A multicountry analysis of local government financial vulnerability during the 2020 pandemic considering systemic factors

Abstract

The COVID‐19 pandemic cut across geographical, sectorial, and policy boundaries and imposed difficult health, economic, and social challenges. Among many learnings, after the 2007–2008 global financial crisis and the austerity period that followed it, the economic and health crises forged by the COVID‐19 pandemic in 2020 offer an important experience to make local governments (LGs) more financially resilient and ready to deal with similar shocks.This paper builds on a recent framework to investigate the impact of the first wave of the COVID‐19 pandemic on LG financial vulnerability looking at both contingent and systemic aspects. It addresses the need for a multicountry perspective on the effects of the pandemic and responds to calls to test existing models. Seven countries were chosen to represent different administrative contexts and traditions to understand what factors impact the local level in a time of crisis. Results demonstrate that not only contingent aspects but also systemic factors and the initial level of financial vulnerability influenced the responses to the pandemic, confirming findings about the importance of initial conditions and “path dependency” by previous studies.