Pandemic Economy: Covid-19 effects and consequences in the first year

A repositioning of the theoretical instruments of development and growth in the context of economics and political economy that we have at our disposal to date seems necessary, especially after the structural transformation caused by the COVID-19 socio-economic and pandemic crisis. Specifically, the overcoming of the COVID-19 era of crisis seems to depend on how we will manage to re-perceive the theory of economic development and apply its proposals in new economic policies, in global terms. In this context, this article examines whether the conceptual and “therapeutic†foundations of development economics have today the necessary potential to cope with structural changes caused by the ongoing global socio-economic crisis. We assess the current debate in the literature of “economic development versus economic growth†and conclude that a new, comprehensive and evolutionary, orientation to understanding economic development seems necessary to respond to new global challenges for the post-COVID-19 era. We propose a multidisciplinary and evolutionary conceptual direction that suggests the multi-angle understanding of diverse historical configurations. We argue that all socio-economic mutations accelerated by the current pandemic crisis have systemic and evolutionary content and effects and cannot be reliably perceived as mere coincidences of “quantities†and growth “performances.†In this way, we can only disagree with any static and linear approach to the current crisis that directly or indirectly leads to reproducing the rigid enclosure of the analysis in partial specializations of economics. On the contrary, we counter-propose a theoretical response of evolutionary type to assess the contemporary theory of economic development and the political economy in the post-COVID-19 era as an interdisciplinary crossroads for all socio-economic sciences.The Covid-19 pandemic raised a few issues concerning how market participants react to a global pandemic. The pandemic was a black swan event on some levels; there had been few pandemics that have had such a global impact: the Spanish Flu of the late 1910s and 1957 influenza. Moreover, global interconnection means that the Covid-19 pandemic was able to spread across the globe quickly, thus indicating that extreme measures were needed to bring it under control. The policies taken by governments around the world had a significant adverse impact on the economy. It is with these factors in mind that we research the psychology of the market participants during the pandemic. Conversely, we introduce a new model of behaviour during uncertainty, which explains how market participants react during crises such as the Covid-19 pandemic. The model analyses the psychological issues, both emotional and cognitive, influencing the pandemic. We found that like any other crises, market participant reacted to government actions and announcements and the impact on the economy. Therefore, leading to the old issue of miscommunication and insufficient actions.