Economic consequences of resource trade-offs for special disaster-blessed industries: the case of COVID-19 pandemic Economic consequences of COVID-19 pandemic

School of Management, Xuzhou University of Technology, Xuzhou, China.

e-mail: jawad.jaws@outlook.com

Abstract

The new COVID-19 pandemic has spread to almost every nation in the world. Most of the available literature on the economic effects of COVID-19 focuses mainly on the recessionary effects of COVID-19 on different industries and aggregate economies. However, some industries, such as masks (surgical and N95, etc.), ventilators and miscellaneous medical services, benefit economically from the current COVID-19 disaster. More and more resources have been diverted to these industries due to the increased demand of these special industries. Excessive demand from these special industries will eventually return to normal or, under special conditions, fall below their normal (usual) demand once the pandemic has ended. Which, in turn, will not only affect these special industries, but can also have an impact on the recovery of aggregate economies around the globe. The study presents a comprehensive model for the different phases of the short-term lifecycle of these special industries. Presentation of the working and economic backlash resulting from the eventual decline in demand of these industries may encourage world economic policymakers to look beyond the current disastrous situation and to devise the necessary monetary and fiscal policies for the future COVID-19 free era. Otherwise, it will be difficult for the economies recovering from COVID-19 pandemic to move back to normal functioning, because the additional resources (such as labor and capital) allocated to these special industries may be idle for some time, which may increase the burden and drag the recovering economies of the COVID-19 pandemic into a deeper recession even when the pandemic is over.