Impact of Public Health Crises on Economic Development

By Brian Abernathy

Economic developers are often tasked with addressing limiting circumstances within their communities that extend well beyond economic factors. Public health crises, ranging from global pandemics to more personal yet equally weighty issues like mental health crises, create scenarios with severe implications for their organizations and communities. The unexpected upheaval caused by the COVID-19 pandemic underscored the critical need for readiness to navigate the potential onset or aftermath of such events.

Public health crises manifest in various forms, each with distinct implications for economic development. Infectious disease outbreaks, such as the COVID-19 pandemic, are characterized by the rapid spread of diseases caused by biological agents like bacteria, viruses, or parasites, leading to widespread illness and significant mortality rates. Natural disasters, such as earthquakes, floods, hurricanes, and tsunamis, cause extensive damage to infrastructure and pose challenges to public health through injury, disease, and displacement of populations. Food and waterborne outbreaks occur when contaminants, sometimes microbial, enter food or water supplies, causing widespread illness, as seen in the Flint, Michigan crisis. Chronic diseases, like cancer and diabetes, represent significant public health challenges due to their prevalence, long-term effects, and associated healthcare costs. Mental health crises, marked by widespread mental health issues triggered by social isolation, economic hardship, or traumatic events, significantly impact well-being and productivity.

What happens to economic development activities when a public health crisis strikes?

• Impact on Business Activities: Public health crises can significantly disrupt economic activities, forcing businesses to shut down or limit operations. In the case of COVID-19, businesses with limited savings to sustain themselves shut down. World Bank reported that during the recent pandemic, on average, “larger firms entered the crisis with the ability to cover expenses for up to 65 days, compared with 59 days for medium-size firms and 53 and 50 days for small and microenterprises.” Economic developers may need to find alternative ways to stimulate economic growth, such as promoting online businesses or remote work.
• Increased Unemployment: Health crises often lead to increased unemployment rates as businesses struggle to maintain operations, creating lasting challenges to recovery, particularly for vulnerable populations. The COVID-19 crisis, for instance, led to unprecedented levels of job loss globally, with millions of workers facing unemployment or reduced working hours. Economic developers must overcome those hurdles with initiatives to create new job opportunities and support those who have lost their jobs.
• Strain on Healthcare Systems: Public health crises put a massive strain on healthcare systems, diverting resources away from other areas of development. Decreased access to funding from private or public sectors exacerbates these challenges. Economic developers may need to advocate for increased healthcare funding or find ways to support healthcare systems to cope with the increased demand.
• Impact on Mental Health: Public health crises can also have a significant impact on mental health. The stress and anxiety caused by such crises can lead to decreased productivity and increased healthcare costs. However, mental health support and resources are essential to mitigate the adverse effects on individuals and communities. Economic developers can promote mental health initiatives and provide resources to support individuals and communities during these challenging times.
• Decreased Investor Confidence: Public health crises can lead to decreased investor confidence, making it more difficult for businesses to secure funding. Economic developers may need to work on rebuilding investor confidence through transparent communication and demonstrating the resilience of their organizations or communities while pushing governments to implement supportive policies and financial assistance programs.
• Supply Chain Disruptions: Global health crises can disrupt supply chains, making it difficult for businesses to get the needed materials. Economic developers can work on developing local supply chains or finding alternative suppliers to help businesses continue their operations.  The COVID-19 pandemic highlighted vulnerabilities in global supply chains, prompting businesses and policymakers to rethink strategies and prioritize resilience and diversification.
• Policy Changes: In response to public health crises, governments often implement rapid policy changes that can impact businesses. Economic developers must stay informed about these changes to help businesses navigate new regulations. Effective coordination between policymakers, businesses, and stakeholders ensures that policy responses support economic recovery and resilience.

Public health crises can often pose lasting challenges to recovery, yet with adequate versatility and adaptability, they can also come with a silver lining. During the COVID-19 pandemic, we saw how dire situations pushed many businesses into diversification and modernity, where many businesses evolved and adapted to embrace shifts like online shopping and more efficient delivery networks. With the right preparation and mindset, Economic Developers have the power to pre-emptively nurture resilient communities, fortify operations, and smartly implement targeted interventions should the need arise.

Look to Convergent Nonprofit Solutions as your partners in developing comprehensive approaches to future-proof your organization. Regardless of the challenges, our experts work closely with you to support your infrastructure and economic development initiatives.