COVID-19 and epidemic: Effects on globalization

This study is carried out to understand the effects of the pandemic phenomenon, which has existed since ancient times and continues its effects on the world economy, by analyzing available data sets to find solutions, according to the results. The aim of the study is, to examine and analyze data sets and to make suggestions to policy makers by evaluating the results. First, the conceptual framework was determined in the study. The phenomenon of globalization was explained with the literature summary. Because COVID-19 pandemic actually had profound effects on the concept of globalization above all else. The world has implemented the necessity of acting together, whether accepted or not. Globalization has removed borders, although this was an abstract concept and was defined as capital movements through transfers. However, COVID-19 pandemic made it clear that, this is not just a money stream, but also a necessity of defining a World, in which a common stand should be taken. In the study, the data set of the World Trade Organization on world trade volume was analyzed on the basis of items. As a result of the examination of the foreign trade volume, based on years by sectors, a decrease was observed in most of the sectors until 2018 after the peak point of 2014. In 2018, an increase in volume was observed in all sectors. However, 2019 was observed as a year in which world trade volume declined. The reason for this is thought to be the US-China tariff wars that started in June 2018. The analysis for 2020 was made by interpreting the outputs of a model that McKibbin and Fernando (2020) built, based on the observations of past SARS and Influenza cases. What is the future of the world economy, which has a downward trend in 2019, after March 17, 2020? It was tried to be understood through a model which was a dynamic stochastic general equilibrium model, based on past observations. The model aimed to analyze, the effects of COVID-19 pandemic in the Energy, Mining, Agriculture (including Hunting and Fishing), Durable Goods Production, Non-Durable Goods Production and Services sectors and Worldwide. Based on the accumulation of past experiences, cases and fatal cases, death rates were estimated and added to the model as an explanatory (independent) variable. In this way, we have predicted 7 different scenarios about the increase in production costs, declines in consumption demand, and what the increase in public expenditures will be. Another concept that the model predicts is, the depreciation of the population and the workforce. Accordingly, it is estimated that the highest loss of workforce will occur in China. Model results of McKibbin and Fernando (2020) show that one of the countries with the most casualties will be the USA. The highest increase in equity risk premium will be in India, Indonesia and Other Oil Producing Countries. The increase in the equity risk premium for Turkey was found to be 1.98%. Production cost increases of 25% to 53% are expected in all sectors. It is worth mentioning a strange finding here. China is not among the 10 countries with the most casualties predicted from the World Health Organization. Decline in consumption demand is estimated for the lowest scenario, out of the seven scenarios. Accordingly, the highest decline in consumption demand will occur in the USA. Increases in government spending are also expected. Increases are foreseen, especially due to health expenditures. The countries with the highest number of people to be affected by the pandemic process are determined as China and India. In this study, the development of the World Trade Volume based on months is also avalaiable. It was observed that the decrease experienced in March 2020 compared to the previous month, gained more momentum in April. Another pandemic that deeply affected the World occurred between 1914-1920. A study, investigating the effects of Spanish Flu is also included in this study. Again, it has been compared with the effects of COVID-19 pandemic, obtained from an analysis made through a spatial model. However, it is stated, that the effects of COVID-19 pandemic are unlikely to cause magnitudes, similar to the flu epidemic. Studies on the plague and COVID-19 pandemic are also included in this study. It has been concluded that time will show whether COVID-19 pandemic will show the similar effects of the plague epidemic, that led to the collapse of feudalism and whether there'll be power changes on a global scale. But some changes will do occur in working life. It is a conclusion from the studies evaluated within this study, that the World GYSH will experience serious decreases. However, it is not certain, that all sectors will suffer. Because the health and pharmaceutical industries and the online shopping market have been positively affected during the crisis.