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Gita Gopinath Diving Deep Down the Path of Pandemic Economics

Gita Gopinath Diving Deep Down the Path of Pandemic Economics

By Isabelle Lee


Because money, very clearly, does make the world go round.

By Isabelle Lee

Holder of four degrees, a professor and the chief economist for the IMF, Gita Gopinath is amazingly just getting started. Join Carlos Watson and Gopinath as they explore her journey from Delhi to Boston and her take on the economic puzzle of COVID-19 on today’s episode of The Carlos Watson Show. You can find excerpts below or listen to the full interview on the show’s podcast feed.

Wrapping Your Head Around the World of Economics

Carlos Watson: Gita, how did you get into economics? Are you from a family of economists, or how did that happen?

Gita Gopinath: No, there’s nobody I know who did economics. And frankly, growing up in India, the grand goal is not to become an economist. It’s mostly to become a doctor or an engineer. So I did science all the way through high school. Then what happened was that we had some friends of my parents who came over and said, “Well, she’d be great in the Indian Administrative Service,” which is an elite public service in India. So then everybody said, “Well, that’ll be fantastic. Doing economics will be great for that.” So then I was sent off to do economics in college. I’m a purely accidental economist.

This is not something that I picked and chose in terms of what I would study, but then this was 1989 to ’92. At that time, India was actually hit by a financial crisis. And there was a lot going on in terms of discussions on economics and reforms. The International Monetary Fund (IMF) came in. So I think all of that got me pretty excited about this, the subject, and then I stuck with it.

Watson: And what do you love about it? It’s been nice to see, as I got prepared for this, seeing all the accolades. It seemed like an endless set of awards. So clearly you’ve done well with it, but what do you love about this? What turns you on about economics?

Gopinath: It’s the combination of the fact that the issues you are studying are just in the news. It’s exactly what the world is worried about. Recessions, jobs, inequality. It’s so clear to people that these are important issues. And given my science background, I like that I’m bringing in the mathematical rigor that comes with having a science mind that is brought to understanding these issues of the day. So it’s that combination that I think is fascinating. And it’s been particularly fascinating this past year when we’ve had a crisis like no other, where there was no textbook recipe of how to deal with this kind of a pandemic and the impact it has on economies. So I think it’s that combination of the analytical skills that go along with dealing with real-world issues that gets me really excited.

Watson: Today, as the chief economist of the IMF, for those who don’t know what you do, what do you do?

Gopinath: So, firstly, the IMF is an organization that was set up following the wars, the terrible Second World War. And the idea was, let’s bring countries together. We certainly can’t afford having these kinds of wars. Let’s make economic cooperation happen. Let’s work toward global prosperity. So we have 190 member countries that are part of the International Monetary Fund. And we do three big things: The one thing that we are very well known for is financing. So we are what they call the lender of last resort, kind of a first responder. When you have a country that is having a hard time paying its bills and the market’s not willing to lend to them at any kind of reasonable rates, that’s when the IMF comes in and provides financing. And this time around, we’ve done it for 85 countries in this crisis.

The second piece is in terms of providing policy advice about how to deal with economic problems in your country, helping especially low-income nations have the right kinds of institutions to have stable economies. So as the chief economist, I’m involved in all these pieces of what the IMF does.

The Hidden Economic Impact of COVID-19 and Vaccines

Watson: And so what have you seen over this last pandemic? Are we in as bad a place? I saw you in earlier conversations say that you thought this was the worst economic moment we’ve seen since the Great Depression, and yet in a weird way, and maybe it’s because I live in Silicon Valley so I may not be grappling with the fullness of it, I see the stock market taking off. I see housing prices rising. I see unemployment, at least the numbers that they’re sharing here in the U.S., under 10 percent. And so for someone who grew up and saw several recessions along the way, in some ways this doesn’t feel like the worst one. How do you see it?

Gopinath: So, Carlos, that’s actually a great point because one of the consequences of this crisis is what we’re calling the great divergence, which is that if you are in the U.S., what you see is a pretty healthy, strong recovery. If you’re in China, you see a pretty strong recovery. But if you look at many, many other parts of the world, the recovery is much slower; it’s taking much longer. And so, if you look forward, this is going to be a world where you will have some strong recoveries and many weak recoveries, and that’s the divergence that we worry about.

In terms of general numbers, if you look at the global economy 2020, we’ve estimated that it shrank by 3 1/2 percent. That’s over three times what happened during the global financial crisis. It’s really the worst peacetime recession in history since the Great Depression. So it was very hard-hit, but again, if you’re in the U.S., what you’re seeing is a better recovery than what you’re seeing in many emerging and developing countries. And this is exactly what we’re trying to address at this point.

Watson: Let me go back to what you were talking about on the vaccine front. In the past, on some of these various drugs, countries like Brazil and India and others have said, “Screw it. I’m not going to wait for the big multinational pharma companies to create drugs at a price that makes sense for me. I’m essentially going to create generic versions on my own.” Do you think we’re going to see that on the vaccine front and given the hoarding that you’re concerned about? Do you think that’s something that the IMF and others will encourage?

Gopinath: So that’s a very important point of, how do we increase production? So there’s one channel that is working, is through licensing agreements. So an example of that is AstraZeneca, the Oxford vaccine. They have licensing arrangements with manufacturers around the world, including India, that are manufacturing their vaccine in India for instance, and that is one way to make it happen. The second is, do we basically say, “Let’s take patents, let’s not worry about IPRs, intellectual property rights, and let everybody just manufacture the vaccines.” The concern is that if you look at vaccines, for instance, like the Moderna vaccine or the Pfizer vaccine, the so-called mRNA vaccine, the technical skills that are required to make, to produce those vaccines are not that simple. So it’s not like reverse-engineering a drug, which can happen much more easily. It’s not that easy to reverse-engineer a vaccine. So you actually need collaboration across manufacturing pharma companies in developed and developing countries to be able to get the right amount of production done. So I think all of these measures will be needed.

Watson: Interesting. So would you argue that given that not only do we have, sadly, this pandemic, but you’ve got folks like Bill Gates and Dr. Fauci saying that we probably should get used to the idea that there will be more pandemics and more waves over the next decade or two? Do you think that in the same way that we had international organizations that dealt with trade, have dealt with lending like yours, should there be international organizations that are distributing vaccines both now and in the future, because that’s going to be core to not only the health but the healthy civilization of the world?

Gopinath: I do think this pandemic has taught us that we need a much more robust mechanism at the international level to deal with a pandemic. So there is the World Health Organization. You do have other kinds of, there are vaccine alliances, you have the COVAX Facility, which comes from the WHO. So all of these have been set up, but there is indeed … this hasn’t worked as well as it should have. We’re certainly seeing not enough production coming through. We are seeing some countries with very large amounts of supplies, others without it. And given that this is not going to be a one-off episode, we certainly know that there’s going to be more variants of this virus and other kinds of viruses that come up, I think there has to be a much more robust structure set in place to deal with all the issues here when it comes to vaccinations.

From Dreams to Reality

Watson: And Gita, what kind of advice do you give? I’m sure particularly as someone who has taught at Chicago and Harvard and other places, you have lots of folks coming up to you for advice all the time. When you talk to people about dreaming fearlessly, what’s some of the best advice you’ve either received yourself or that you’ve given to people when they ask you about how to not only dream fearlessly but bring those dreams alive?

Gopinath: Well, I think the No. 1 factor has to be inner strength, frankly speaking. I suspect you might agree too. I mean, sometimes you have to really believe in yourself. And as a woman in the field of economics, and especially macroeconomics where it’s mostly male-dominated, you might not get that much reinforcement from everybody else. You really have to believe in what you’re capable of doing and in pushing your ideas forward. So I think that’s No. 1.

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