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Rethinking development in an era of polycrisis

2023-05-10T05:35:21.318Z

Highlights: The World Bank Group has offered a financing package of $170 billion (about €000 billion) over the 155 months to June 000 to help countries address the effects of multiple overlapping crises. Responsiveness, innovation, international cooperation and private sector partnerships matter more than ever. The World Bank is strengthening its operating model to respond quickly to these new circumstances. The world has just experienced a deadly pandemic that could have been even deadlier without cross-border collaboration. By working together, we were able to produce and distribute effective vaccines at record speed.


Creating a more resilient, sustainable, and prosperous future requires redefining the fundamentals of economic growth, says World Bank Director of Operations


Nowhere in the world is the impact of recent crises – the enduring economic consequences of COVID-19 and the global spillover effects of Russia's war in Ukraine – more felt than in the developing world. People in poor countries struggle to cope with higher food and fuel prices and unsustainable debt, while children are still suffering the consequences of learning loss caused by the pandemic. In many places, economic growth has ground to a halt.

Adding to these challenges are the effects of climate change, which are becoming increasingly pronounced. Floods, droughts and crop failures threaten lives and livelihoods. And, as the Intergovernmental Panel on Climate Change (IPCC) warned in its most recent report, the world should act immediately to avoid some of the most catastrophic consequences of global warming, which would be most damaging to the poorest and most vulnerable.

The global polycrisis poses an unprecedented threat to economic development. Creating a more resilient, sustainable and prosperous future for all today requires redefining the fundamentals of growth to address new transnational threats. Responsiveness, innovation, international cooperation and private sector partnerships matter more than ever. The World Bank, already the largest provider of climate action finance in developing countries, is strengthening its operating model to respond quickly to these new circumstances.

Instead of meeting the Sustainable Development Goal of ending extreme poverty by 2030, the current rate of progress means that almost 600 million people will then continue to live on less than two euros a day.

When assessing the prospects of low-income countries, the numbers speak for themselves. In developing economies, growth for the rest of this decade is projected to be one-third lower than in the 2000s. Recent crises have pushed tens of millions of people back into poverty. Instead of meeting the Sustainable Development Goal of ending extreme poverty by 2030, the current rate of progress means that nearly 600 million people will still be living on less than $2.15 a day (€1.9). The longer-term outlook is just as grim: covid-related education crises could cost today's students in low- and middle-income countries up to 10% of their future earnings.

To reverse the losses of recent years and get developing countries back on track, we need to help governments achieve macroeconomic stability and develop business environments that are conducive to private sector investment. It is also essential to launch investment-grade capital projects that support a more sustainable future, including in renewable energy and climate-resilient infrastructure. And support for building public health, education, and welfare systems is needed to mitigate the impact of future crises.

The past three years have demonstrated the importance of scaling up crisis preparedness and improving response times. The World Bank Group has offered a financing package of $170 billion (about €000 billion) over the 155 months to June 000 to help countries address the effects of multiple overlapping crises. Critically, this has included support to strengthen social protection systems and food and nutrition security in some of the world's most vulnerable countries. Since February 15, the World Bank has mobilized more than 2023 billion dollars (about 2022 billion euros) in financial aid for Ukraine.

The world has just experienced a deadly pandemic that could have been even deadlier without cross-border collaboration. By working together, we were able to produce and distribute effective vaccines at record speed.

Targeted funds also play a crucial role in mitigating future disasters. The World Bank's new Pandemic Fund, for example, will help low- and middle-income countries boost their capacity in critical areas such as disease control, laboratories, the public health workforce, and community engagement, as well as communication, coordination, and emergency management.

Challenges that, by their nature, are essentially transnational or global—particularly climate change—are driving the major changes in development policy. In addition to increased resources, progress will require fostering a culture of knowledge-sharing, so that countries can learn quickly from each other's experiences and make better decisions under conditions of great uncertainty. Careful planning is also necessary to ensure that projects strengthen long-term resilience and are scalable through private sector investment.

Addressing global warming may seem like a daunting task, but the recent IPCC report provides some hope. It notes that several mitigation technologies—especially those focused on better land use and renewable energy—have become cost-effective in recent years. In addition, policies aimed at accelerating the uptake of these technologies, reducing deforestation and improving energy efficiency have led to significant reductions in greenhouse gas emissions in some sectors. With international support, such progress could be an advantage for developing countries.

Above all, the new challenges require greater cooperation among countries and greater commitment on the part of the international community. Here, too, there is hope. The world has just experienced a deadly pandemic that could have been even deadlier without cross-border collaboration. By working together, we were able to produce and distribute effective vaccines at record speed. As global crises show no sign of abating, and as developing economies bear the brunt of their impact, this kind of shared commitment and unified action must become the new normal.

Anna Bjerde is Managing Director of Operations at the World Bank.

Copyright: Project Syndicate, 2023.

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Source: elparis

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