Chapter 3: The Political Economy of Covid-19

The Spanish flu of 1918–1920 raised concerns among policymakers and public health professionals for the emergence of a pandemic that may kill millions and destabilize the global economy and societies. Medical and policy interventions controlled several terrifying epidemics during the last 30 years, including SARS, H1N1 and MERS, but in early 2020 a new pandemic dawned in Wuhan in China, COVID-19. In this chapter, I present an analysis of the outcome and impacts of COVID-19 thus far from a political-economic perspective.

Political economy is a branch of economics based on the idea that the economic and political systems are interwoven; politicians are economic agents that establish policies to get elected and increase their own benefits. To be elected, they need to improve the wellbeing of their constituency in order to get votes and monetary contributions. As a result, policy choices give different weights to the preferences of various groups. Political-economic outcomes vary across countries and regions, reflecting differences in government structures and socio-economic situations (Alesina & Rosenthal, 1995; Rausser, Swinnen, & Zusman, 2011).