TheMarketForIdeas

A month ago, in the first episode regarding the pandemic, we identified the fact that the structural distribution of the spread of SARS-CoV-2 virus throughout the countries and autonomous territories of the world fulfils all the standards of the nodal analysis. The single difference from similar distributions in the case of world’s gross domestic product is the higher degree of concentration in the case of the pandemic. 13 countries, i.e., 6.19% of the number of countries and autonomous territories, cover 80% of the total number of infections.

The pandemic plays the part of a parallel world, which seems to push the countries of the world into a “strange” competition, as if they were competing to get as much contaminations as possible.

Given the above-mentioned issues, I decided to continue to apply the methodology of nodal analysis in its microeconomic approach, which comparatively investigates the markets in terms of economic concentration. We chose for the comparative analysis the study of the structural distribution of the six continents, in the hope that they will explain the high inequality of the global structural distribution. The results are presented in the table below: 

The detailed analysis of data in the table above signals three very important paradoxes:

1. The first paradox is the very large share of the USA in total contamination, of 30.83%, which is 1.92 times higher than the sum of the shares of the leaders of the other five continents. The current USA administration has proved incapable of managing a credible and coherent program to reduce contamination, amid the resistance of the population towards imposing limitations on individual freedoms. An example that unequivocally demonstrates the above-mentioned statement is the comparison between the number of contaminations of the USA and India, the largest democracy in the world. India, with a population about 4 times larger than the USA, registered a number of contaminations of 2.44% of the total!
2. The second paradox is the low number of contaminations in Asia. The continent with about 45% of the world’s population covers only 17.43% of the total number of contaminations. In my opinion, the explanation lies in the customs of the people of the East Asian countries. The population of these countries has great confidence in the state’s leadership, is very disciplined in carrying out the received tasks and is of exceptional solidarity in situations that reveal national danger. We should also remember that East Asia has a history of regular respiratory epidemics and this has led to social norms, such as the high rate of voluntary wearing of masks for the safety of others at all times. Therefore, a sense of prevention and a high reaction speed to the occurrence of undesirable events on the part of the leaders of these countries adds up. The Republic of South Korea, Taiwan and Japan are enlightening examples of prevention and speed of reaction. It is worth noticing that Asia registers less than half the number of contaminations in Europe.
3. The third paradox is Africa. With a population almost double than that of Europe, with the highest number of countries and autonomous territories among the 6 continents, Africa has a share of 2.001% of the total number of contaminations. The explanation lies in the fact that apart from South Africa and, partially, Nigeria, the other countries have a marginal stance in the current process of globalization. As a rule, these countries have very low levels of nominal GDP. Given the nature of the disease caused by the virus, it might also be very difficult for countries in Africa, with their low state capacity, to pursue testing strategies that lead to a relatively accurate view of the extent of the epidemic.

From my viewpoint, the conclusion that emerges from the analysis of the three paradoxes is that the pandemic is a disease resulting from the deeply unequal process of globalization. Let me explain: there are 4 countries in the world: Brazil, the Russian Federation, India and China, known by the acronym “BRIC countries”, which are said to be the emerging economic powers. However, over the last decade, the foreign direct investment of the developed countries in China amounted to about 2 times more than the foreign direct investment in the other 3 countries taken together. This distribution of foreign direct investment has decisively contributed, through the presence of subsidiaries of multinational companies, to the steady annual growth rate of over 5% of China’s GDP. On this basis, the foreign pleasure and business tourism has developed exceptionally in China. As a result, given that between December 2019 and January 2020 there were the holidays of the Western New Year and the Chinese New Year, in China, in this case Wuhan, a real tourist exodus has happened. Qualitatively, the facts are clear: the pandemic has its origins in the contacts of Chinese tourists and residents, employees of subsidiaries of multinational companies, who had contacts especially with European countries and the USA.

For the quantitative explanation of the above-mentioned statement, it is essential to determine the number of Chinese tourists and residents of Wuhan and other localities in the same province, structured by their destinations, especially the G7 countries (USA, Japan, Germany, United Kingdom, France, Italy and Canada).

The World Health Organization needs to convince the Chinese government to accept this assessment. Of course, there is also an undesirable alternative: for each country in the G7 group to transparently make the assessment of arrivals from the region (especially of residents) between December 2019 and January 2020. 

(The Romanian version of this article has been published in Ziarul Financiar, May 25^th, 2020.)