COVID-19 and Peace: New Report Highlights Economic Impact and Implications for Nation Brands

What has been the impact of COVID-19 on the global state of peacefulness? Which factors can we determine as having the greatest impact on nation brands in terms of perceptions of peace? We caught up with Paulo Pinto, lead researcher on the COVID-19 and Peace report at the Institute for Economics & Peace.

Paulo, which finding of the COVID-19 and Peace report did you find most intriguing?

The most intriguing finding was a disconnect between the rate of infections and countries’ level of socio-economic development, as measured by Positive Peace. Most epidemics, like Ebola, Cholera, Dengue, Measles, Meningitis, Yellow Fever, Zika and others take place among countries or regions of low to medium socio-economic development. This is most likely because highly developed countries tend to have better nutrition, sanitation, health care, medical research and emergency response systems.

However, in the first half of 2020, COVID-19 spread quickly among highly developed nations, such as Italy, Spain, the UK, the US, Germany and France. This may at least in part be due to high levels of air travel in these countries. As we state in the report, air travel may have been an important vector for the quick spread of this virus in the first stages of the pandemic. After the disease jumped out of China by air travel, local – or community – transmission started in earnest. This happened not only in the above-mentioned countries but also in places like Brazil, Russia, Iran and India.

Another very intriguing pattern in the data is that the global number of new cases has continued to rise – from 100k/day in May to 200k/day in early July. However, the number of COVID-19 deaths stayed broadly flat at 4.5k/day in this period. If this is not a data error, it means the death rate has been declining steadily, as hospitals find more effective ways to treat the disease.

Which countries and regions are foreseen to have the greatest impact on Positive Peace due to COVID-19? 

COVID-19 has two major impacts: humanitarian and economic. The humanitarian crisis (deaths and health sequelae) of COVID-19 is substantial and regrettable. But as we pointed out in the report, it is still small in comparison with other global scale but less visible problems – such as hunger, cardiovascular diseases and even suicide.

In terms of the economic impact, the countries that are most likely to see deteriorations in Positive Peace are Italy, Greece, Brazil, South Africa, Poland, Latvia, Slovakia and Hungary.

Given new developments since we launched the report, we could add to this list the US, the UK, India, Russia, Singapore, Spain, Argentina,Mexico, Peru, Chile, Colombia, Pakistan and Iran.

Which tools can countries, regions or cities use to minimize hostility towards foreigners, as tourism begins to restart?  

Our research shows that social attitudes – including towards foreigners, minorities etc. – are very hard to change. We have detected a global deterioration in attitudes over the past decade, despite improvements in economic conditions, economic infrastructure, health and technology (See Positive Peace Report 2019, pages 28 to 30). ‘Hostility to foreigners’ was one of the indicators of Positive Peace that deteriorated the most over the past decade.

Some tools that can be used when tourism restarts are education and marketing campaigns highlighting the importance of visitors to local economies. Not only in the tourism and hospitality industries but also in transport, real estate and other industries. And that these inputs will trickle through all sectors eventually.

Which aspects of peace were most heavily affected by COVID-19, and what are the necessary steps in recovery planning?

The most affected aspects – or pillars as we call them in the report – were Good Relations with Neighbours (GRN) and Sound Business Environment (SBE). A recovery in GRN will need the resumption of travel and tourism, but this will only be achieved if a vaccine is found or if treatment continues to improve and death rates continue to decline. Without this, it is difficult to envision a scenario where GRN will return to pre-pandemic levels.

SBE will only recover completely when the unemployment rate is back below 7 or 6 per cent in most developed countries. This may take multiple years or perhaps a decade or more to achieve. The US unemployment rate has now jumped to 13 per cent, from below 4 per cent late in 2019; assuming historical improvement patterns in unemployment, the US unemployment rate would only return to 4 per cent after 2030.

In the planning and recovery stages, countries and industries will need to become more self-sufficient.

Over the past 20 years, developed nations outsourced manufacturing and some food production to other countries, with their local industries being negatively affected. COVID-19 showed that this was imprudent. Companies and entire industries have sought to become increasingly ‘efficient’ and failed to factor in the possibility of logistic and operational disruptions.

There are almost no redundancy systems; no safety buffers; no ‘plan-Bs.’ In manufacturing, this is manifest in the risky ideas such as ‘just-in-time’ and other techniques where operations are run almost without inventories or substantial safety margins.

In finance, shareholders and private equity firms force companies to ‘work their lazy balance sheets’, reduce cash buffers and equity capital cushions. This was a key reason for wide-spread corporate failures in the Global Financial Crisis, and the same story is repeating itself now. This mind-set needs revision.

The possibility of global and regional logistical and operational disruptions will have to be incorporated to the future price of goods and services. In fact, many governments and industry groups are calling for the re-industrialization of their economies or a partial repatriation of industrial capabilities.

What is the methodology behind the COVID-19 and Peace report? 

The COVID-19 and Peace report was based on IEP’s Positive Peace methodology, as described in the Positive Peace Report 2019, page 84 onwards. To that, IEP added the analysis of leading indicators of economic activity available at the time of writing and editing (March to May 2020). Those indicators are discussed throughout the report.

Many more data visualisations and analytical discussions were prepared but did not make the final report. However, this extra material helped IEP test ideas, challenge findings and consolidate the views made public.

Thank you, Paulo.


For details on the methodology and results of the most recent study, visit visionofhumanity.org.

Curious about how different countries compare in terms of their sustainability, attractiveness, brand strength and reputation? Find out in our country observatory.

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The Editorial Team

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