Globalization Does Not Increase Pandemic Risk

By Vincent Geloso. He is a senior fellow at AIER and an assistant professor of economics at King’s University College. He obtained a PhD in Economic History from the London School of Economics.

"The coronavirus outbreak has sparked concerns that the occasion will fuel the ongoing backlash against open trade and borders. Nativists, protectionists and extremists on all sides of the political spectrum have already joined the bandwagon. To be sure, these critics would have jumped on any occasion to criticize globalization. They would have also proposed the same remedies as they do now regardless of what the occasion was. 

However, their case has an element of plausibility. The ability to trade more easily increases our contact with goods and individuals from all across the world. That mechanism, all else being equal, increases the risks of being exposed to harmful parasites and pathogens. As such, the present situation provides them with a seemingly reasonable motivating factor to argue for their preferred policies. 

Do not be fooled, their arguments still fall woefully short! 

Consider the cost of the largest flu pandemic of the 20^th century: the 1918 Influenza. According to Robert Barro, the effect of the pandemic was to reduce GDP per capita by 6% (all else being equal). Subsequent pandemics such as those of 1951, 1957 and 1968 produced smaller economic (somewhere in the range of less than 1% to 4%) and demographic damages (death rates at each outbreak kept falling). The modern average flu season still imposes large costs – even in its mildest form – but they represent 0.6% of global income. 

This suggests that damages kept falling over the course of the 20^th century. During the 20^th century, the volume of international exchanges went in the opposite direction: trade increased and expanded as a result of trade liberalization and technological innovations in transport and communications. Thus, it appears that in spite of globalization, the damages wrought by pandemics have fallen.

Even if the damages from a pandemic reached the high bound of what experts predict, it would still be below historically-observed levels in spite of globalization which has made us immensely richer. 

The argument above assumes that globalization increases health risks. However, it’s not clear that it does. It could reduce mortality risks through a multiplicity of channels. One of those channels is pretty straightforward: greater development improves health outcomes. 

In particularly poor countries, income gains brought by globalization translate as improvements in net nutrition which reduces vulnerability to a great range of diseases. Enrichment thanks to globalization can also enable investments in health products and services that were previously unavailable. As a result, the quality of care increases in a way that offsets some of the increased risks of contagion. 

An additional channel for reducing risks materializes through the effect of income on air pollution. During the 1918 Influenza epidemic, air pollution heightened mortality risks (and thus death rates) especially in cities with higher coal-fired power capacity. This finding can be linked with the literature on the Kuznets curve which states that air pollution will increase with income per capita but only up to a certain point. After that point is reached, further increases in income actually reduce air pollution. As globalization helps increase income per capita, it contributes to crossing the threshold. 

The last, and probably most important, channel is through the role of international travel. In a recent paper published in Philosophical Transactions of the Royal Society B: Biological Sciences, five British researchers pointed out that some low-virulence pathogens strain can help provide immunity against related high-virulence strains. Frequent international travel may help diffuse those low-virulence pathogens in ways that strengthen global resistance to more virulent strains. Thus, rather than increasing propagation risks, a more globalized world (proxied here by international travel) would reduce the likelihood of a major pandemic. 

The sum of the elements above suggest that globalization does not constitute a risk to human health – quite the reverse. Voices that speak for curtailing international trade and migration can (and should) be ignored."