Economics Assignment: Implications of Evolutionary Approach on COVID-19
Task: Prepare an economics assignment discussing what implications does the evolutionary approach to economics offer about the potential long-run consequences of the COVID-19 pandemic for the functioning of economic systems?
The key purpose of this economics assignment is to reflect on the implications of the evolutionary approach to economics that offer the possible long-term outcomes of the Covid-19 for the operation of economic systems. Hence, it can be said that the sudden outburst of the Covid-19 pandemic has not only impacted individual life but has had a massive impact on business that generally addresses the economic system of the particular nation. Hence, this study will cover the evolutionary approach to finances and the possible long-term outcomes of the Covid-19 on the economic system.
Possible long-term consequences of Covid-19 pandemic on the economic system
The sudden outburst of the Covid-19 pandemic nationwide is not merely a worldwide endemic and public wellbeing catastrophe; it also has a serious effect on the global economic system as well as economic markets. Considerable decrease in income, an increase in the unemployment rate, reductions in business operation, and interruptions in the service, transport, and industrialized sectors are with the impacts of the pandemic overcome process that have been adopted in several nations (Fuentes & Moder, 2021). Hence, this is evident that most administrations around the world underestimated the threats of the quick increase of Covid-19 and were often reactive in their response to a crisis. Thus, it can be said that the eruption of the disease is not probably to withdraw in upcoming future; convenient intercontinental measures are essential to save not simply the lives of the people but also secure the prosperity of the economic system (Malliet et al., 2020). However, it can be said that the global Covid-19 pandemic has forever transformed the experiences of business operations, customers, employees, humans, citizens, and the behaviour and attitude of people are changing as a result. The covid-19 pandemic crisis is practically evolving what and how consumers buy and is increasing immense structural transformations in the consumer goods industry, for instance. This certain outbreak of disease has had a major impact on business operations, workforce, finance, technology, and industries that will directly affect the economic system of the particular nation.
Additionally, it can be said that the considerable trouble on healthcare systems, the Covid-19 pandemic, has had severe financial consequences meant for the affected nations. The Covid-19 epidemic has had a direct impact on income due to early deaths, absenteeism, and decrease in productivity and has made a harmful shock on supply, with the activity of manufacturing that has been slow down due to disruptions in the global supply chain and shutting down in factories. For instance, the advance adjusted seasonally insured rate of unemployment in the United States of America has already met a level of record that is 11% for the ending week of April 11, 2020. On the other hand, the larger economic issues are related to the recent and probable claim in the future for oil, decoding into the variation of oil prices because of a reduction in the economic activities determined by the pandemic (Pak et al., 2020). Here, it can be said that the anticipated excess of supply was also reliable for considerable reductions in price. In case lower than anticipated oil rates endure, several financial systems of dependent oil might deal with the reductions in investment and trade. Hence, this will lead to potential consequences of shocks to the markets of labour, and it will have a severe impact for the long-term in the global economic system, particularly for nations that rely on migration. Internationally, migrant employees make significant initiatives for the employment markets, overcoming differences in both the occupations of low and high skilled workers. Additionally, it can be said that the restrictions of intercontinental journey and isolation are probable to endure for the expected future as nations are trying their best to bring to an end of Covid-19 spread, the flows of migrations will be limited, hampering worldwide development and growth. Moreover, it can be said that all these consequences will have a major impact on GDP, trade, and the financial system, which will have a direct impact on the global economic system (Sengupta, 2020). However, the discussed factors will have a long-term impact on the main GDP aggregates, including employment that has had been affected by the pandemic for most of the nation. Thus, the Covid-19 pandemic will start with the comparisons of GDP and estimations of employment, prior to getting deeper into the evaluation with the comparisons of trends for selected main aggregates of GDP and employment. As a whole, it can be said that the long-term consequences that have been caused with the Covid-19 pandemic on the global economic system need strong and well-built strategies to overcome the financial issues faced by the business sector.
Implications of an evolutionary approach to economics
An evolutionary approach to the economy mainly focuses on the changes that occur in the production, consumption, and distribution of an economy, and its implications are based on economic growth, industrial organization, financial crises, and the business cycle. In the present context, the evolutionary approach to the economy is discussed in terms of the impact of Covid on business, consumption, and overall economic growth (Griethuysen, 2002). As per the evolutionary approach, there are there steps in the evolutionary cycle- the process of self-organization, convergence, and emergence. In the case of self-organization, it works with an open system that organizes its own functional structure (Griethuysen, 2002). In the convergence process, the self-organizing system emerges new possibilities to exchange material, energy, information via internal development. In the emergence process, the different converging systems are assembled and create a new level of organization. The covid has affected different businesses in terms of employment, business process, productivity, and many other areas.
In the context of the evolutionary approach, it can be said that along with business growth, employment growth is also important to ensure the income level of the individuals stays at a stable place. The income level of the individuals affects the consumption level, which has an ultimate impact on the economic cycle. In the context of Covid, it is seen that the income of the individuals significantly affected due to employment losses, temporary closure of workplaces, and shutdown of many industrial sites and workplaces, which seized employment of many individuals (Brodeur, Gray, Suraiya, & Bhuiyan, 2020). The diminishing employment affected the average income and the consumption of the individuals. On the other hand, the huge losses faced by the businesses lead to a significant downturn for the economy due to less contribution of businesses (Brodeur, Gray, Suraiya, & Bhuiyan, 2020). Due to the impact of Covid, the businesses that are approaching their customers via physical stores faced huge losses because of lockdown restrictions and fear of people visiting public places. The e-commerce model for businesses is a reliable thing that ensures a business can reach out to its customers even in a condition like covid. The acceptance of the e-commerce model is increasing day by day, and it has a constructive impact on fiscal growth.
The acceptance of the e-commerce model by the businesses allows them to increase their customer base, which means the revenue of the business will increase, which will contribute more to the economy. The convergence process of the evolutionary economic approach indicates that the firms can increase their capability with merger and acquisition with other firms, which will help them support with technology, material, information, etc. Outsourcing the products, parts, or services is more beneficial for organizations as they can strengthen their internal network, which will help them to increase productivity and to meet the market demand.
The evolutionary economic approach indicates how the economic system can better function by implementing strategies related to business development, employment opportunity, acquisition, or merger. The covid has significantly affected the consumption, business profitability, and income of individuals, which integrated affected the economy. Hence, to keep the balance of the economic cycle, the employment factor, business development, and consumption need to be managed simultaneously by implementing adequate strategies.
Brodeur, A., Gray, D., Suraiya, A., &Bhuiyan, J. (2020).A Literature Review of the Economics of COVID-19. Retrieved from website: http://ftp.iza.org/dp13411.pdf
Fuentes, N. M., & Moder, I. (2021, February 5). The scarring effects of COVID-19 on the global economy. VoxEU.org. https://voxeu.org/article/scarring-effects-covid-19-global-economy
Griethuysen, P. van. (2002). SUSTAINABLE DEVELOPMENT: AN EVOLUTIONARY ECONOMIC APPROACH. Retrieved June 11, 2021, from citeseerx.ist.psu.edu website: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.664.3866&rep=rep1&type=pdf
Malliet, P., Reynès, F., Landa, G., Hamdi Cherif, M., & Saussay, A. (2020). Correction to: Assessing Short-Term and Long-Term Economic and Environmental Effects of the COVID-19 Crisis in France. Environmental and Resource Economics, 77(3), 669–669. https://doi.org/10.1007/s10640-020-00510-4
Pak, A., Adegboye, O. A., Adekunle, A. I., Rahman, K. M., McBryde, E. S., & Eisen, D. P. (2020). Economic Consequences of the COVID-19 Outbreak: the Need for Epidemic Preparedness. Frontiers in Public Health, 8(241). https://doi.org/10.3389/fpubh.2020.00241
Sengupta, S. (2020). Coronavirus, Population and the Economy: A Long-Term Perspective. The Indian Economic Journal, 001946622096802. https://doi.org/10.1177/0019466220968025