COVID-19 in the Global South: Economic Impacts and Recovery
Research insights from the CEGA network may help inform government and NGO decision-making in the face of the coronavirus pandemic.
This blog, written by CEGA Director of Operations, Lauren Russell, summarizes insights from our June 10 webinar, “COVID-19 in the Global South: Economic Impacts and Recovery.” It is part of a series on how global development research is adapting to the coronavirus pandemic. It is cross-posted on the UC Berkeley Conversations page.
As COVID-19 began to spread — first in China, then in Europe — at the beginning of this year, governments around the world enacted “lockdowns,” closing schools and non-essential businesses, shutting down transport, and imposing curfews. Some of the earliest and strictest lockdown policies were imposed in the Global South, with profound implications for the large majority of households relying on daily wages from the informal economy. The United Nations World Food Programme recently warned of famines “of biblical proportions,” with COVID-19 projected to leave more than a quarter of a billion people in LMICs suffering acute hunger by the end of the year.
On June 10th, 2020, the Center for Effective Global Action (CEGA) hosted a Berkeley Conversation on COVID-19 in the Global South: Economic Impacts and Recovery to explore the economic impacts and longer-term implications of the pandemic in low- and middle-income countries, along with insights that could help governments and NGOs protect individuals and households from falling deeper into poverty.
Ted Miguel (UC Berkeley, CEGA Faculty co-Director) shared the results of weekly phone surveys his research team is conducting in rural Western Kenya, representing some of the most rigorous evidence available in the region on the spread of COVID-19 and its economic fallout. Since the start of the lockdown in early April, Kenyan households have reported significant declines in household income (-25%), consumption (-29%), and food security, with up to 56% of respondents reporting that their children must now skip meals.
Meanwhile, rates of domestic violence have significantly increased — including violence against children which has increased +49% since the start of the lockdown.
Paul Niehaus (UC San Diego, GiveDirectly co-Founder) added that “COVID has turned the world of social protection on its head…the set of people who are now economically insecure and vulnerable is enormous and much bigger than is typical.”
Through a randomized evaluation of nearly 200 villages in Western Kenya — the largest and longest test of a universal basic income in terms of duration and enrollment — Niehaus and collaborators are exploring the effects of unconditional cash transfers on living standards, food security, mental and physical health. They find large improvements in mental health for all cash transfer recipients, as well as a significant reduction in person-to-person interactions outside the household with short term cash transfers (but not longer-term or lump-sum transfers), possibly because people feel less compelled to risk their health and the health of their families to earn a daily wage. These findings suggest that short-term transfers could help dampen the spread of COVID-19 in addition to mitigating its economic impacts.
What else should governments and NGOs consider when designing social protection programs in response to COVID-19? Drawing on evidence from India and Zambia, Supreet Kaur (UC Berkeley) explained the importance of integrating insights from psychology into the design of social safety net programs to sustain their effects over time. Resource scarcity exacts a large cognitive toll on the poor, compounded by limited capacity to plan and save money even under normal circumstances: “People right now are worried about their financial security. This doesn’t just mean that they don’t have enough to eat or can’t afford to send their children to school — it is likely to change their psychological state, crowding out their capacity to focus on other things like decision-making, productivity, savings, health, parenting, and more.”
Kaur presented research documenting that inexpensive psychological interventions — like simple financial planning tools, introduced to beneficiaries in conjunction with cash — can have outsized impacts.
Finally, determining who is eligible for support remains a challenge in countries where reliable and up-to-date information regarding on-the-ground economic conditions is hard to come by, especially during a pandemic. Josh Blumenstock (UC Berkeley, CEGA Faculty co-Director) discussed the potential of high-frequency data from mobile phones and satellite networks, combined with machine learning approaches, to rapidly identify households in direst need.
Blumenstock noted that “these approaches based on big data and machine learning can provide missing and complementary information that, combined with traditional approaches, can help governments more effectively respond to the humanitarian crisis.”
Please visit the CEGA event page or Berkeley Conversations website to view the full webinar, and contact us at cega@berkeley.edu with any questions or comments. If you are interested in learning about the economic impacts of COVID-19 in the United States, please consider registering for “COVID-19 and the US Social Safety Net,” hosted by our sister center The Opportunity Lab on July 1, 2020.
