New social contract

Lebanon’s path back from the brink of collapse

Development Matters New social contract , ,

By Dr. Nasser Saidi, Economist and former Minister of Economy and Industry of Lebanon

Beirut, Lebanon – August 2020: Beirut Port destroyed following explosive blasts. Photo: Shutterstock

Since October 2019, Lebanon has been in the throes of a historically unprecedented economic and financial meltdown, simultaneously facing a humanitarian crisis, a debt crisis, a banking crisis, a currency crisis, and a balance of payments crisis. The numbers are staggering. Real GDP has declined for the fourth consecutive year by a cumulative 45% since 2018 making it the second most severe financial crisis in history. The Lira has lost 90% of its value, annual inflation is running at 150% and an 80% de facto haircut has been imposed on deposits.

These multiple crises impose terrible human costs. Unemployment exceeds 45% of the population, with 77% in poverty and 40% in extreme poverty. There are basic commodity shortages and long queues for fuel, bread and medicine. Government-provided electricity is rationed at about three hours per day; the majority of the population relies on expensive private generators. The monthly minimum wage is now the equivalent to $40 (below Bangladesh), a soldier’s salary is $76 while a judge earns $247. People seeking to escape have fuelled an unprecedented wave of emigration of professionals (doctors, consultants, engineers and teachers), other skilled workers and youth. Lebanon’s human capital is leaving.  The four main pillars of the economy, trade and tourism, health, education, and banking and finance, are being destroyed.

At present, Lebanon, after a thirteen-month deadlock, has formed a new government under Prime Minister Najib Mikati. The priority today is to restore trust and confidence in government and the banking sector.

But first, why and how did Lebanon descend into economic collapse?

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Digitalização como estratégia anticorrupção: quais são os dividendos de integridade de se tornar digital?

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Carlos Santiso, Diretor de Inovação Digital do Estado do Banco de Desenvolvimento da América Latina

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A resposta à crise do coronavírus está fornecendo uma oportunidade única para reinventar o governo, reconstruir a confiança e acelerar a luta global contra a corrupção, impulsionada pelo uso mais inteligente de novas tecnologias e análises de dados. A transformação digital é fundamental para os planos de recuperação, que exigirão governo ágil e redução da burocracia, mas também programas de reativação à prova de corrupção. Também exigirá o gerenciamento e a mitigação dos riscos à privacidade e à segurança pública.

A correlação entre digitalização e corrupção está bem estabelecida. A digitalização pode interromper a corrupção reduzindo a discrição, aumentando a transparência e permitindo a responsabilização, desmaterializando os serviços e limitando as interações humanas. Além disso, permite uma supervisão mais eficaz por instituições de responsabilidade mais inteligentes e sociedade civil com experiência em dados. No entanto, há menos evidências acionáveis ​​no nível micro sobre os efeitos de reformas específicas da digitalização sobre os diferentes tipos de corrupção e os canais de política através dos quais operam.

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La digitalización como estrategia anticorrupción

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Por Carlos Santiso, Director, Dirección de innovación digital del estado de CAF – Banco de Desarrollo de América Latina

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La respuesta a la crisis del coronavirus está brindando una oportunidad única para reinventar el gobierno, reconstruir la confianza y acelerar la lucha mundial contra la corrupción, impulsada por el uso más inteligente de las nuevas tecnologías y el análisis de datos. La transformación digital es un aspecto fundamental de los planes de recuperación, que requerirán gobiernos ágiles y reducción de la burocracia, pero también garantías de integridad en el uso de los recursos de los programas de reactivación. También requerirá gestionar y mitigar los riesgos para la privacidad y la ciberseguridad.

La correlación entre digitalización y corrupción está bien establecida, aunque no las relaciones de causalidad. La digitalización puede alterar las oportunidades de corrupción al reducir la discreción, aumentar la transparencia, y permitir la rendición de cuentas al desmaterializar los servicios y limitar las interacciones humanas. Además, permite una supervisión más eficaz por parte de instituciones de rendición de cuentas más inteligentes y una sociedad civil conocedora de los datos. Sin embargo, hay menos evidencia accionable sobre los efectos de reformas específicas de digitalización en diferentes tipos de corrupción y los canales de políticas a través de los que operan.

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Digitalisation as an anti-corruption strategy: what are the integrity dividends of going digital?

Development Matters New social contract , , ,

By Carlos Santiso, Director, Digital Innovation in Government Directorate, Development Bank of Latin America

The response to the coronavirus crisis is providing a unique opportunity to “reinvent government”, rebuild trust and accelerate the global fight against corruption, propelled by the smarter use of new technologies and data analytics. Digital transformation is central to recovery plans, which will require agile government and cutting red-tape, but also corruption-proofing reactivation programmes. Additionally, it will require managing and mitigating the risks to privacy and cybersecurity. At a macro level, the correlation between digitalisation and corruption is well established. Digitalisation can disrupt corruption by reducing discretion, increasing transparency, and enabling accountability by dematerialising services and limiting human interactions. Furthermore, it allows for more effective oversight by smarter accountability institutions and data-savvy civil society. However, there is less actionable evidence at the micro level on the effects of specific digitalisation reforms on different types of corruption and the policy channels through which they operate.

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Forced displacement in 2021: much to commemorate, little to celebrate

Development Matters New social contract, Reviving multilateralism ,

 By Martin Wagner, Senior Policy Advisor Asylum, ICMPD, Caitlin Katsiaficas, Policy Analyst, ICMPD, and Benjamin Etzold, Senior Researcher, BICC

Photo: Ververidis Vasilis, Shutterstock

This year, we celebrate 70 years since the 1951 Geneva Refugee Convention was signed. While the Convention has aged relatively well since its inception and has remained relevant for so long, global developments have left their mark. Ever more protracted, mostly internal, conflicts make true solutions for displaced people scarce. As a consequence, UNHCR has sounded the alarm on the growing numbers of displaced persons, virtually every year for the past decade, on the occasion of World Refugee Day (20 June). As expected, the 2020 figures presented at this year’s world refugee day were no different.

The international community, spearheaded by UNHCR, has taken considerable action to tackle this trend, seeking global allies to expand access to solutions for refugees who have little chances for return or resettlement. The Global Refugee Forum, created to promote the 2016 Global Compact on Refugees, mobilises a broad array of actors and initiatives committed to its objectives. Two of these goals are: 1) building opportunities for refugees to become self-reliant and 2) expanding third-country solutions (through resettlement for the most vulnerable and other safe and legal pathways for refugees to complement resettlement).

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From protest to progress?

Development Matters New social contract ,

By Mario Pezzini, former Director of the OECD Development Centre & Special Advisor to the OECD Secretary General on Development and Alexander Pick, Head of Unit, New Development Policies and Institutions, OECD Development Centre

The COVID-19 crisis is an opportunity for humanity to chart a new course and for societies to build forward better. The pandemic has shown that there is a need for change. However, as the new edition of Perspectives on Global Development warns, relying on the same voices, the same institutions and the same mind-sets that prevailed prior to this crisis to answer these questions is unlikely to produce an equitable, inclusive and sustainable recovery. A surge in discontent prior to the pandemic demonstrated that these approaches were failing billions of people around the world, as well as generations not yet born.

Our report, From Protest to Progress?, argues that a long-lasting recovery from COVID-19 cannot be achieved without addressing this discontent, which it defines as collective feelings of frustrated expectations, injustice, vulnerability and powerlessness. A sharp increase in protests during the period between the global financial crisis of 2008-09 and the COVID-19 pandemic shown in Figure 1 attests to a global rise in discontent. However, not all forms of discontent are so obvious: the report also finds evidence of growing discontent amid marked declines in voter turnout, trust in government and support for democracy. And if these variables seem biased towards democratic countries, it’s worth noting that protests rose in authoritarian states too. Taken together, we see that discontent was neither marginal nor fleeting; indeed, it is likely to worsen as countries emerge from the pandemic.

Number of protests by region, 1991-2019

Source: Clark, D. and P. Regan (2021), “Mass Mobilization Protest Data”, Harvard Dataverse (database).
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A new social contract for a job-rich recovery

Development Matters New social contract , , , ,

By Paola Simonetti, Deputy Director, Economic and Social Policy Department, ITUC

“People are no longer coming to the kiosk to buy tea since the pandemic outbreak started. I am the breadwinner of a family of nine. On many days I don’t earn a single shilling and return home empty handed”. This is the story of Jamila, a tea kiosk holder in Mogadishu, Somalia. Her story is also the story of around 2 billion informal workers worldwide who have been left to cope with the crisis on their own.  

The pre-existing labour market deficiencies have made those who were already vulnerable – low-skilled workers, migrant workers, informal workers, women, and young people – even more exposed to the impact of the crisis. In fact, the world entered the pandemic with a pre-existing “sustainability debt”.

The ITUC SDG8 composite indicator below – covering 145 countries corresponding to more than 97% of the world population – is calculated on the basis of four sub-domains related to four dimensions: economic well-being, employment quality, labour vulnerability, and labour rights. The rating ranges between 70-130 and the world average is set to 100.

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Quatrième révolution industrielle et migrations : comment assurer la transition dans les pays d’origine et de destination ?

Development Matters Asia, Français, Migration, New social contract, Reviving multilateralism ,

Par Jason Gagnon, Économiste du développement et Catherine Gagnon, Stagiaire, Centre de développement de l’OCDE

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Avec l’arrivée de nouvelles technologies qui brouillent les frontières entre sphères physique, numérique et biologique, un changement spectaculaire dans la façon dont nos économies et nos sociétés interagissent, produisent et communiquent est en cours. Et comme nos économies sont aujourd’hui plus que jamais interconnectées, cette révolution industrielle a lieu dans pratiquement tous les coins du monde. Parallèlement, les migrations internationales n’ont jamais été aussi nombreuses.

Ces deux mégatendances ont une forte interaction qui va considérablement modifier la mondialisation telle que nous la connaissons. Les pays du Conseil de coopération du Golfe (CCG) en sont une belle illustration : à la fois tournés vers un nouveau modèle économique, ils restent très dépendants de la main-d’œuvre migrante, notamment d’origine d’Asie du Sud et du Sud-Est. Des mesures politiques concrètes doivent donc être mises en place dans ces pays d’origine et de destination pour permettre une transition plus fluide au niveau mondial.

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The fourth industrial revolution and migration: how to ensure a smooth transition?

Development Matters Asia, Migration, New social contract, Reviving multilateralism ,

By Jason Gagnon, Development economist and Catherine Gagnon, Intern, OECD Development Centre

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A dramatic change in the way our economies and societies interact, produce and communicate is underway as a fusion of technologies blurs the lines between the physical, digital, and biological spheres. And with our economies more globally interlinked today than ever, this industrial revolution extends to practically every corner of the world. Meanwhile another sweeping trend is gaining traction: international migration is at an all-time high as new host countries, routes and freshly skilled workers multiply, and as a young population eager to make a mark on the world continues to grow.

The two megatrends of technology and international migration have the potential to significantly change globalisation as we know it. The Gulf countries offer an illustration of the especially pronounced interaction between both trends. On one hand, Gulf Cooperation Council (GCC) countries have made it a priority to usher in this new economic era. On the other, GCC countries are some of the world’s most dependent countries on migrant labour. How can GCC countries ensure a smooth labour market transition as they shift to this new economic model? And how can the primary migrant countries of origin to the GCC – mostly in South and Southeast Asia – navigate the changes they will face in the main destinations for their labour migrants?

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The debt burden: why ex-post intervention shouldn’t be the default option

Development Matters New social contract, Reviving multilateralism ,

By Rodrigo Olivares-Caminal, Professor of Banking and Finance Law at the Centre for Commercial Law Studies, Queen Mary University of London, and Paola Subacchi, Professor of International Economics, Global Policy Institute, Queen Mary University of London

The financial response to the COVID-19 crisis has driven debt building at an unprecedented speed, which has increased the risk of debt distress and the odds of a new debt crisis cycle. Emerging markets and developing economies are most at risk. When the COVID-19 crisis began in February 2020, it demanded extraordinary policy measures to protect lives and provide support to those who had lost their livelihoods. The public debt vulnerabilities for many countries, especially the poorest ones, were already significant at that time, but the subsequent collapse of many economic activities exacerbated the situation. As of 30 April 2021, 29 countries were at high risk of debt distress, and 7 low-income countries had already succumbed to it. Somalia, for example, is currently in debt distress and needs to secure relief to restore debt sustainability.

Emerging markets and developing economies are most at risk because of their exposure to international capital flows and the fact that portions of their debt are issued in hard currencies, namely the US dollar. This leaves them vulnerable to changes in US monetary policy, and so to sudden outflows when risk aversion and international financial volatility are high. Some countries have learned lessons from previous debt crisis cycles – as is evident, for example, in the development of local-currency securities markets which mitigate the risk of foreign-currency borrowing – but such resilience is patchy and far from being systemic.

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