Countries with certain socio-political characteristics rebound more easily after crises, say economists Abhijit Banerjee and Esther Duflo
WITH MUCH of the world economy in an induced coma, it is easy to think that it will be permanently hobbled by the covid-19 crisis. Yet history suggests that if a vaccine or a treatment is found, there is a good chance that the world will bounce back to where it was—provided wise economic and public-health policies are in place.
For economists, this rapid regional convergence is the best example of the logic of capitalism. The fundamental qualities that made an area attractive in the first place are still there: a river, a central location, a long history, a good education system and the like. Businesses will want to invest, people will want to move back and the more a city is damaged, the faster its recovery will be.
Another feature is that these countries emerged from conflict with strong governments that enjoyed a fair amount of legitimacy . Finally—and relevantly—most of these countries had very little inequality, which surely contributed to the sense of a joint enterprise. This risk is probably highest where the social equilibrium is already fragile, for example in much of the developing world. However countries like Italy, France and America—where inequality has become corrosive and resentment drives a substantial part of politics—may not be too far from the precipice of social instability.
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