How COVID-19 is changing the opportunities for oil and gas-led growth

Development Matters Climate change, Covid-19, Natural Resources , , , , ,

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By Glada Lahn and Siân Bradley, Senior Research Fellows, Energy, Environment and Resources Programme

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_680622253For oil and gas exporters, COVID-19 has caused a downturn like no other. From early 2020, lockdowns sent global energy demand plummeting by over a quarter. Combined with the Saudi-Russia price war, oil prices hit their lowest levels in over two decades, down to less than $20 a barrel in April. Without strategic reserve filling, the collapse would have been even steeper. As lockdowns eased and June’s OPEC-plus agreement to cut production boosted oil prices (around $40/b in June), producer countries could be forgiven for hoping that the worst is over. However, as the pandemic hit, the fossil fuel market was already facing a grim prognosis.

From boom and bust to… bust

Five years ago, Chatham House began exploring what decarbonisation might mean for extractives-led development. To achieve the Paris Agreement’s commitment to limiting global warming to well below 2°C and as close as possible to 1.5°C, all credible pathways will require a radical reduction in fossil fuel use. With 76 per cent of all greenhouse gas emissions (GHGs) and close to 90% of CO2 emissions coming from the burning of coal, oil and gas, the implications for these markets are profound. We are no longer talking about a cycle of boom and bust, but about structural decline. Continue reading →

Building tax systems in developing countries is vital to overcoming COVID-19 and achieving the SDGs

Development Matters Covid-19, Policy, SDGs , ,

By Ben Dickinson, Head of the Global Relations and Development Division, Centre for Tax Policy and Administration, OECD

T&D cover imageThe Sustainable Development Goals (SDGs) serve to stimulate action in areas of critical importance for humanity and the planet. With the COVID-19 pandemic affecting lives and livelihoods alike, the question is how will the SDGs be financed?

Domestic resources, primarily tax revenues, provide the vast majority of financing for development – money needed to build roads, schools, hospitals, social protection systems, and other critical services in developing countries. A new report released today, highlights the OECD’s work on building tax systems in developing countries, unlocking a range of tools, experience and expertise to meet the tax challenges of the 21st century. Continue reading →

Lessons from LDCs’ responses to COVID-19: From crisis to opportunities?

Development Matters Covid-19, Least developed countries, Trade , ,

By Ratnakar Adhikari, Executive Director, Enhanced Integrated Framework

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide. This blog is also a part of a thread looking more specifically at the impacts and responses to the COVID-19 crisis in Least Developed Countries (LDCs). 

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June 2020 : Staff members outside the Republican Hospital for Covid-19 Patients in Taiz, Yemen. Photo: Akramalrasny / Shutterstock.

Many least developed countries (LDCs) have not yet seen large numbers of COVID-19 cases – though there are notable exceptions such as Afghanistan, Bangladesh, Nepal and Sudan.

Yet, all LDCs are confronting severe economic disruptions – and a major fiscal squeeze – from the global demand shock, supply chain disruptions and, significantly reduced income from tourism and remittances. Domestic lockdowns to prevent the spread of the virus present unique challenges in countries with high poverty rates in which large sections of the workforce are informally employed.

At the same time, crises can come with opportunities for positive change, and the present crisis might offer this for LDCs, to undertake much-needed reforms that would place them on firmer footing as economic recovery takes hold. A few LDCs have done just that, examples of which are below. Continue reading →

Re-imagining cities in the COVID-19 era

Development Matters Covid-19 , , ,

By Robert Muggah, Principal, SecDev Group & Co-founder, Igarape Institute

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

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Empty streets in Lima, Peru, during the Coronavirus outbreak, March 2020.

The COVID-19 pandemic is quietly and radically reconfiguring cities around the world. It has already brought several of the world’s global cities to their knees. In addition to the billions of people forced to work remotely are another billion living in slums who depend on the informal economy, have few safety nets and are seeing their incomes and livelihoods upended. With the COVID-19 pandemic now rapidly intensifying in lower- and middle-income cities and neighbourhoods, it is overwhelming under-resourced hospitals, demolishing commerce, shredding remittances, straining digital infrastructure, increasing vulnerability to cyberattacks and intensifying mental health illnesses. Many cities were already facing massive liabilities and revenue shortfalls before the outbreak of the pandemic – yet these are set to intensify dramatically around the world. Continue reading →

Engaging citizens for sustainable development: Core business for a better recovery

Development Matters Covid-19 , , ,

By the Co-Chairs of the OECD Development Communication Network (DevCom): Nanette Braun, Chief, Communications Campaigns Service, UN Department of Global Communications, Amalia Navarro, Director of Communications, Ibero-American General Secretariat (SEGIB) and Mathilde Schneider, Director of Communications, French Development Agency (AFD)

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

devcom-covid19Those of us who work in sustainable development need no convincing: to overcome global challenges, we need global collaboration and solidarity. The COVID-19 pandemic has made this need clearer than ever. We face vastly different situations, but we are all connected and all responsible for our common future. We can rebuild from this crisis if all of us – all countries and all citizens – play our part.

Yet, we know that not everyone is convinced about sustainable development, and some vocal critics are using this historic crisis to promote national isolationism. So how do you address people who want to go it alone and do away with multilateral organisations? It’s fairly easy to convince people to stay healthy by washing their hands, but how do you convince them to respect gender equality, reduce their carbon footprint or help achieve our other global goals? Continue reading →

COVID-19 and the global contraction in foreign direct investment

Development Matters Covid-19, Development finance , , ,

By Adnan Seric, Research and Industrial Policy Officer at the Department of Policy Research and Statistics (PRS) at the United Nations Industrial Development Organisation (UNIDO), and Jostein Hauge, Research Fellow at the Centre for Science, Technology, and Innovation Policy (Institute for Manufacturing) at the University of Cambridge

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_163440290COVID-19 is uprooting economic globalisation. As both supply and demand are experiencing simultaneous shocks due to lockdown measures, global production networks and international trade flows are being disrupted on a scale never seen before. Disruptions to flows of portfolio and foreign direct investments (FDI) — which are part and parcel of economic globalisation — are no exception. According to the International Monetary Fund, investors removed over US$100 billion of portfolio investment from developing countries since the beginning of the COVID-19 crisis, the largest capital outflows ever recorded. According to the UN Conference on Trade and Development (UNCTAD), global FDI flows are expected to contract by 40% during 2020/21.

The contraction in FDI is going to hit developing countries particularly hard, mainly for two reasons. First, FDI inflows to developing countries are expected to drop even more than the global average seeing that sectors that have been severely impacted by the pandemic account for a larger share of FDI inflows in developing countries. Second, developing countries have become more reliant on FDI over the last few decades — FDI inflows to developing countries increased from US$14 billion to US$706 billion (current prices) between 1985 and 2018, as seen from Figure 1. As a share of world FDI inflows, this represents an increase from 25% to 54%. Continue reading →

COVID-19 has threatened medical equipment supply chains: it is in developing countries’ interest to rebuild them better

Development Matters Covid-19, Policy ,

By Piergiuseppe Fortunato, Economic Affairs Officer, UNCTAD and Annalisa Primi, Head, Structural Policies and Innovation Unit, OECD Development Centre

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

supply-chains-medicalSupply chain breakdowns and the revival of export restrictions in strategic sectors underline the importance of domestic and regional manufacturing capabilities.

Trade can be instrumental for development. But increasing concentration in global markets and repeated threats and rounds of tariff hikes are putting the global trading system, and the institutions around which it was built, under severe stress. The COVID-19 outbreak has exacerbated these tensions, precipitating the World Trade Organization (WTO) into a stalemate and leading many economies to simultaneously enact temporary export bans and restrictions on critical goods. All at a time when these goods are more needed than ever before, amidst a pandemic which has put vast parts of the planet under lockdown and limited economic activities in an unprecedented way.

Global annual growth this year might fall between 6% and 7.6% according to the OECD’s latest projections and economies in all regions of the world will shrink. Developing economies will likely be hit the hardest due to their role in global trade. Most developing economies specialise in supplying commodities. Their exports have been severely hit by the COVID-19 crisis, as demand for natural resources has plummeted, prices have collapsed, and traditional exports such as fresh, perishable agricultural products have been blocked due to logistical shortages. Continue reading →

COVID-19: super-accelerator or game-changer for international (development) co-operation?

Development Matters Covid-19 , ,

By Stephan Klingebiel, Director of UNDP’s Global Policy Centre in Seoul, Republic of Korea and Artemy Izmestiev, Policy Specialist, UNDP’s Global Policy Centre in Seoul, Republic of Korea

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

development-co-operationThe outbreak of COVID-19 as a global health emergency and the resulting socio-economic crisis is testing global structures of co-operation. The challenges are giving rise to new forms and expressions of transnational solidarity. In an article on COVID-19, “We will come through this together”, the UN Secretary-General reminds us that no country can tackle this issue alone and co-operation is crucial for addressing existing challenges. In April 2020, the United Nations Development Programme (UNDP) Seoul Policy Centre held a series of webinar discussions where think tanks around the world presented their views on what to expect in the area of international (development) co-operation after the pandemic. This blog post, while not intending to represent the views either of our panellists or of UNDP, is informed by those discussions.

We expect that the current global crisis will significantly impact the future framing of development co-operation. As the crisis acquires global dimensions, the provision and support of global public goods seems to become more and more central. Is this a new narrative for development co-operation, particularly with international co-operation budgets coming under increasing pressure in developed countries? Continue reading →

Unbundling Corruption: Why it matters and how to do it

Development Matters Asia, Policy , ,

By Yuen Yuen Ang, Political Scientist at the University of Michigan, and the author of How China Escaped the Poverty Trap and China’s Gilded Age: The Paradox of Economic Growth and Vast Corruption

Corruption-whistleblower-shutterstock_1581042757Even amid a global pandemic, corruption persists and manifests itself in multiple forms, ranging from corrupt police extorting truck drivers delivering essential goods, rigged procurement contracts, to politically connected corporations receiving huge bailouts from the government while small businesses are starved of loans they desperately need to stay afloat. Although all of these actions are corrupt, they involve very different actors and stakes; some are transactional while others are extractive; and each brings about vastly different consequences.

Yet the conventional way of measuring corruption across countries does not capture qualitative distinctions across types of corruption. Instead, standard indices—most notably, the Corruption Perception Index (CPI)—measure corruption as a one-dimensional problem, ranging from 0 to 100. Consistently, rich countries rank at the top while poor countries are stuck at the bottom. Continue reading →

Why we need Global Public Investment after COVID-19

Development Matters Covid-19 , , , ,

By Simon Reid-Henry, Reader in Geography and Director, Institute for Humanities and Social Sciences, Queen Mary University of London

This blog* is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

business-sustainabilityThe COVID-19 response has highlighted the international need for an ongoing pool of public money and explains how Global Public Investment (GPI) would work.

It has been heartening this June to watch the latest Gavi (the Vaccine Alliance) pledging round raise US$8.8 billion, partly in response to COVID-19. It would be more heartening if we didn’t have to live on tenterhooks always, unsure if the goodwill to meet this or that international need will eventually be found. Or whether, as with the US’ denial of contributions to the World Health Organization, it might even be withdrawn.

What is Global Public Investment?

This is the idea behind Global Public Investment (GPI): a system of fixed and multi-directional international fiscal allocations. Think of it as a way of funding global public goods, like a COVID-19 vaccine, or of meeting already agreed international commitments like the Sustainable Development Goals. Either way, GPI would fill a modest but important niche by providing a common pool of public money internationally. Continue reading →