Question

Briefly discuss five (5) ways in which economic planning can be used to reduce the economic impact of global pandemics such as the Corona Virus in the future.
[30 marks]

Answer 1

The Coronavirus has taught a lot of economic lessons. Some are:

(1) Investing in human capital. The governments have realized that investing in the healthcare sector is crucial to avoid long term health hazards and maintain a healthy workforce. We should see more and more governments developing their human capital infrastructure.

(2) Monetary policy. Since nominal rates in most advanced countries is close to 0, there is not much scope for easing monetary policy to boost the economy. This call for raising inflation targets so that higher rates of interest can be maintained

(3) Fiscal policy: Fiscal policy has been neglected for long on the back of self-correcting markets. But the pandemic has shown that whenever there is a severe crisis, fiscal policy is the most important policy tool. both fiscal and momentary policy need to work hand in hand to avoid such crisis in the future.

(4) Debt: Fiscal policy brings to the front the issue of excessive national debts. A government can engage in a fiscal stimulus only if there is no excessive burden of the national debt. Thus, governments need to become more efficient and cut don the debts and deficits.

(5) Supply Chains. The pandemic will force the governments to ensure that the supply chain of most essential commodities is not too global. Self sufficiency becomes crucial in times of crisis as each country wil try to first cater to the neeeds of its own citizeens and strong domestic value chaons can mitigate the crisis better.