One slogan of the COVID-19 crisis has attracted less publicity than certain others, despite its apparent roaring success. ‘Whatever it takes’ was not aimed at directly at saving lives, but at preserving the economy and the slogan has been (almost) too successful, according to Professor Bige Kahraman of Oxford’s Saïd Business School.
Speaking at the end of last month, the Associate Professor of Finance said that, in mid-March, the Federal Reserve chair, Jerome Powell, let it be known that the US central bank will do – whatever it takes – to keep the markets from going into freefall.
‘That was critical,’ said Professor Kahraman, to what followed – a sustained stock market run, in the face of bad news heaped upon bad news. While appalling economic indicators have emerged, with many economists and politicians warning of the biggest downturn in 300 years or 90 years or 30 years, the markets have gone up and up.
‘It is surprising,’ said Professor Kahraman. ‘From early April, the market just rallied. It was unexpected and it was against expectations. It was only one month after big market falls.’
In late February, the FTSE 100 had been standing at more than 7,000, but, by 12 March, it had crashed more than 24% - some 1,700 points to 5,230 over fears about COVID-19. Similar falls were seen on Wall Street as the Dow Jones average fell some 7,000 points from more than 27,000 to fewer than 20,000.
Professor Kahraman maintained it was Mr Powell’s reassurance that made all the difference. The Fed chair had begun by cutting interest rates – to less than zero. But received a distinctly frosty market response. But the US bank chief then sent a strong signal to the market that the US central bank would do – whatever it takes. And he was soon followed by UK Chancellor Rishi Sunak – with a massive injection of capital into the UK economy and plans to protect jobs with the furlough scheme and businesses with loans.
Investors rushed into the market....To such an extent, it started to get a little out of control. There was a momentum that saw market rises, whatever the bad news
‘Everyone was expecting unemployment to rise,’ said Professor Kahraman. ‘But there was a very strong commitment from major players. [In addition to Chancellor Sunak’s move] In the US, Congress passed a high speed Bill, which saw a $3 trillion bonus for the economy....The Fed started purchasing assets, including even junk bonds and ETFs… As a result, the market did not do what it had done in 2008, despite the bad news.’
What followed next was most unexpected, Professor Kahraman maintained, ’Investors rushed into the market....To such an extent, it started to get a little out of control. There was a momentum that saw market rises, whatever the bad news.’
The markets have crept up steadily ever since Mr Powell’s intervention, so that the index has recovered by more than 15% in the US and the UK – in spite of the dire economic warnings. At the end of May, the FTSE reached more than 6,200, while the Dow Jones went over 25,000 points – on lockdown-easing news.
Another factor in the market optimism, Professor Kahraman said, is that, although there are expected to be some closures, as firms cease trading - others will move into that space, ‘Some firms will fail but others will acquire their business, which will mean market concentration – which is good for profits. If they manage to survive, there could be higher profits for firms in future.’
We don’t have the same structural problems of the Great Depression. Europe was going into a slowdown, but this is an external shock [In the UK and the US] and the recovery should be fast once the treatments and vaccines are developed
And, said Professor Kahraman, ‘Although many industries have suffered a very negative affect, others have been boosted, particularly tech firms. This has been good news for them in terms of business.’
But, she warned, ‘This [longer term government fiscal stimulus packages] is not sustainable.’
Government bail-outs cannot be open-ended. However, Professor Kahraman does not believe we are heading towards a Great Depression-style slowdown.
‘Although some of the figures may resemble the economy around the same time, we don’t have the same structural problems of the Great Depression. Europe was going into a slowdown, but this is an external shock [In the UK and the US] and the recovery should be fast once the treatments and vaccines are developed.’
Eighty five per cent of children around the world in more than 150 countries are affected by school closures due to COVID-19. Many are currently receiving no education. And internationally, the fear is that some, not least girls, will never return to school. While the public health concerns of COVID-19 should, no doubt, be tackled now, policy makers could also act swiftly to avoid the education crisis turning into an education disaster.
Policy makers could also act swiftly to avoid the education crisis turning into an education disaster
No one knows how the virus will wreak havoc in coming months. Will there be a second peak in Europe or China? Will Africa escape the worst of the pandemic? Will the virus be contained in Latin America or South Asia, where it is currently not quite at its peak? The final consequences are fundamentally uncertain.
But this should not stop us acting now. Some potential actions are ‘no-regret’ policies - no one will regret them later and they are a good use of resources now - however the pandemic evolves. Elsewhere, I have expanded on no-regret policies in the areas of public health, social protection, the economy and the manufacturing and distribution of a vaccine when it becomes available. Here, I want to focus on no-regret policies for education, specifically for lower and middle income countries - though they have global relevance.
This blog argues for three areas of no-regret policies:
- First, ensuring learning continues to happen in whatever form is possible;
- Second, that special actions are prepared for remedial action and reversing dropout later; and
- Third, learning the lessons from digital education, in order to move towards a more inclusive and effective digital learning system later, even in resource-constrained countries.
COVID-19 could not have come at a worse time for children. It is generally acknowledged that there is a serious learning crisis in the developing world. While enrolment has increased to historically unprecedented rates, too few children are learning. For example, a recent World Bank report highlighted that three out of four children in grade 3 in Kenya, Tanzania and Uganda cannot read a sentence such as, ‘the name of the dog is puppy’. In India, by grade 3, three-quarters of children cannot solve 46 minus 17, and by grade 5, it is still a problem for half of them.
Abhijeet Singh, an Oxford DPhil, now at Stockholm School of Economics, has shown that pupils typically start at similar levels, but then some fall behind, never to catch up, in the kind of school systems we find across these countries. And now, children who were especially at risk of falling behind, have lost their access to school because of COVID-19. Often, such children are from disadvantaged families – and now they have to learn at home, if at all.
Children who were especially at risk of falling behind, have lost their access to school because of COVID-19
The first no-regret policy should be to try to keep children learning now, as much as we can. Some are at risk of falling behind in the way Dr Singh has shown - and catching up never quite happens in the educational systems of the developing world. And the signs are not good. Work by the Centre for Global Development found that 95% of children, currently at home in Senegal, were not given any work by teachers, while 30% were not involved in anything educational. Supporting learning by any means available is essential – digitally, via radio or TV, via homework distributed to children’s houses, community workers identifying children vulnerable to lose out and more.
The second no-regret policy should be to prepare now to ensure children are identified and targeted for remedial education, or to reverse drop-out later. Children will be behind, but some will be more behind than others. This is the time to plan for better forms of remedial teaching, such as the type of programmes pioneered by Pratham in India, and in recent years across the world. Evidence of their potential at scale is strong as joint work, including with the RISE programme and others at Blavatnik School of Government at Oxford, have shown.
There is another reason why it is important to do this now. Much evidence exists to show that, during economic hardship, children will not just temporarily leave school, but do so permanently. And this is likely to happen now too. This affects, not least girls - with early marriage one of the consequences. It is the time to consider how such children, who may intend to drop out, can be reached. Maybe conditional cash transfers, targeted at adolescent girls, could be considered, whereby cash is offered to families conditional on children doing homework - which will continue after schools reopen, if children continue to attend.
Much evidence exists to show that, during economic hardship, children will not just temporarily leave school, but do so permanently. And this is likely to happen now too
The third no-regret policy concerns digital learning: this may well be its time. But, unless we start acting now, this will be the start of more learning inequalities rather than fewer in the future.
All over the world, the scale of digital teaching and learning has exploded, with countries and schools looking for ways to connect to pupils. Crucially, though, there are huge inequalities of access within countries - and between them. This was highlighted by a report we did at Blavatnik School of Government - as at least three billion people remain digitally unconnected.
No doubt, the appetite for digital learning will be increased by this crisis. And doing this as well as we can is a first step. But if we do not start attacking digital inequalities through inclusive access, and prepare now to roll out at scale across the world, educational inequalities will continue to expand ever more. Work on a Digital Roadmap and Digital Toolkits may help policy makers get ahead. But there is more. The way digital tools, such as Zoom, Teams, Skype and the like, have been used for education all over the world is only exploiting their communication opportunities.
Digital learning systems are very different. If used well, they allow low-cost individualised learning at the right level with feedback loops to suit each child, rather than exposure to the same for all children in a ‘Zoom’ class. This has substantial potential in low-resource environments. A recent report by a team I led at Oxford gives more ideas. The key now is to learn as much as we can from the digital experiences during the crisis, and then get educational systems ready to using digital tools in the future in an inclusive way.
The developing world faces a learning crisis...We do not have to wait until after the COVID-19 virus has passed to start tackling it. Nobody will regret acting now
The developing world faces a learning crisis, exacerbated by the COVID-19 pandemic. We do not have to wait until after the COVID-19 virus has passed to start tackling it. Nobody will regret acting now. And it will make responding later easier - and more affordable.
Professor Stefan Dercon
University of Oxford (Blavatnik School of Government and Economics Department)
Most of the biological processes that keep us alive depend on multiple proteins working together. One of biology’s great puzzles is how this multitude of proteins and their complex interactions came to be.
Now, an international team, including University of Oxford Professor Justin Benesch and DPhil student Shane Chandler from the Department of Chemistry, has revealed that complexity can evolve through surprisingly simple mechanisms. They identified the evolutionary “missing link” through which haemoglobin — the protein complex that transports oxygen in our blood — evolved from simple precursors.
They found that the emergence of modern haemoglobin’s structure and function was triggered by just two mutations more than 400 million years ago. The team, led by the University of Chicago, also included researchers from Texas A&M University and University of Nebraska-Lincoln.
The team’s strategy was a kind of molecular time travel going back hundreds of millions of years. They used statistical and biochemical methods to reconstruct and characterise ancient proteins before, during and after the earliest forms of haemoglobin were evolving. This allowed them to identify the missing link during haemoglobin evolution – a two-part complex, which existed before the last common ancestor of humans and sharks. This ancient complex did not yet possess any of the critical properties that allow modern haemoglobin to carry oxygen from the lungs to the brain, muscles and other tissues.
A key question was to determine through which interfaces the ancient proteins assembled, a question tackled by Chandler and Benesch in Oxford, who said: 'Part of the puzzle that needed to be solved was how haemoglobin attained its four-subunit structure. This required us to develop new methods for detecting protein-protein interfaces and revealed the historical order of assembly of this remarkable molecule.'
The traditional view of how biological complexity evolves is that it increases gradually over the course of many mutations that each cause small improvements in fitness. The new research shows that complicated new structures can come into being very quickly.
University of Chicago Professor, Joseph Thornton, who led the study, said: 'We were blown away when we saw that such a simple mechanism could confer such complex properties. This suggests that jumps in complexity can happen suddenly and even by chance during evolution, producing new molecular entities that eventually become essential to our biology.'
By Dr Gina Crivello
Approximately 90 per cent of the world’s 1.2 billion young people (aged 15-24) live in low- and middle-income countries (LMICs). They are navigating the coronavirus pandemic at a critical period in the life course when they are expected to set the foundations for their adult lives. Intersecting age, gender and economic vulnerabilities affect their varied experiences and capacities to cope and recover in this crisis. Yet the spread and scale of the coronavirus in LMICs and our understanding of how people at different life stages are being affected, and how, continues to evolve. And while older people and those with underlying health conditions are clearly the most vulnerable to COVID-19, the consequences of economic recession for marginalised youth is likely to be long-lasting.
The recent comparative study of Young Marriage and Parenthood (YMAPS) in four low- and middle-income countries underscores the need to identify how best to support young people coming of age in challenging settings, and which groups of youth might be particularly vulnerable in times of acute crisis. A collaboration between Young Lives (Ethiopia, India, Peru) and Child Frontiers (Zambia), YMAPS involved 345 individuals, prior to the coronavirus pandemic, including married, cohabiting, divorced and parenting male and female adolescents and youth (age 15-24), in interviews about their everyday life experiences, relationships and support needs.
The findings from this study indicate that the millions of young people in LMICs are managing the gendered responsibilities of first-time marriage, cohabitation and parenthood, already with limited economic resources and weak safety nets. They will struggle in the face of the global crisis. There is a real risk that the pandemic will exacerbate inequalities within their intimate relationships and family lives and create further social and economic divisions among this generation of youth. To avoid this, the findings from this study point to a range of possible secondary effects that need to be addressed for young people in LMICs in both the acute and recovery phases of the pandemic:
Economic Precarity: Young people faced economic precarity even before the pandemic. Most youth in these settings make their living from the informal economy, without written contracts, job security or benefits, including access to sick pay and unemployment. Prior to the current crisis, the families who reported the greatest number of economic and environmental shocks were also those with the fewest economic and social resources to cope. For young households, the pressures were already severe, often leading to separation or divorce, and sometimes to violence. We can expect economic recession to destabilise the already fragile livelihoods of young couples and young families in these settings.
Gender Inequality: Despite awareness of gender equality among the younger generation, young people continue to be socially conditioned to take on gender-stereotyped family roles, expecting men to be ‘breadwinners’ and girls and women to take on nearly all responsibility for unpaid housework and childcare - no matter if they also do paid work.
Above all else, [my girlfriend] looks after the baby and the house … [w]hat we are having to eat, she looks after everything […]. She takes care of her pots, her things. I take care of my cars […]. Before she makes any decisions, she has to talk to me.
- Young man, cohabited, age 20, peri-urban Peru
There are concerns that gender inequality is becoming further entrenched during the pandemic as women bear the brunt of additional unpaid workloads.
Even before stay-at-home measures were imposed in response to COVID-19, married girls and young women faced high levels of surveillance by husbands and in-laws, and their contact with childhood friends and family was also mediated by them. Young women in these circumstances found it difficult to seek help when they experienced domestic conflict or violence from their husbands, partners or in-laws. This was unfortunately common, and by several accounts, is already rising significantly in many countries during the pandemic.
Unintended Pregnancies: Young people’s aspirations to marry and have children in their 20s were thwarted by unintended pregnancies in their teen years. Early pregnancies led young people to marry or start living together even though many felt unprepared to take on these adult responsibilities.
Our research found that, even before the pandemic, adolescents and young people struggled to access modern contraception and contraceptive advice until after the birth of their first child, and safe abortion services were limited.
I came to know about these things only after becoming pregnant … I was not aware of these techniques before marriage … Even he [my husband] was not aware of the family planning methods.
- Young woman, married and became pregnant age 19, rural India
Access to contraceptives and other sexual and reproductive health services will be compromised in the context of lockdowns and travel restrictions, and in places with less effective health systems, potentially resulting in millions of unintended pregnancies and unsafe abortions in LMICs. Research on the 2014 Ebola outbreak in West Africa found that school closures contributed to an increase in adolescent pregnancies, and policies prevented pregnant girls from returning to school when they opened; the long-lasting effects on gender inequality are well documented. There are predictions the COVID-19 pandemic will result in an additional 13 million child marriages over the next decade, and an increase in unintended pregnancies.
Priorities to assist young people in marriage and parenthood during & post COVID-19
Our findings point to a range of specific measures at national level that take what young people have told us into account. These might minimise the longer-term impacts of COVID-19 on this formative period in their lives. Short- and medium-term responses should do more than avoid exacerbating gender and other inequalities exposed by the pandemic; they should be designed to reduce them. They include:
- Step up child marriage prevention policies and practices after the lockdown to ensure that the numbers do not rise;
- Encourage and support young women and young men to return to school after pregnancy and marriage or cohabitation;
- Take account of married and cohabiting adolescents in poverty alleviation and livelihoods strategies directed at the poorest families;
- Improve protections for informal labourers and ensure that post the pandemic young people have access to decent work;
- Ensure affordable access to modern contraceptives and sexual and reproductive health rights and services;
- Address the sources of domestic conflict and ensure women can safely get help at all times;
- Promote women’s access to safe public spaces, when lockdowns are no longer in place;
- Ensure boys and men’s attitudes are more gender equal and that they contribute fairly to the share of unpaid work and caregiving within the home;
- Decrease women’s financial dependence by promoting access to education, suitable work opportunities, and quality affordable childcare;
- Strengthen systems supporting young families to confront existing and future risk.
We need to be aware of, and prepare for these measures now, not in several months’ time. Otherwise this unprecedented crisis threatens to set back decades of progress and blight the futures of the generation now growing up under the shadow of COVID.
Note: The comparative analysis from the four country ‘Young Marriage and Parenthood Study’ (YMAPS) and international policy recommendations are published on May 15th, and can be found alongside detailed country study findings on the Young Lives website here.
By Dr Kate Orkin
COVID-19 and the related government-led lockdowns have resulted in widespread economic shock and job loss, in the UK and around the world. Governments, including in low and middle-income countries, have responded with economic interventions to cushion the shock. The most widely-used government tool has been cash transfer programmes: the World Bank finds 234 measures involving expanding cash transfer programmes worldwide, as well as 100 food or voucher schemes.
In the past, some governments have been concerned that transfers would increase dependency on the state and, in particular, that cash transfers would not be used well because it is hard to monitor how people spend them. Many governments used instead to provide food aid or subsidise basic food items.
So why have governments shifted to using cash in low and middle-income countries?
Why have governments shifted to using cash in low and middle-income countries?
In most situations, there is strong evidence that money, not food, is the most efficient and effective way to distribute emergency aid and social programmes. This particular question, on how poor people use cash transfers, is one of the most studied in development economics.
The finance ministry in Mexico did one of the first conditional cash schemes in 1997. To evaluate the programme, they ran a randomised trial. They could not roll out the programme all at once, so they randomly selected some communities to receive it first and compared them to those who did not. This is a similar process to how drugs are tested, but with a social programme. Since then, many countries' governments in low and middle income countries have implemented similar studies.
In most situations, there is strong evidence that money, not food, is the most efficient and effective way to distribute emergency aid and social programmes.
Poor people spend cash grants well. The bulk of transfers are spent on food anyway. For example, a review of 165 studies by the Overseas Development Institute found that recipients of cash grants have better dietary diversity and are less likely to face food insecurity. A World Bank review found grants improve growth and cognitive development in small children. Cash also has the added benefit of giving people autonomy to spend on what they need most. It also stops distortions arising in local markets, where bringing in free food can lead to price decreases that hurt local producers.
Poor people spend cash grants well
Emergency, fast cash is a smart investment in long-term poverty alleviation
Numerous studies, from China and India to Ethiopia and Malawi show that economic shocks have severe long-term consequences. Poor households often take short-term decisions that leave them in deeper long-term poverty. The decision most feared is that households reduce children’s nutritional intake.
Setting aside moral arguments, malnourished children have lower schooling attainment and lower earnings throughout their lives. A World Bank review found grants improve growth and cognitive development and later outcomes in small children. It is harder to find a smarter investment.
When households face economic shocks, women may enter into transactional sexual relationships: during the outbreak in West Africa, a study by anti-poverty organisation BRAC found young women had older partners, higher rates of pregnancy and did not return to school. Both responses to poverty could be mitigated by cash transfers.
But studies also show that, when facing a short deep shock, desperate households often sell productive assets such as cows, vehicles or phones or dip into meagre savings which they usually use to search for work. Losing the means of earning can lead to many additional years of poverty. Temporary cash grants can help. Studies in Bangladesh and Malawi found recipients of grants are less likely to sell assets when they face shocks.
There are anecdotes of welfare queens: people spending their welfare money poorly. But the anecdotes just do not bear out the reality
In low and middle income country settings, cash transfers also mostly do not affect whether, or how much, people work. In some studies they increase job search because they give people money for transport costs and airtime. For example, one South African study found youngsters in households with a pension recipient are more likely to find jobs.
There are anecdotes of welfare queens: people spending their welfare money poorly. But the anecdotes just do not bear out the reality in large samples of people. There is really no good evidence of waste. A review of 19 studies by the World Bank found cash grant recipients did not increase spending on alcohol or cigarettes. In some countries, which only give the grants to parents, there have been arguments that the grants are incentives for women to have children. But there is little rigorous evidence of this. For example, trials in Nicaragua and Malawi found that women in households are less likely to fall pregnant; a trial in Mexico found no effects.
An increase in cash grants may also help stimulate the economy. In a trial in Kenya, the NGO GiveDirectly evaluated an intervention which gave the poorest people, in some randomly selected villages, large lump-sum cash transfers. They found that people living near to villages, where the poorest received cash transfers, also had higher food consumption, partly because recipients spent money in their businesses. There were no meaningful inflationary effects.
Most striking of all, the study estimates a ‘fiscal multiplier’ of 2.6 for this area of Kenya, implying that every $1 invested in fiscal stimulus will grow the local economy by $2.60. That is even larger than in such multipliers the US during a recession. These were much, much bigger transfers than most governments in poor countries give out, equivalent to about $1,800, if spent in the US. So we do not know if the same effects occur from smaller transfers, but in principle the mechanism might work in the same way.
Cash is also usually cheaper to distribute than food. It can often be transferred to bank accounts or mobile money accounts. It does not go off
Cash is also usually cheaper to distribute than food. It can often be transferred to bank accounts or mobile money accounts. It does not go off, and governments don’t have to worry about having the wrong type of cash in the wrong place. There are worries that cash might be more fungible and possible to divert, but there is also evidence on how to prevent ‘leakage’, in particular by paying directly to beneficiaries, requiring biometric identity verification and being very clear about who is getting what benefits on what schedule. It is obviously difficult to set these systems up from scratch, but many countries have them in place already. And cash is much better for social distancing than food parcel queues, if it can be sent to bank accounts.
There can be cases where food aid makes more sense, for example if there is disruption to the food supply chain or if prices go up rapidly. Sometimes beneficiaries say they prefer food. But in general, it is fair to say that a cash system can work better than a food system.
South Africa is an interesting recent example. They had an emergency food parcel system before the crisis and it got completely overwhelmed. They just could not scale up fast enough to reach everyone who needed it. The authorities eventually admitted that the food parcel system was not working, so instead they increased the amount of their pension and child grant, where people were signed up already. They have also added a new cash grant for the unemployed.
Dr Orkin is a labour economist at the Blavatnik School of Government, University of Oxford
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