Category: Covid-19

Asia, Covid-19, Latin America and the Caribbean

Prospects for Chinese and Mexican South-South co-operation post-COVID-19

By Denghua Zhang, former diplomat and Research Fellow at the Australian National University and Carlos Cortés Zea, Coordinator of the AMEXCID-UNDP Co-operation 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.

The COVID-19 crisis is having profound impacts on the international political and economic order. It also provides an opportunity for stakeholders to reflect on past practices in each sector and learn from lessons to improve policies in the future. In this case, we examine the purposes, approaches and capacities of emerging providers (or Southern providers as some may call them) through the lens of China and Mexico—two major players in south-south co-operation (SSC).

Emerging providers, similar to traditional donors, provide aid to serve their own national interest. Motivations underpinning emerging providers’ efforts can vary significantly. The Chinese foreign aid programme is driven by a combination of factors including diplomatic competition with Taiwan, access to natural resources in recipient countries, image building as a responsible global power, and generating geopolitical support when its relationship with developed countries is strained. For example, China is currently taking a whole-of-government approach to conduct its COVID-19 diplomacy; an effort to improve its global image and garner support from developing countries in the face of growing pressure from developed countries over China’s handling of the crisis.  

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Development Matters
Africa, Covid-19, Français

La restructuration de la dette en Afrique doit impliquer ses nouveaux créanciers

Par Arthur Minsat, Centre de développement de l’OCDE et Yeo Dossina, Commission de l’Union africaine[i]

Ce blog aborde les impacts de la crise du COVID-19 en matière de flux de capitaux et de dette dans les pays en voie de développement.

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La récession mondiale causée par la pandémie COVID-19 appelle à l’annulation ou à la restructuration de la dette des pays africains. La crise a déclenché un double choc fiscal, avec une hausse des dépenses publiques et une baisse des recettes. Il est essentiel de rétablir la capacité d’emprunt des pays africains pour lutter contre la perte de leur marge de manœuvre budgétaire.

Avant le choc, l’Afrique avait déjà montré des signes de vulnérabilité. Bien que le continent africain se soit illustré par le deuxième taux de croissance économique le plus élevé au monde, avec 4,6 % en moyenne entre 2000 et 2018, sa croissance avait commencé à ralentir, passant d’un pic de 6,8 % en 2012 à 3,2 % en 2019. En 2020, la croissance de l’Afrique devrait se situer entre -2,1 % et -4,9 %, ce qui réduira considérablement la marge de manœuvre budgétaire de tous les pays. Dans l’ensemble, le financement du développement a diminué depuis 2010 en pourcentage par habitant. Tant pour les recettes intérieures que pour les flux financiers extérieurs, le montant du financement par habitant a diminué de 18 % et de 5 % respectivement tout au long de la période 2010-2018. Une économie mondiale moins performante et une croissance démographique toujours élevée dans la plupart des pays africains sont à l’origine de cette tendance à la baisse.

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Covid-19, Français, Natural Resources, New social contract

Une taxe climat européenne pourrait bénéficier aux pays exportateurs de pétrole

Par Håvard Halland, Economiste au Centre de développement de l’OCDE

Ce blog fait partie d’une série sur la lutte contre le COVID-19 dans les pays en voie de développement. Visitez la page dédiée de l’OCDE pour accéder aux données, analyses et recommandations de l’OCDE sur les impacts sanitaires, économiques, financiers et sociétaux de COVID-19 dans le monde.

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Pour relancer nos économies d’une manière durable dans le sillage de la crise due au Covid-19, l’instauration d’une tarification effective du carbone à l’échelle mondiale reste plus importante que jamais. Cependant, tant que les Etats ne parviendront pas à s’entendre sur la gravité des risques induits par le changement climatique, la mise en place d’un système mondial de taxation des gaz à effet de serre restera une perspective lointaine.

Le mécanisme d’« ajustement carbone aux frontières » envisagé par l’Union européenne (UE) pourrait toutefois être un premier pas vers une réallocation des investissements internationaux dans le sens souhaité. Ambitieux, les nouveaux objectifs climatiques de l’UE exigeront des réductions des émissions non seulement dans le secteur de l’énergie, mais aussi dans les secteurs à forte intensité énergétique comme les industries lourdes, la métallurgie, la pétrochimie, le ciment, les engrais.

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Covid-19, Green transition, Natural Resources, Social Protection

EU climate tax could benefit oil exporters

By Håvard Halland, Senior Economist at the 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.

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In energy-intensive sectors, a carbon border tax could shift the geography of investment.

For a green coronavirus recovery, an effective global price on carbon remains as important as ever before. However, until governments can agree on the severity of the risk posed by climate change, a global tax on greenhouse gas emissions seems a remote prospect. Nonetheless, the “carbon border adjustment mechanism” that the EU is considering could have similar effects on capital allocation – albeit on a smaller scale.

The EU’s ambitious new climate goals will require emissions reductions not only in the energy sector, but also in energy-intensive sectors such as heavy industries, metals, petrochemicals, cement, and fertilizer. To ensure a level playing field between EU companies and foreign firms not subject to EU emissions targets, the EU may implement a border tax on carbon-intensive imports. The combination of high carbon taxes within the EU and a carbon border tax would present energy-intensive industries with a new set of locational choices.

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Covid-19, Development in Transition, Reviving multilateralism

COVID-19: A game changer for the Global South and international co-operation?

By Debapriya Bhattacharya, Chair, Southern Voice and Distinguished Fellow, Centre for Policy Dialogue (CPD), and Sarah Sabin Khan, Senior Research Associate, CPD

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.

In a short but seemingly never-ending time span, the COVID-19 crisis has propelled governments into the dilemma of balancing the response to immediate health, economic and social fallouts, with long-term recovery. Some remain vigorously engaged in saving lives. Others are seesawing between loosening restrictions and enforcing new ones to prevent a second wave. Countries from the Global South are among the worst affected by the pandemic. This is due to both their weak pre-crisis conditions as well as their disadvantaged position in global governance. There is a broad consensus that things will not and cannot go back to the way they were before. A “new normal” will emerge in terms of how governments, producers, businesses, consumers and other economic agents conduct themselves. This will be also true for global governance structures and the conventionally dialectical relationship between the North and the South.  

In this context, pessimistic views and optimistic outlooks on the post-COVID world confront one another. 

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Covid-19, Development in Transition, Reviving multilateralism

COVID-19 and the human development crisis: what have we learnt?

By Pedro Conceição, Director of the Human Development Report Office and lead author of the Human Development Report and Mario Pezzini, former Director of the OECD Development Centre and special adviser to the OECD Secretary-General on development

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.

To say COVID-19 is unprecedented is no cliché. Its simultaneous impact on multiple development areas – education, health and the economy – sets it apart. As does its geographic reach: the pandemic, and its spillover, have touched every country.

Of course, the world has seen many crises over the past 30 years, including health crises from HIV/AIDS to Ebola, and economic crises such as the Global Financial Crisis of 2007-09. Each has hit human development, devastating the lives of millions. But overall the world has still made development gains year on year. What distinguishes COVID-19 is the triple hit to health, income and education, fundamental building blocks of human development. And as a result the global human development index is on course to decline this year for the first time since the concept was introduced in 1990 – something that can still be avoided or at least mitigated with strong policy responses.

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Africa, Covid-19, New social contract

Ongoing debt restructuring must involve Africa’s new creditors

By Arthur Minsat, OECD Development Centre and Yeo Dossina, African Union Commission[i]

This blog is a part of a thread looking more specifically at the impacts of the COVID-19 crisis in terms of capital flows and debt in developing countries.

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The global recession caused by the COVID-19 pandemic calls for a cancellation or restructuring of African countries’ debt. The crisis has triggered a double fiscal shock of soaring government expenditure and slumping revenues. Restoring African borrowing capacity is essential to fighting a loss of fiscal space.

Prior to the shock, Africa had already shown signs of vulnerability. Although the African continent boasted the world’s second highest economic growth rate at 4.6% on average between 2000 and 2018, it had started to slow down from a peak of 6.8% in 2012 to 3.2% in 2019. In 2020, Africa’s growth is likely to fall between -2.1% and -4.9%, significantly reducing the fiscal space of all countries. Overall, financing for development has dropped since 2010 in per capita terms. For both domestic revenues and external financial inflows, the amount of financing per capita has decreased by 18% and 5% respectively throughout 2010-2018. A less favourable global economy and persistently high demographic growth in most African countries have driven this downward trend.

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Building resilience, Covid-19, Infrastructure

Building resilience and infrastructure in a warming world

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By Jan Corfee-Morlot, New Climate Economy/ World Resources Institute (WRI), Nancy Kete, Kete Consulting and Delger Erdenesanaa, WRI

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.

Solar panels and roadInvestment in tackling climate change is still very small compared to the expected adverse impacts on society and nature. The economic costs of climate change are estimated to range from 2-10% of global GDP loss by the end of this century. Flood-related damages alone under high emissions scenarios might account for 3% of global GDP in 2100, translating to losses in the range of USD 14-27 trillion per year. In today’s US dollars, this would be equivalent to losing the combined GDP of China and India in the best-case scenario, and US, Canada and Germany combined, in the worst case.

Currently most climate funding supports work to reduce emissions rather than for adaptation to impacts. While the world must strive for net-zero emissions and the goals of the Paris Agreement, we must at the same time plan for conditions that may be much worse. Continue reading “Building resilience and infrastructure in a warming world”

Lia Beyeler
Covid-19, Green transition

The health of the planet and intra-generational equity – lessons learnt from a pandemic

By Milindo Chakrabarti, Professor, Jindal School of Government and Public Policy, O.P. Jindal Global University, Haryana and Visiting Fellow, RIS, New Delhi, and Jhalak Aggarwal, Post-Graduate Student, Jindal School of Government and Public Policy, O.P. Jindal Global University, Haryana

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.

Covid-climate-enviromentAmidst the disorder ushered in by the COVID-19 pandemic, the spread of the virus has curtailed human destruction of the environment. During lockdowns, less cars moved around and less companies dumped their pollutants. At a time when virtually the whole world was under lockdown, “daily global CO2 emissions decreased by 17% by early April 2020 compared with the mean 2019 levels, just under half from changes in surface transport. At their peak, emissions in individual countries decreased by 26% on average” notes a study by the Global Carbon Project published in May. Unfortunately, the trend is reversing with the easing of lockdown measures. The same study predicts that by the end of the year the estimated decline in global carbon emissions will be around 4% if restrictions are lifted, and potentially higher at around 7% if restrictions persist until the end of 2020. Furthermore, to revive and stabilise the economy, attempts are underway to relax environmental regulations and help create new livelihood opportunities to replace those destroyed by the pandemic.

If there is a link between the COVID-19 crisis and emissions declines, reversely, is there a link between the climate crisis and the emergence and spread of the Coronavirus? Continue reading “The health of the planet and intra-generational equity – lessons learnt from a pandemic”

Development Matters
Covid-19, Development finance

The Future of Financing for Development

By Mahmoud Mohieldin, United Nations Special Envoy for the 2030 Agenda, and Benjamin Singer, Economic Affairs Officer, United Nations

This blog is also a part of a thread looking more specifically at the impacts of the COVID-19 crisis in terms of capital flows and debt in developing countries
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Before the pandemic started, developing countries had been increasing their debt levels since the 2000s. By the end of 2019, 44% of IDA-eligible countries were already considered at high risk of or in debt distress. Debt servicing costs of least developed countries (LDCs) and low-income countries increased twofold from 2000 to 2019 to reach 13% of government revenue. A growing proportion of this debt was privately owned, or commercial.

Then the pandemic hit, sending countless public health systems, many already under pressure, into disarray. Up to 1.6 billion livelihoods – half the world’s workforce – have been lost. Health and unemployment benefit expenditures skyrocketed at the same time as the release of some US$9 trillion worth of stimulus packages.

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