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Professor Cezar Mereuță’s Paretian Odyssey Continues

Professor Cezar Mereuță’s Paretian Odyssey Continues The unexpected results of a research that analyzes two parallel worlds, the economy and the pandemic: 10% of the countries of the world generate 80% of the world GDP, but also 80% of the total COVID-19 contagions

A paradox confirmed by statistical data: the nodal analysis, used in economics to show that the strongest 10% of the players in a market generate 80% of the total sales in that market, also applies in the field of... the pandemic. This is revealed by an analysis made by Prof. Dr. Cezar Mereuță, who, for a year, monitored the parallels between the economic power of countries and the number of infections with the SARS-CoV-2 virus. The result shows that the two indicators are mirror-like: 9.35% of the countries of the world generated 80% of the world GDP in 2019; and 9.91% of the countries of the world accounted for 80% of all the contagions in 2020. Based on the results of the research, Prof. Dr. Cezar Mereuță provided a set of explanations and recommendations. 

 

What were the premises from which you started the research and what surprised you the most in the analysis? Could the economically powerful countries have taken better decisions in pandemic management? 

The premises from which the research of the comparative outlook of the macroeconomic nodal analysis from 2019 and the nodal analysis of the 2020 pandemic started consists of the data resulted according to the interview granted upon your initiative in April 2020. According to the data from that interview, entitled “Prof. Dr. Cezar Mereuță: New challenge for the most powerful leaders in the world”, we had in mind the high share of the G7 group’s contagions, of 58.1% of total recorded contagions, as compared to the share of the same group in the world GDP, which ranged between 42% and 46%. Recall that the G7 group founded in the 8th decade of the last century and consisting of the United States, Japan, Canada, Germany, United Kingdom, France and Italy, which are the most economically and technologically developed countries with consolidated democracies in the world, set out to draw the guidelines for the sustainable development of the countries of the world. In the same interview, an experiment on April 22nd showed a relative similarity between the two types of nodal analyses. I intuited then that this type of relative similarity would also be found at the end of 2020. Obviously, the magnitude of the crisis generated by the pandemic required a more efficient global management, developed mainly by the G7 group. In practice, the G7 group was completely inactive, led by the US President Donald J. Trump, who showed a total minimization of the pandemic, considering it at first as a simple cold (curable with cleaning products!) and claiming by the end of the year that the US is at war with the pandemic and that it will win. The President forgot to mention that throughout 2020 the largest multiple of contagions per 1 million inhabitants as compared to the world average, amounting to 5, which the US had, did not provide the guarantee of winning the war. The results of this inactivity shaped the core of the 2020 humanitarian catastrophe. 

“The pandemic has a slightly higher environment distortion degree than the world economy.” 

In the microeconomic management, in crisis situations we may find a method of laissez-faire management (everyone does as they please) which leads in the vast majority of cases to the bankruptcy of companies. In the case of pandemic, this method was applied. The comparative analysis of those nodal analyses (world economy and pandemic) uses 5 reference quantities: = the mode of framing within the 10 by 80% principle (10% of the number of countries account for 80% of the GDP); = the number of countries that account for 80% of the GDP; = the share of the leader in the total GDP; = the new concentration coefficient of the GDP shares, M; = the degree of structural dominance of the leader, Gdl. With the help of the two coefficients, the matrix of qualitative assessment of distortion of the competitive environment is elaborated. The results obtained on December 31st, 2020, for pandemic as against the world economy in 2019 are the following: 

 

 

 

The pandemic has a slightly higher environment distortion degree than the world economy. These results were an amazing surprise that I personally would have never expected. Such small differences between the quantities of the two nodal analyses and, especially, the fact that pandemic has them higher than the world economy, fully justified the title of the paper, but, at the same time, provided relevant data on the scale of the humanitarian disaster. This is why achieving the greatest success of intuition in my entire career has produced great sadness to me. 

 

What should the G7 do during the run-up to the mass reveal of impact of vaccines? 

From my viewpoint, two actions are currently crucial to significantly improve the pandemic outcomes. = The organization by the G7 group of a team of 5-6 of the best communication experts in the world, who, in a very short time, have to develop the strategy of communication between the state and civil society in the countries of the world’s power structure. The proposal starts from two statements by the illustrious American researchers in the field of world history, Daron Acemoglu and James A. Robinson, the first showing that “the essence of democracy is freedom of appeal”, and the second that the success of a democracy lies in “the consensus between the state and the civil society”. It was obvious that the restrictions generated by the health protection measures affected individual freedom as the foundation of democracy. As a result, the consensus between the state and the civil society could not be obtained through excessively authoritarian leadership, without real efforts to convince population of the need for measures. In this sense, the elaboration of a communication strategy adapted to the situation is absolutely indispensable. Certainly, if this action had been implemented since April 2020, the impact of the pandemic would have been greatly reduced. = The organization as soon as possible, with the unanimous consent of 19 of the 20 countries of the power structure, of a summit where China may provide answers to the following question: which were, concretely, the implemented measures which determined in June 2020 practically the extinction of pandemic in the country with the largest population in the world? The summit should not be concerned with the surge of the pandemic or how it was eradicated in the Wuhan Province, but solely with the answer to the above-mentioned question. At the same time, the Chinese government should agree that a team of independent journalists interview the foreign residents in China in the multinationals and in the group of direct investors. 

“Achieving the greatest success of intuition in my entire career has produced great sadness to me.” 

China has a fundamental moral obligation to the rest of the world to explain how about 20% of the world’s population registered on December 31st, 2020, 87,052 infections and 4,634 deaths, while the remaining 80% of the population registered at the same time 83,965,549 infections and 1,828,684 deaths? The discrepancy is unbelievable. If China does not agree with such a proposal, it might justifiably upset the international community. 

 

What impact could the recent announcement by the European Medicines Agency of the association between the AstraZeneca vaccine and the rare cases of thrombosis have in this equation? 

As it is known, the European Medicines Agency has not revoked the AstraZeneca vaccine due to side effects. Some countries have reduced the number of vaccinations with this product. It is essential that, regardless of the vaccine manufacturer, its side effects are minimized. Otherwise, people’s confidence in vaccines would dramatically drop, with catastrophic consequences. 

 

What are the latest results showing the impact of pandemic on the economy? 

The latest data on the economic outcomes of pandemic were provided by the World Bank in October 2020. The main information is as follows, with reference to the power structure of the 20 countries in 2019 (power structure is determined by calculating the number and the share of the number of countries accounting for 80% of the world GDP). = The only country where GDP growth is estimated is China, with 1.9%. = Regarding the G7 group, the estimates are USA, -4%; Japan, -5.6% (mainly as a result of the presumed cancellation of the 2020 Olympics); Germany, -6%; United Kingdom, -9.8%; France, -9.8%; Italy, -10.6%; Canada, -7.1%. = Significant GDP declines are estimated in: Spain, -12.8%; India, -10.3%; Mexico, -9%. = The rest of the countries in the group of 20 will have decline estimates ranging between 1.5% and 5.4%. 

***

Prof. Dr. Cezar Mereuță is an associate researcher at the Center for Macroeconomic Modeling of the Romanian Academy, an associate member of the Romanian-American Foundation for Education and Culture and an honorary member of the Romanian Academy of Technical Sciences. Parallel Worlds. The 2020 Pandemic Versus the World Economy is the latest work coordinated by Cezar Mereuță, published together with Dumitru Miron, Octavian-Dragomir Jora, Mihaela-Nona Chilian and Carmen Mereuță.

 

Photo by Gerd Altmann from Pixabay.

 
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OEconomica No. 1, 2016