How should policy wonks prepare for post-Covid economy? For many, this subject may be a little too soon to talk about considering that there still are risks of second and third wave of the pandemic as is evident from France and England. But because fortune favours the prepared, and because existing trends and policy actions during Covid will invariably come to dictate global and local post Covid economies, it is a subject that warrants a series of discussions.
The likes of Mark Twain have long advised ‘never to predict anything, especially the future’. The business of predictions forces humility upon forecasters; just look at what cultural, economic, political, social, technological predictions were made for 2020 in the year 2010. Then again, it’s a part of being human, and so we try, even as the predictions fail nearly all the times.
At the meta level, perhaps the biggest trend to watch out for is the temptation towards autocratic model of governance. China’s success in managing the pandemic in comparison to the US got a lot of people talking about the benefits of big governments and autocratic regimes at a time when anti-democratic politics had already been on the rise in nascent democracies and emerging economies. What is often forgotten though that it is the state’s capacity that matters, for not all authoritarian regimes are as effective as China’s and not all democracies are as messed up as the USA under pandemic emergency.
This is an era when technology has advanced to the degree that it can help achieve the ideals of direct democracy and deliberative democracy nearly as much as it can help authoritative regime achieve their dystopian ideals courtesy advancements in the intrusive bio-tech. The direction in which the camel chooses to sit will have repercussions on global economies, international coordination on matters of trade and investment being one example. Or for example, nationalistic policies that may lead countries to chose food security over trade.
Nationalism and authoritarianism, regardless, the production, consumption and trade of food is likely to change post Covid. If Covid boots out increasing number of people from job market, the demand for staple food crops can be expected to rise to feed the population. This may lead some countries to limit food exports, and some to shift to staple food crops for export purposes but resultantly leading to lower production of the crop being replaced. There could always be yield improvements but those aren’t overnight solutions.
A prolonged pandemic may also lead to a fall in eating out culture whilst increasing the demand for packaged food, including lab grown food such as lab grown meat and milk. Localism may also find its way in food sector, where urban farming courtesy hydroponic farming and roof top farming techniques are some of the key trends to watch for as these too have the potential to change land use for crops as well as trade patterns.
Near shoring will also be a visible feature of post Covid economy. Helped by 3D printing, automation in factories, and 5G, near shoring had already begun before Covid struck global economy hard. After Covid, as countries invest further in technologies and tech-based business solutions, expect countries to diversify their supplier base where given the fragility of supply chain, preference is likely to be given to near shoring prospects. In some cases, this may help some of Pakistan’s industries, but in the case of many other industries, perhaps not so much – not unless Pakistan takes a great leap forward towards tech adoption and innovation. This will affect both trade, and investment flows.
Real estate is another area of economy that can expect change. Companies such as Twitter and Careem are becoming remote-working companies, as are many large accounting firms. Even back offices of global oil and gas companies are moving toward work from home models, where at least two Pakistani conglomerates, according to BR Research sources, are evaluating options of moving to smaller office places, and shifting at least a third of staff to work from home and a third to smaller satellite offices and/or co-working spaces.
These developments will have implications on both construction and banking industries whilst requiring investments in laptops, smart phones, broadband and other technologies as well investments in agri-tech, health-tech, supply chain solutions and all other forms of start-ups beyond intermediaries.
On the whole, expect inequality to remain a dominant theme in the post Covid world. The stage was set well before Covid arrived on the scene but when millions of people lack medical coverage, or are jobless, whilst selling assets at cheap prices to cash rich affluent class, inequality will likely be a key lens from which policy wonks will have to see the world whilst making public policies or tweaking macroeconomics. To that end, social registries, business registries and other tools of statistics and documentation can be expected to gain traction as governments try to better target their handouts and incentives.
Of course, much depends on the scale and duration of Covid-19 and the nature of its impact on global and local economies, whereas Pakistan may be seriously lagging behind in many of these developments. But the stage has been set for a flurry of changes to happen once the storm settles or even perhaps during the storm if it continues any longer. And the human inclination to grasp existing set of ideas means that tech and tech-based solutions will drive change.
Economists, public policy and political economy stakeholders would do well to be cognizant of this at all times, whilst taking action or analyses and forecasts thereof. This is because these developments may not only cause change in trade and investments, or avenues of growth, but also perhaps in the way economic indicators are measured; for instance, prices of home delivered food/other goods, co-working spaces, smartphones, laptops may have to be tracked in the next round of CPI rebasing. One hopes that debates and discussions on post coronial economy will begin soon in Pakistan.
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