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

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

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

Unbundling Corruption: Why it matters and how to do it

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

América Latina y el Caribe en tiempos del COVID-19: no descuidar a los más vulnerables

Por Federico Bonaglia, Director Adjunto, Centro de Desarrollo de la OCDE, y Sebastián Nieto Parra, Jefe de la Unidad de América Latina y el Caribe, Centro de Desarrollo de la OCDE.


Este artículo es parte de una serie sobre cómo abordar COVID-19 en los países en desarrollo. Visite la página específica de la OCDE para acceder a los datos, análisis y recomendaciones de la OCDE sobre los impactos sanitarios, económicos, financieros y sociales del COVID-19 en todo el mundo.


Photo by Manuel on UnsplashRead this blog in English

Las medidas de contención necesarias contra el COVID-19 han generado una crisis económica mundial sin precedentes, combinando choques por el lado de la oferta y de la demanda. Ahora, la pandemia está afectando a América Latina y el Caribe y los países se están preparando para el efecto multiplicador que tendrá en la región. Tan solo unos meses antes, a finales de 2019, muchos países de la región tuvieron una ola de protestas masivas impulsadas por un profundo descontento social, aspiraciones frustradas, vulnerabilidad persistente y creciente pobreza. Esta crisis exacerbará estos problemas.

Más allá de la magnitud del impacto en los sistemas de salud que ya son débiles (unos 125 millones de personas aún carecen de acceso a los servicios básicos de salud), el abrumador impacto socioeconómico de la crisis podría recaer desproporcionadamente en los hogares vulnerables y pobres si no se implementan respuestas ambiciosas de política. Continue reading

How COVID-19 could help eliminate fossil fuel subsidies

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By Mario Pezzini, Director of the OECD Development Centre and special adviser to the OECD Secretary-General on development, and 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.


Oil pumpjacks in Tatarstan, Russia
Photo: Yegor Aleyev/Tass/PA Images

As oil-exporting countries struggle to respond to the crisis, there is a way to make critical fiscal resources available.

The Covid-19 pandemic has hit oil-exporting countries at the worst possible moment. Severely strained health systems, and the need for economic stimulus, call for unprecedented growth in public spending. At the same time, oil export revenues have plummeted, following the demand collapse caused by the pandemic and a breakdown of traditional price-setting mechanisms. As a result, many oil exporters in the low- and middle-income category will struggle to muster anything near the level of expenditure required for an efficient response to the virus. Continue reading

Is COVID-19 widening educational gaps in Latin America? Three lessons for urgent policy action

By Nathalie Basto-Aguirre, Paula Cerutti and Sebastián Nieto-Parra, 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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Classroom in Jaqueira Village, city of Porto Seguro, Brazil. Photo: Joa Souza/Shutterstock

COVID-19, like most crises, is exacerbating inequalities in the region. To contain the pandemic, most Latin American countries have closed their schools, affecting the learning of 154 million students. However, not all students are affected equally. While distance education can contribute to alleviate the immediate impacts of school closures, it requires a number of conditions to deliver meaningful results. Students from poorer socio-economic backgrounds tend to suffer the most and risk bearing lasting consequences in terms of learning outcomes and, ultimately, opportunities. In particular, three interconnected dimensions stand out. Continue reading

COVID-19 crisis: Why we must prioritise mental health of the world’s displaced

By Shaifali Sandhya, PhD, Clinical Psychologist, Care Family Consultation


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.


Deprsession-shutterstock_332939864The modern world is in an unprecedented situation. In the last decade, the global population of the forcibly displaced has swelled to 70.8 million; with the advent of COVID-19, its numbers are expected to soar as a staggering number of refugee and asylum-seeker families find themselves further displaced by fear of disease, food insecurity and by the pressures of collapsing national economies. In many countries displaced communities’ access to labour markets is limited to the informal market, and equally vulnerable will be nations’ shadow workers – garbage workers, prostitutes, domestic help, garment makers, and gig workers. Faced with an economic crisis of cataclysmic proportions, economists and political leaders will be tempted to focus solely on the physical and economic facets of the current crisis.  But if we want to make it through this crisis, that won’t be enough.  In addition to financial and physical wellbeing we will need to recognize and address mental health around the world and at every level of society, especially of its displaced communities. We are at best, unprepared for the worst; for both OECD and developing countries, we need to provide tailored mental health treatment to those who need it in the communities they live in. Continue reading

Exceptional measures for exceptional times

By Patrick Bolton, Columbia University and Imperial College, Lee Buchheit, University of Edinburgh, Pierre-Olivier Gourinchas, University of California Berkeley, Mitu Gulati, Duke University, Chang-Tai Hsieh, University of Chicago, Ugo Panizza and Beatrice Weder di Mauro, The Graduate Institute Geneva*


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-Finance-shutterstock_524218915These are not normal times, and what the world is experiencing is not a normal recession. We propose a mechanism to implement a debt standstill for low- and middle-income countries, which would facilitate the involvement of private creditors in the restructuring, reduce potential risks of free-riding and free resources to cover some of the immediate costs of the COVID-19 crisis.

The Bank of England has announced that Great Britain is entering the worst recession in 300 years, the spike in unemployment claims in the US makes unemployment claims in previous recessions look like rounding errors, and the Olympic games have been postponed. IMF forecasts predict that only 9 countries out of 190 will have positive per capita GDP growth in 2020 (and none of them will record a growth rate above 2%). To put this in context, at the peak of the global financial crisis more than 75 countries registered positive GDP per capita growth.

A downturn of this magnitude can cause tremendous long-term damage, especially so in emerging and developing economies with a high degree of informality and weaker social and economic safety nets.

While many advanced economies are able to finance massive fiscal stimulus packages with super low interest rates, emerging and developing countries are hit by a double whammy as the COVID-19 crisis has led to a sudden stop in capital flows. According to estimates by the Institute of International Finance, non-resident portfolio outflows from emerging market countries amounted to nearly $100 billion over a period of 45 days starting in late February 2020. For comparison, in the three months that followed the explosion of the Global Financial Crisis, outflows were less than $20 billion.

This situation has led more than 100 countries to seek IMF help. As explained in an April 30, 2020 Op Ed by the Ethiopian prime minister Abiy Ahmed, many countries are facing a dilemma: continue to service their external debts or redirect resources to save lives and livelihoods? Continue reading

Build back better with risk-informed development co-operation

By Navid Hanif, Director, Financing for Sustainable Development Office, United Nations Department of Economic and Social Affairs


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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Photo: Victor Balaban

Covid-19 is endangering lives and livelihoods, with devastating effects on the poorest and most vulnerable people. The full effects of this global pandemic are still unfolding and uncertainty remains high. Yet the impacts on our societies, economies and ecosystems will surely be felt for years to come. Now is not the time to turn away from international development co-operation. In fact, Covid-19 has graphically reinforced the need for global co-operation and collaboration, both for immediate response and for longer-term recovery. Advancing development co-operation that is both risk-informed and climate-smart will be a vital plank in the efforts to build back better.

The world was already falling behind in efforts to eradicate poverty, reduce inequalities and take climate action. Based on pre-crisis data, the 2020 Financing for Sustainable Development Report of the Inter-Agency Task Force on Financing for Development estimated that one in five countries – representing billions of people – were likely to see average income per person stagnate or decline in 2020. Many more will likely struggle as the socioeconomic impacts of the pandemic hit and test countries’ resilience. Continue reading

Is there any silver lining in the COVID-19 crisis?

By Bert Hofman, Director, East Asian Institute and Professor in Practice Lee Kuan Yew School of Public Policy, National University Singapore


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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The economic devastation that COVID-19 leaves in its trail is astonishing. The IMF projects that the world will fall into a deep recession, deeper than the one that followed the Global Financial Crisis.  Despite the unprecedented policy response that we have already seen, including a tripling of average fiscal deficits to almost 10 percent of GDP, and monetary loosening in similar orders of magnitude, world GDP is projected to decline by 3 percent in 2020, double the decline of 2009.

The IMF projects that low income countries would barely grow this year, only 0.4 percent compared to 5 percent last year, and 4.7 percentage points lower than projected only in January. Emerging and developing economies as a whole fare even worse: GDP is projected to decline with one percent in 2020, compared to 3.7 percent growth last year.  And all of that could be worse: the IMF’s downside scenario is far worse. Continue reading