Disruption Without Change: The Consequences of COVID-19 on the Global Economic Balance

The coronavirus disease 2019 (COVID-19) pandemic upended the global economy, resulting in large losses of gross domestic product worldwide. But by the time the pandemic was well into its second year, an unexpected pattern had emerged. The world’s worst pandemic in a century accelerated previous trends but had not changed much about the international economic order. China was the only major economy to show positive economic growth in 2020 relative to 2019 but reversed necessary domestic reforms to do so. The United States was the best-performing advanced Western economy in 2020 but greatly increased its federal debt. Europe and U.S. treaty allies performed less well. Prepandemic trends persisted: China’s share of the global economy was growing, that of the United States was holding steady, and that of U.S. allies was declining.

In this report, the author reviews the economic track record of the United States; major U.S. competitors China and Russia; and U.S. allies and partners, including the European Union, the United Kingdom, Japan, Australia, and India, to discern how the dramatic economic changes induced by the pandemic could affect geopolitical competition and the future security environment.

The author also discusses vaccine diplomacy, the effort to distribute vaccines to developing countries, which is exemplary of how the pandemic has affected global competition. The report draws on official data releases, reports by international organizations, and media reports and uses data released through August 31, 2021. It was completed before the February 2022 invasion of Ukraine and has not been subsequently revised.

The research reported here was Prepared for the Department of the Air Force and conducted within the Strategy and Doctrine Program of RAND Project AIR FORCE.

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