SEATTLE, Washington — On a global scale, COVID-19 has threatened to push half a billion people
back into poverty, prompting policymakers to consider crafting an international COVID-19 relief package. While such legislation would deliver necessary global aid, it would also provide several economic benefits for the United States and the global economy overall.
The Design of an International COVID-19 Response
In May 2020, Senate Democrats introduced the International Response and Recovery Act
. While it was never passed, this bill proposed $9 billion of financial support to be issued to the United Nations Global Humanitarian Response Plan, the fight against malaria and AIDS and the Coalition for Epidemic Preparedness Innovation, among other international efforts. It also supported a World Bank trust encouraging nations to adopt pandemic response programs and urged the U.S. International Development Finance Corporation to fund international investments.
It is impossible to know if policymakers would refocus on the past legislation or draft a new bill altogether. However, similar to the past legislation, it is very likely that international COVID-19 relief would feature funds for the clinical and financial recoveries of the global population. This type of response would offer immediate relief to a struggling international community and would also provide three key economic benefits as the United States looks to move beyond COVID-19.
1. Save Vital Players in the Global Economy
To be most effective, the United States would have to distribute the funds that compose any sort of international COVID-19 relief to countries that are most disadvantaged by the pandemic. As noted by the Atlantic Council, developed markets have had the capacity to compose various stimulus plans
in order to survive economic downfall. Developing countries, on the other hand, have been left in fiscal need.
Additionally, emerging markets in developing countries represent some of the fastest-growing economies
, consistently serving as sites of investment for some of the world’s largest companies. For example, Guyana, a middle-income country in northern South America with a booming oil industry, was reported by Nasdaq to have the world’s fastest-growing economy before the pandemic. Likewise, before the pandemic, Bangladesh was projected to expand its GDP from $287 billion to around $500 billion by 2024.
It is no stretch to say that emerging markets are one of the most vital pieces of the global economy. Altogether, emerging markets
compose one-third of the global gross domestic product and were projected to compose half of the global gross domestic product by 2030. By supporting the recovery of these developing nations, the United States could support the recovery of important international trading partners and the global economy as a whole.
2. Invest in the Global Economy Post-COVID-19
While in the aftermath of the pandemic, investors may favor developed markets
but emerging markets will eventually be rebuilt. If anything, the pandemic has exposed reasons to diversify the post-COVID global economy and many experts predict markets to be rebuilt in a way that prioritizes a more diverse supply chain. As noted by the World Economic Forum, the lockdown has exposed flaws in relying so heavily on China as a global supplier and may give emerging markets such as India, a chance to excel in a more diverse supply chain
. As the global economy rebuilds, international COVID-19 relief could serve as the foundation for an economic relationship with emerging markets as they take on new roles in the supply chain.
There is also evidence that aid programs can directly stimulate the economies of emerging markets. According to the U.S. Global Leadership Coalition, aid programs such as Feed The Future, played an important role
in helping the agricultural market in Liberia recover after Ebola. As reported by USAID, the Feed the Future Ebola Recovery Partnership
focused on providing farmers with effective technologies for recovery, connecting farmers with investors, and rehabilitating destroyed infrastructure. Currently, Feed the Future is doing similar work to help stimulate productivity in Bangladesh’s post-COVID-19 agriculture sector.
Ultimately, aid programs like these show that international COVID-19 relief has the potential to be an investment. International assistance allows the United States to look beyond COVID-19 and support markets and economies that will soon become key economic players.
3. Protect U.S. Jobs
As previously noted, emerging markets represent some of the fastest-growing economies in the world. While they are hubs of investment important to large corporations, they are also extremely important to small businesses as export locations. According to the U.S. Chamber of Commerce
, “98% of the roughly 300,000 U.S. companies that export are small and medium-sized businesses and they account for one-third of U.S. merchandise exports.” The consequence of supporting international trade so far has been U.S. job growth
with one in every five U.S. jobs being tied to the export industry. Any further international assistance therefore could potentially serve as a valuable investment in the U.S. job market.
Finally, the consequences of not acting could potentially be dramatic. The Atlantic Council suggests that lack of a sufficient response from countries like the United States could result in global instability
, possibly including migration, protests and resurgence of military groups. Such a global state of unrest could mean an economic fallout that is far worse for the United States and the rest of the world than that caused by the COVID-19 pandemic alone.
As COVID-19 threatens to reverse decades of work in global poverty reduction, international COVID-19 relief could play a crucial role in saving the world’s poor. As is common with so many poverty reduction efforts, it would also serve as an investment in the United States’ economic future and the future of the global economy.
– Michael Messina