Cost Effective Analysis
Cost effective analysis is particularly taken into consideration for analyzing the economic outcome associated with lockdown intervention in this case study. The reason behind opting this particular process is due to the fact that comparison among various aspects of the economy becomes much more visible under cost effective analysis. Additionally, it also demonstrates how resources can be allocated in order for the intervention to be effective in nature (Debata et al. 2020).
The GDP of Scotland before the onset of the global pandemic is around $205 billion. However, after the lockdown measures have been incorporated; the growth of GDP has experienced a steep decline. To put it in statistical terms it can be stated that approximately -21.9 % growth rate is experienced by Scotland’s GDP and the GDP per capita has deteriorated to $37460 Which was initially $42500. However, the economist had already predicted Scotland to experience a tremendous growth after lockdown measures were lifted. This has not been reflected in real life; since the onshore GDP of Scotland only experienced a minute growth of 0.7 % in the last quarter of 2021. Throughout the course of 2021 the overall economic growth of Scotland has only experienced 2.2% growth (Grima et al. 2020). This figure was actually published by the government authority of Scotland. However, the important thing that should be taken into account in this particular statistical inference is that the output which is relevant with oil and gas extraction is not taken into consideration. The onshore Scotland GDP was actually evaluated to be around $164.7 billion in 2019. With respect to that figure, in 2022 the economic development was not at all substantial in nature. However, the growth of the service sector has experienced a small increment of 1.7%, which is definitely a setback. In 2019, economists and experts around the world have predicted a 6.4 % annual growth. Output in this particular sector has deteriorated especially in the months of July and September of 2021. On the contrary, the construction industry has experienced a growth of 3.5%, which was originally considered to be a 6% contributor in the overall GDP of Scotland. The service sector which constitutes around 18% of the GDP has increased minutely (Susilawati et al. 2020).
On a similar note, the average rate of inflation in Scotland before the lockdown measures are incorporated is around 0.85% in the early phase of 2020. However, after the lockdown measures were incorporated, it immediately jumped to 1.79 % in the last quarter of 2021. If the inflation rate of Scotland is around 2.19 % which represents that the rate of inflation in Scotland is substantially high. There are various factors that can be attributed to this particularly high rise in inflation rate (Ozili and Arun, 2020). The first one is increasing the price of energy as well as fuel. To put it in a different perspective it can be stated that the cost of fuel and the price associated with energy are significant factors when it comes to driving the rate of inflation up in Scotland. However, the rising energy prices in the global market are mainly driving the inflation rate in Scotland. Additionally, the supply problem associated with high cost of shipping is definitely hurting businesses to operate in a seamless manner. That is why several economists have pointed out that despite sufficient government stimulus to rejuvenate the national economy of Scotland, the rate of inflation is still increasing because of high demand in the market. Individuals are looking to spend more to acquire basic commodities which are further driving the cost of necessary commodities to a great extent. The economy is gradually recovering from the prices of global pandemics. However, the aftershocks of covid are still relevant in certain parts of Scotland; which is why the seamless operation of business growth is not realized as expected. However, in comparison to the United Kingdom’s inflation rate of 5.4%, the rate of inflation in Scotland is quite reasonable in nature. At this particular juncture, if the government decides to impose another lockdown in order to flatten the curve of covid variants, then the probability of the inflation rate to spiral out of control is inevitable in nature (Açikgöz and Günay, 2020).
The rate of unemployment is simultaneously influenced during the global pandemic. After the initial lockdown measures were imposed, there were several businesses that were operating in Scotland which had to shut down because of strict government regulation. The rate of unemployment after initial lockdown measures skyrocketed in Scotland. However, in 2021, the rate of unemployment deteriorated to 4.2%. The fundamental reason behind this is that the government of Scotland has imposed several stimulus packages to revitalize the national economy. As a consequence of that, businesses which were previously struggling immediately started to recover (Caraka et al. 2020). However, the pent up demand of Covid crisis has also assisted the business especially in the manufacturing industry to substantiate the necessary workforce. Although, the salary of individual employees somehow reduced by 1.6% on an average across Scotland with respect to the previous scenario. However, the rate of unemployment deteriorated extensively. In April 2021, the estimated number of people above the age of 16 in Scotland was around 292,800 who were self-employed. However, in the first half of 2022, Scotland’s unemployment rate declined radically to 3.8% (Pedauga et al. 2022). This is definitely a positive aspect of the government’s initiative that was imposed previously. In this particular context, if the government decides to impose another lockdown, then not only the rate of unemployment would spiral immediately; but at the same time the probability of the business growth would also hinder extensively. This would in turn influence the growth rate of the national economy in Scotland. Since the current number of population who are self employed in Scotland Rangers is between 246800 to 250860. In the long run, the Government of Scotland should definitely motivate young entrepreneurs to open up startups which would revitalize the national economy of Scotland. Rather than imposing another lockdown, it is imperative to identify alternative measures to assist the national economy to flourish simultaneously and at the same time the government should also invest in ensuring that covid variants can be contained (You et al. 2020).
The comparators that are primarily incorporated in the due course of the study are the gross domestic product, the rate of unemployment and inflation rate. The main reason as to why these comparators are taken into account in terms of analyzing the economic analysis is because these comparators reflect the broader picture of the Scottish economy to a great extent (Spelta et al. 2020).
Perspective
The perspective which is considered in this particular instance is the change of economic factors before and after the onset of the global pandemic. During the course of the crisis, the economic condition of Scotland experienced vehement peaks and valleys which was not at all normal. Previously, the Scottish government did not have the necessary tools at their disposal to address such an economic crisis. The crisis especially multiplied because of nationwide lockdowns. Hence, it is imperative to understand the significance of alternative measures. This is the primary perspective that is emphasized in the study. Before initiating another lockdown it is always necessary to evaluate the circumstances associated with Scotland’s economy with the first lockdown measure; and the economic doldrums associated with the lockdowns. Based on this argument, the perspective should definitely be redefined before initiating another lockdown (Goolsbee, A. and Syverson, 2021).
Trial based approach is opted for in this study; owing to the fact that there is no particular model that can be applicable in terms of resolving the covid variant crisis; since the existing model is not applicable in terms of addressing shortcoming associated with the national economy. During times of global pandemic, it is always a favorable approach to opt for trial based practices. In view of the fact that with the help of trial and error benefits, associated with individual approaches should be meticulously analyzed and resolved accordingly. Otherwise, if a particular approach is emphasized on then the resources cannot be accumulated as per cost effective analysis. If the approach fails to flatten the covid variant curve, then the entire resource allocation method associated with the approach under cost effective analysis would also be futile in nature. That is why a trial based approach is selected.
The time horizon that is particularly emphasized starts from the initial days after lockdown measures were incorporated in Scotland to the last quarter of 2021. However, the scope of timeline is also extended in certain instances because covid variant rise is experienced in 2022 as well.
The outcome to be measured for economic analysis
c) The cost data to be collected for the economic analysis:
References:
Açikgöz, Ö. and Günay, A., 2020. The early impact of the Covid-19 pandemic on the global and Turkish economy. Turkish journal of medical sciences, 50(SI-1), pp.520-526.
Caraka, R.E., Lee, Y., Kurniawan, R., Herliansyah, R., Kaban, P.A., Nasution, B.I., Gio, P.U., Chen, R.C., Toharudin, T. and Pardamean, B., 2020. Impact of COVID-19 large scale restriction on environment and economy in Indonesia. Global Journal of Environmental Science and Management, 6(Special Issue (Covid-19)), pp.65-84.
Debata, B., Patnaik, P. and Mishra, A., 2020. COVID?19 pandemic! It’s impact on people, economy, and environment. Journal of Public Affairs, 20(4), p.e2372.
Goolsbee, A. and Syverson, C., 2021. Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020. Journal of public economics, 193, p.104311.
Grima, S., Dalli Gonzi, R. and Thalassinos, E., 2020. The impact of COVID-19 on Malta and it’s economy and sustainable strategies.
Ozili, P.K. and Arun, T., 2020. Spillover of COVID-19: impact on the Global Economy. Available at SSRN 3562570.
Pedauga, L., Sáez, F. and Delgado-Márquez, B.L., 2022. Macroeconomic lockdown and SMEs: the impact of the COVID-19 pandemic in Spain. Small Business Economics, 58(2), pp.665-688.
Spelta, A., Flori, A., Pierri, F., Bonaccorsi, G. and Pammolli, F., 2020. After the lockdown: simulating mobility, public health and economic recovery scenarios. Scientific reports, 10(1), pp.1-13.
Susilawati, S., Falefi, R. and Purwoko, A., 2020. Impact of COVID-19’s Pandemic on the Economy of Indonesia. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 3(2), pp.1147-1156.
You, S., Wang, H., Zhang, M., Song, H., Xu, X. and Lai, Y., 2020. Assessment of monthly economic losses in Wuhan under the lockdown against COVID-19. Humanities and Social Sciences Communications, 7(1), pp.1-12.
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