with economic growth in major economies. Countries with average PCE scores, such as Malaysia, would gain more GDP growth by 3.47 percentage points if they could improve their PCE scores for deaths to South Korea's level in Q2 of 2020. Therefore, there is not a trade-off between lives and livelihood facing by governments. Instead, to save economy, it is important to contain the pandemic first. Our conclusion is also mainly valid for infections due to COVID-19.
author2 School of Social Sciences
author_facet School of Social Sciences
Feng, Qu
Wu, Laura Guiying
Yuan, Mengying
Zhou, Shihao
format Article
author Feng, Qu
Wu, Laura Guiying
Yuan, Mengying
Zhou, Shihao
author_sort Feng, Qu
title Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
title_short Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
title_full Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
title_fullStr Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
title_full_unstemmed Save lives or save livelihoods? A cross-country analysis of COVID-19 pandemic and economic growth
title_sort save lives or save livelihoods? a cross-country analysis of covid-19 pandemic and economic growth
publishDate 2022
url https://hdl.handle.net/10356/161627
_version_ 1759857197411467264