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As the world comes out of the Covid-19 pandemic, what are the major forces that will shape globalization?
Will the more prominent role of the state undermine the level playing field? Will global value chains be reshuffled? How will policies to combat climate change affect cross-border flows of goods and investment? Does digitalisation matter for international trade and within country inequality?
Hosted by the University of Gothenburg / School of Business, Economics and Law
The COVID-19 pandemic has had a profound impact on our world and caused a devastating economic and social disruption. An especially heavy blow was dealt to emerging markets and developing economies (EMDEs). These countries now face the challenge of containing the virus and at the same time ensuring an inclusive recovery. This creates a need for effective policies that would allow the EMDEs to build back better.
The COVID-19 pandemic has also significantly exacerbated existing inequalities with 120 million people being pushed into extreme poverty. It is crucial to reduce discrimination and inequality everywhere to have a successful recovery since we cannot have macroeconomic and financial stability without social sustainability.
These challenges are aggravated by climate change—a crisis that can cause even greater destruction than the pandemic. There is an urgent need to find pathways to reach net-zero emissions at the global level and ensure a just transition that leaves no one behind.
During this lecture at the 9th Annual International Conference on Sustainable Development (ICSD), Kristalina Georgieva, the Managing Director of the International Monetary Fund, and Jeffrey Sachs, the Director of the Center for Sustainable Development at Columbia University and a world-renowned economics professor, discussed the above-mentioned interconnected challenges of recovery, climate change and inequality.
Introduction was delivered by Jutta Urpilainen, European Commissioner for International Partnerships.
Global Witness’s annual reports on the killings of environmental defenders are but one, awful, indication of the social injustices that can accompany the extraction of natural resources from the subsoil and from forests. The struggle for social justice in these environments has become yet more difficult under COVID, all the more so given the impacts of COVID on indigenous populations in many of these environments. These challenges seem likely to intensify downstream of COVID in the face of economic reactivation policies, closing civic space, the search for energy transition minerals, and a politics of urgency that risks undermining a politics of social justice.
In this talk, Anthony Bebbington explored some of these trends and the challenges they present to civil society and to philanthropies that support civil society. He referred especially to the experience of the Ford Foundation, while also making a broader argument.
The COVID pandemic will have been the largest global shock since WWII. It will have affected disproportionately and differently developing countries. In this #KAPTalks, Pascal Lamy discussed the likely consequences of the COVID pandemic on the geoeconomic and geopolitical environments of developing countries, and asked how international cooperation can be relaunched in order to avoid a further fracture between the global North and South.
As we begin the final stretch to 2030, Sub-Saharan Africa is facing serious challenges achieving the Sustainable Development Goals (SDGs). With significant population growth and massive urbanization in the continent, governments are under tremendous pressure to achieve economic growth, provide jobs and social services, and expand access to energy.
Currently 600 million people lack access to electricity and about 900 million lack access to clean cooking solutions. By 2025, Africa’s population will exceed China and India, and by 2040, its economic output could quadruple, with about 500 million more people moving into African cities. All of this implies a three -to-fourfold increase in the demand for energy. Thus, how the continent decides to source its energy will determine economic transformation and prosperity of its people, and will also greatly influence global climate change.
The current lack of access to reliable and affordable modern energy is seriously affecting service delivery in health and education and also slows down economic growth. At the same time Sub-Saharan Africa already faces a disproportionate negative impact of climate change though it accounts for less than 4 percent of Green House Gas (GHG) emissions, and about 2 percent of energy-related CO2 missions. Extreme weather events, including droughts and floods already have impacts on energy generation and agricultural production.
Within the above above context, the question is: how can Africa achieve its ambitious goals enshrined in the African Union’s Agenda 2063, promote the Sustainable Development Goals, and at the same time adhere to its commitments under the Paris Accord?
Dr. Yumkella argued that accelerated investment in sustainable energy is key to achieving all three agendas. In 2019, he was part of several global initiatives supporting energy transitions in Africa including, serving as adviser to the Director General of the International Energy Agency, Coordinator of the AU-EU Sustainable Energy Investment Platform, and one of the facilitators of the UN-World Bank Health and Energy Platform for Action (HEPA) for Clean Cooking Solutions.
The lecture covered some of the efforts to achieve SDG-7 i.e. access to affordable, reliable and sustainable modern energy services for all. It highlighted the crucial importance of energy as an enabler for achieving the development goals of health, food security, education and clean water and sanitation. It also explored the policy actions required to scale up investments to achieve the SDG-7 targets by 2030. Other critical issues addressed included, the pathways to sustainable development and sustainable energy access for Africa and how international cooperation can support capacity building for the right strategies and policies to be put in place to incentivize public-private partnerships for a low carbon transition on the continent.
The Kapuscinski Development Lecture was opened by dr. Anna Wróbel from the Department of Regional and Global Studies (Faculty of Political Science and International Studies, University of Warsaw) who welcomed the distinguished guest, Professor Francis Fukuyama.
Next, Professor Daniel Przastek, Dean of the Faculty of Political Science and International Studies, University of Warsaw, welcomed the guest, and expressed hope to be able to welcome Professor Fukuyama for a real life event at the University of Warsaw in the future.
Then the floor went to Martin Seychel, Deputy Director-General, EC International Cooperation and Development, who delivered opening remarks on behalf of the European Commission.
Final speaker at the introductory part of the lecture was Ivan Zverzhanovski, UNDP Regional Partnerships Advisor to welcome Professor Fukuyama on behalf of the UNDP.
Professor Fukuyama started his lecture on “Economic and Political Development: The Importance of Institutions” by pointing out that in the study of development economics, there was a period when the role of institutions was largely omitted, and it was only since the 1980s, that development economists have begun to recognize the importance of institutions. According to Professor Fukuyama it was inter alia because of the work of economists like Douglass C. North.
Yet initially inclusion of institutions into the study of development was limited, and narrowed the focus mostly to contract enforcement and property rights. Speaking of this Professor Fukuyama indicated that it is not certain whether western-style property rights were applicable globally. He stressed that there were many other institutions outside of property rights that were needed to achieve development, transparency, democratic accountability and modern state capacities. Yet it was only by the early 2000s that the institutional agenda in development studies broadened to include “good governance and anti-corruption,” but policy responses to achieve the latter have yielded disappointing results. Following Professor Fukuyama, believe in the power of markets and the disparaging of the state is destructive for development and democracy. This is why the ideas of good governance and anticorruption are that important. This is also why many development institutions today are pushing for a broader governance agenda to extend the basic state-building process and initiate more pervasive anticorruption measures. Even though various successful anti-corruption measures have been put in place, we do not know if aggregate corruption has changed. It might have moved from one sector to another, from one level of hierarchy to another. But getting rid of corruption is difficult – those in power know what they are doing. One needs to have enough power to bring about this political change, because it’s so entrenched. Professor Fukuyama expressed regret that even in countries where serious reforms were undertaken, some years afterwards, one by one these have been reversed. At this point, he indicated once again how important institutions are for development, but institutions are not efficient by themselves to bring about good results. It is because political power and money following it have been able to manipulate the institutions. It is possible to use the COVID-19 pandemic to illustrate some of the points brought about in the lecture, and it is not democracy that is the most important factor here. Other important features that increase efficiency of institutions include: 1) state capacity (inclusive health services during pandemic), 2) citizens’ trust in government, and 3) bad leadership indicating those who saw the pandemic not as a threat to general health but a threat to their personal political interests. Professor Fukuyama concluded his speech by yet again emphasizing the importance of strong institutions, and the importance to have rules, and impersonal, expert-led institutions.
Next, dr. Karina Jędrzejowska from the Department of Regional and Global Studies (Faculty of Political Science and International Studies, University of Warsaw) opened the discussion, and forwarded to Professor Fukuyama selected questions asked by the audience. The first group of questions asked related to the current state and threats to democracy. Responding to that Professor Fukuyama stated that we are living in a difficult time for global democracy. But a silver lining to the current pandemic is that it is exposing bad governance. It is revealing structural inequalities and showing what reforms are needed to make institutions effective. Next questions addressed the prospects for transatlantic cooperation, and future of economic and security multilateralism. According to the speaker, in order to have strong multilateralism, a strong hegemonic power is needed. When responding to the question on the condition of the concept of developmental state, Professor Fukuyama expressed the opinion that the idea has not lost it relevance, and the lessons drawn from implementation of this development model in East Asia still matter for development worldwide. Next, there were questions about impact of cultural diversity on development. Responding to that, Professor Fukuyama said that it is possible to govern diversity successfully, but ethnic and racial diversity can make democracy more difficult. Liberal democracy exists to accommodate and govern diversity, but – unfortunately – “human beings do not need race & ethnicity to hate each other”. In the final remarks Professor Fukuyama expressed his worries regarding the concept of transhumanism, and made some recommendations to the students of international relations at the University of Warsaw. Students were reminded of the importance of studying economics in order to get a better understanding of the surrounding world.
Next, dr. Jędrzejowska thanked Professor Fukuyama for the lecture and debate. Next, she thanked the UNDP, European Commission, and the authorities of the Faculty of Political Science and International Studies, University of Warsaw, for making the event possible, as well as thanked the participants for their attendance and questions. Then the event was closed.
Royston Braganza is a CEO of Grameen Capital which aims to provide debt financing to social enterprises across sectors such as affordable education and skill development, affordable healthcare, clean energy & innovation, agriculture, financialinclusion and livelihoods. Having a background in banking being in his earlier assignment a head of HSBC’s SME Business and Senior Vice President with HSBC, Royston Braganza was instrumental in setting up and heading HSBC’s Microfinance & Priority Sector business inIndia. Prior to that, he worked in Citibank India for over 8 years in various assignments across both the Consumer Bank andthe Corporate Bank.
In his talk titled Reimagining Ways To Achieve SDGs – Innovations In Finance And Digitalisation, Royston Braganza pondered on how to respond to crises, how to make our life better, greener, cleaner and more inclusive. Keeping in mind that people are all interconnected in today’s world, he made it elear to reimagine the innovation and moving forward by focusing on two areas, finance and digitalisation. Considering the current health crisis which tums into an economic crisis and theninto a humanitarian crisis, it affects every part of life, state-wise and individual-wise. The urge to reimagine capital, whichshould be a capital with conscience. Covid-19 has distracted the norrnality but it is also an opportunity to build new systemsbłock by błock. A crisis urges to rethink values and actions and can cause a boost to build greener and inclusive life, as it has been said by the speaker: „In terms of digitalisation, it changes everything and helps to improve life. At the moment, we use mobile phones for contact tracing, whether in India, Nairobi or Riviera, the situation is the same. We use newtechnologies – solar power in Africa; AI, machine learning.
They say that data is the new oil. It’s actually better than oil because you can use data several times, and creatively. We nowneed to leam how to use it for making life better, and we should focus on serving every single person, so nobody is leftbehind.”
The speakers used an example of Grameen Foundation that in 2007 acknowledged that 400M people in India have to live with 2$/day and set a goal to bring microfinancing to 400M people via helping microfinancing companies to raise capital.Eventually and gradually microfinance NGOs tumed into mainstream banks and in 2008, through these NGO tumed into banks, Grameen had emphasised the impact on 52M clients, affecting the lives of about 300M people counting in the familymembers. Microfinancing has been a positive story, showing that one can do good and do well at the same time. lt is possible to make profit by facilitating affordable healthcare, education or housing to people who very much need it. This sentiment has been echoed in every aspect of life, including in churches and company boards. Now impact has become mainstream and fast growing, supporting the achievement of SDGs. Thanks to Grameen Foundation, 200M accounts were opened in a very short period in India, which was supported by the fact that 1B people got an ID, and that mobile technologycan be used. Nowadays, it is obvious that companies invest in their employees, are customer centric, reimagining the way todo business.
Royston Braganza also focused on ways to attract mainstream capital to combat the consequences of Covid-19 in his lecture, which tums to be the most relevant issue and barrier to achieve SDGs. Again, using an example of Grameen Foundation that has shown that taking a bigger risk can pay off – the foundation created an impact fund and distributed it in smaller shares of it to smaller distributors (at the moment it is a Covid-19 impact bond, which supports women artisans who get a monthly stipend and a training, which will help them to overcome the difficulties created by the pandemie). The existing models, Royston mentioned, are transferrable to other SDGs, for example to the climate: when big companies like Shell or Nesquik become funders of the bond, it should be distributed to communities through smaller NGOs and entities to fund activities and create impact at grass root level. The existing models can be scaled by awareness raising, and by creating one’s own networks.
How will the world economy look like after the pandemic? Will governments take initiative to reshape their economies to better serve human needs? Is this a turning point for restructuring globalization for the public good? These were some of the questions addressed by Nobel Prize-Winning Economist Joseph Stiglitz in his Kapuscinski Development Lecture on „The Post-Pandemic World: Restructuring Globalization for the Global Public Good”.
Joseph Stiglitz started his lecture by recognizing that countries around the world responded differently to Covid-19 pandemic. According to him, the US, Brazil and India failed in their respective responses to the crisis, whereas Denmark and New Zealand did a better job in controlling both the pandemic and its economic aftermath. So what accounts for the successes and failures of different countries in coping with the Covid-19 pandemic? Are there any generalizations, Stiglitz asked, that we can draw from this encounter? According to Stiglitz, countries that recognize the importance of science and the institutions; and those that demonstrate deep respect for their citizens have done better. As he discusses in his recent book, Power, People and Profits: Progressive Capitalism for an Age of Discontent , countries which respect science, social organization, credibility and the institutions for the verification of truth have succeeded to raise the standard of living for their societies in the last 250 years. Not surprisingly, these countries managed to cope with the pandemic better than others.
Stiglitz argued that 6 months after the outbreak of the pandemic, it became clearer that the US was particularly vulnerable to this crisis due to the existing inequalities such as the lack of access to health care and good nutrition. “This is not an equal opportunity virus,” Stiglitz continued, “it goes after those who are most vulnerable. It has exposed and exacerbated inequalities in our society.” Now, there is a global consensus that we don’t want to bounce back to where we were in January 2020.
Speaking on the impact of Covid-19 on globalization, Stiglitz argued that the pandemic made us all suddenly all that “viruses do not carry passports, they can go anywhere in the world.” However, the economic system we have created is not resilient to global supply chains with a clear example being the US inability to produce masks, protective gear for health care workers or ventilators at the height of the pandemic. Stiglitz conclusion was that there is a need to create more resilient supply chains going forward. The lecture was followed by a Q&A session moderated by Anya Schiffrin.
Photo: Daniel Baud and the Sydney Opera House
