April 2021, Volume 27, Number 2
Global: Covid, Trade
Death rates from Covid are much higher in richer than in poorer countries. As of March 2021, there were almost 1,900 deaths per 100,000 residents in the UK and 1,600 per 100,000 in Italy and the US, compared to less than five deaths per 100,000 residents in China, Thailand and Vietnam.
Analysts seeking explanations for why death rates from Covid are higher in rich countries point to data issues, such as underreporting deaths in poorer countries, demographics that mean poorer countries have more younger residents, and more outdoor activities in poorer countries. Some scientists believe that closer proximity to animals and microbes in poorer countries mean more residents have acquired immunity to viruses.
Births fell sharply in 2021 in many countries, and most demographers expect continued declines in fertility in most countries. In 2020, Italy had twice as many deaths as births. Fewer children and more elderly may slow innovation and put downward pressure on interest rates.
World trade in goods was $18 trillion in 2020, including $11 trillion in intermediate goods, such as auto parts that were later assembled into vehicles. In spring 2021, a shortage of shipping containers slowed trade and raised costs, as Americans and Europeans ordered more goods produced in Asian factories. The cost of shipping one container from China to Los Angeles is normally $2,500 or less, but rose as high as $25,000 in spring 2021. Most shipping containers are made in China, where more are being built.
The Ever Given container ship, which can carry 20,000 containers, ran aground in the Suez Canal in March 2021, blocking ships for six days from transiting a canal that carries 10 percent of the world?s trade. The 120-mile long Suez Canal opened after a decade of construction in 1869, and allows ships to move between the Red and Mediterranean Seas in less than 15 hours without locks.
The cost of building the Suez Canal was twice the $50 million estimate, but tolls paid by passing ships made it very profitable for French investors. The canal was widened and deepened in 2015 at a cost of $8 billion. Egypt received $5.6 billion in canal tolls in 2020.
The garment industry is often the first to create large numbers of jobs for women in poor countries, often rural-urban migrants who earn $50 to $200 a month sewing clothes for the manufacturers that retailers and clothing brands contract to sew for them. Activists want the retailers and brands to be responsible for any labor law violations committed by manufacturers. Instead, most retailers and brands rely on third-party auditors to audit their manufacturers to ensure they are in compliance with local labor laws.
The Worker Rights Consortium released a report in April 2021 that charged that clothing manufacturers did not make required severance pay when they laid off sewing workers in 2020 when the pandemic changed buying patterns. The consortium wants retailers and brands to create a global severance guarantee fund that would pay back wages and severance to laid off workers if clothing manufacturers did not.
The US has been a leader in pursuing free trade since WWII, often absorbing many of the adjustment costs as first Japan and then China emerged as manufacturing powerhouses. President Trump changed US policies, and Biden appears ready to continue some Trump policies that reject the conventional wisdom that freer trade provides broadly shared benefits, as with a rising tide lifting all ships.
US advocacy for free trade peaked in the 1990s, when NAFTA was signed and China joined the WTO. US job losses to Mexico and China spurred a rethinking of the benefits of freer trade.
The term BRICs, for Brazil, Russia, India, and China, was coined in 2001; South Africa was added in some formulations. Two decades later, China is the world?s second largest economy and India is fifth, but the economies of Brazil and Russia are unchanged.