The pandemic’s effect on the international system
Charles A. Kupchan
Senior Fellow, Council on Foreign Relations
Charles A. Kupchan
Senior Fellow, Council on Foreign Relations
Fan Gang
Director, National Economic Research Institute, China Reform Foundation
The Covid-19 crisis is rocking the world economy, and in the wake, no less, of an already partially underway “de-globalization” process. The diversification – and possible fragmentation – of the global supply chain presents a major challenge to the Chinese economy, but it is not at all certain that it will have such drastically negative effects on global growth, since there are a great many companies (including some Italian ones) interested today in breaking into the Chinese market, and Chinese companies interested in diversifying trade partnerships.
David Livingston
Deputy Director Climate and Advanced Energy, Atlantic Council
Digital technology is clearly a fundamental sector of the twenty-first century economy. It also demands deep behavioral adaptation by individuals and the society as a whole, a new legislative framework and conceptual tools. There is broad consensus in Europe by now about the need to ensure greater autonomy with the freedom to set effective rules in this pivotal sector, establishing what is known as “digital sovereignty”.
Italy must not underestimate the challenge of generating economic recovery using Next Generation EU resources. Europe, after so many years of hesitancy, made a decided shift in gears when it reached out to the market to collect the funds for reconstruction. It is now up to individual countries to submit credible recovery plans. There are various glitches to be resolved when it comes to the Italian situation – first among them being to formulate a consistent vision of the country’s future.
The European Union has finally taken a vanguard position on green energy and climate change, approving major steps by other nations, such as China, Japan, South Africa, South Korea and the United States. The election of Joe Biden to the White House and the appointment of John Kerry as special climate envoy strongly suggest that transatlantic cooperation on the Green Deal, among other things, will be relaunched.
Southern Italy needs a new vision for the future built on consideration of its system strongpoints and on a deeper scrutiny of its problems, with a view to identifying alternative proposals focused on the competitive capacity of those regions, with the goal of improving the business environment.
In stark contrast with the past, any analysis of the year 2020 is dominated by the profound impact of a pandemic so capricious as to thwart any attempt at predicting the future. The fundamental question is whether the change has been a structural one and, as regards energy, if it is capable on its own of accelerating or slowing decarbonization, given the fact that the energy industry remains a prime sector within which to seize recovery-related opportunities.
The Italian healthcare system continues to feel the pressure of the coronavirus pandemic. However, the outlay of financial and organizational resources needed to confront the emergency must not take the focus off the structural issues posed by the need to protect a steadily ageing population’s health. Instead, the pandemic should offer an opportunity to highlight existing shortcomings and create new models with which to confront a future return to normality.
A return to life in small towns and outlying areas could offer a strategic opportunity for Italian post-pandemic economic recovery. Italy’s environmental and cultural heritage can become pivotal elements in the framework of long-term policies conceived in continuity with some ideas previously promoted at both national and local levels, with the aim of regulating the equilibrium between the economic development of cities, small towns and remote areas.
An overall energy transition is under way, and has been for several years despite significant structural obstacles and cyclical ups and downs. The ongoing pandemic and the related economic slowdown have come at a critical juncture in this respect. Today’s situation has highlighted a connection between GDP levels, population density and the impact of Covid-19 infections – likely through air quality – as manifested in various areas of Northern Italy and probably elsewhere.
The daily effects of the Covid-19 pandemic on every individual and organization are clearly foregrounding how wealth and health go hand in hand. The quest for health – the focus of the political agenda and objectives of every government – will influence every government’s process of reconstruction for months to come.
Business is the fundamental agent in the recovery of an economy struck as dramatically by the pandemic as Italy’s has been. To determine whether that recovery will be a success we need to consider the system’s economic armature of countless small and medium-sized family-run enterprises. Today’s generational hand-over becomes even more important than it has been over recent decades. At stake is the result of the major challenges awaiting national manufacturing: the digital transformation and the environmental transition.
“Doing business” is a term that evokes complexity and challenge, especially when paired with “in Italy”, a country well known for its structural problems and irreconcilable contradictions: Structural problems consisting of a slow and chaotic bureaucracy, lack of legal certainty – due to repeated impulsive legislative modifications as well as to inconsistency and sluggishness in the judicial application of the law – and excessive difficulty accessing credit; irreconcilable contradictions in the form, first, of constant references to entrepreneurs as the drivers of economic recovery clash, wi
Joe Biden is not going to have an easy launch into the White House. Not only because of the way Donald Trump’s behaving but, essentially, because the Democrats have lost several seats in the House of Representatives and the Senate run-off elections in Georgia on January 5th could award the two missing seats to the Republicans, creating a “divided government” that would make it very difficult for Biden to stick to his agenda – especially in terms of the economy.