Like it or not: coercive power is essential to development

By Erwin van Veen, Lead Levant Research Programme, Senior Research Fellow, Conflict Research Unit at Clingendael

Understanding the political economy of coercion is essential to achieving developmental gains in countries at the lower end of stability and institutional performance. Surprisingly, this matter rarely features on the development agenda, which means the implementation of the Sustainable Development Goals continues to suffer in such countries.

If national development is defined as the long-term, collective pursuit of the highest level of wellbeing for the greatest number of citizens, it is a deeply political and highly contested process by default. That is in part because all these components are subject to varying definitions. What is the collective? What is wellbeing? Who is a citizen and what are their rights? Different countries offer starkly different answers to such questions. But beyond definitions, there are also more commonplace reasons for development being such a political undertaking.

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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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Adapting to the new normal: the economic impact of COVID-19 in Central America

By Miguel Angel Medina Fonseca, Economist at Chief Economist Office, Central American Bank for Economic Integration


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: Eve Orea / Shutterstock

The COVID-19 pandemic is causing one of the largest economic recessions in the world’s history. In Central America, the Central American Bank for Economic Integration foresees a worst case scenario where the region’s GDP will contract by 4.9%, and public debt will increase by at least 7.6 percentage points of GDP.

The COVID-19 pandemic has prompted most governments around the globe to take preventive containment and mitigation measures, often implemented under state of emergency or similar clauses. In Central America, most policies have focused on saving people’s lives and reducing the socio-economic impact of the pandemic. Some measures stand out:
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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.


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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

COVID-19 in Latin America: Promoting entrepreneurship and reducing social vulnerabilities

By Jorge Arbache, Private Sector Vice-President, Development Bank of Latin America (CAF)


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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Vendor in Quito, Ecuador. Photo: teranbryan_ecu/Shutterstock

Statistics show that economic growth in Latin America is highly volatile, with periods of acceleration and collapse. This dynamic hides perverse implications. The combination of low growth persistence with high-growth volatility is associated with greater risk aversion, which in turn encourages financial speculation and firms to invest in lower risk, but also lower social return projects. Additionally, poverty and other social indicators are also very sensitive to the harmful combination of short growth spells and high volatility. Continue reading

Fighting COVID-19 in Africa’s informal settlements

By Maimunah Mohd Sharif, Executive Director, United Nations Human Settlements Programme (UN‐Habitat)


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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Kibera informal settlement in Nairobi, Kenya. Photo: Boris Golovnev/Shutterstock

The COVID-19 pandemic has cost hundreds of thousands of lives in the world’s richest cities but poses an even greater threat to cities in the developing world. There are now more than 150,000 confirmed cases of coronavirus across Africa, in all 54 countries, with South Africa and Egypt the worst affected.

One of the most pressing concerns for Africa is that over half the population (excluding in North Africa) live in overcrowded informal settlements. In these areas where several people have to share one badly ventilated room, diseases such as COVID-19 spread fast and it is impossible to practice physical distancing whether in homes or outside. Continue reading

COVID-19: Forging a new social contract in the Middle East and North Africa

 By Rabah Arezki, Chief Economist for Middle East and North Africa Region at the World Bank and Mahmoud Mohieldin, United Nations Special Envoy for the 2030 Agenda


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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Egypt, Hurghada: Disinfection of a street during the coronavirus outbreak, March 2020. Photo: Aleks333/Shutterstock

The COVID-19 crisis and its dual shock of disease and falling oil prices have brought to light the underlying flaws of Middle Eastern and Northern African (MENA) economies today. Flaws that authorities must fix if the region is to prosper.

At the global level, there will likely be a ramping up of the role of the state to eradicate the virus and protect economies from depression. State intervention is already high in the MENA region (see Figure 1). How well this helps countries cope first with the pandemic and then its aftermath depends on their ability to refocus, be more transparent, and develop accountability mechanisms.

Figure 1. Government Consumption in GDP

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Social protection and sub-regional integration: fundamental instruments for post-COVID-19 social reconstruction

By Alfredo Suárez Mieses, Secretary-General, Central American Social Integration Secretariat (SISCA), and Gabriela A. Ramírez Menjívar, Head of the Multidimensional Poverty, Human Capital Development and Social Protection Area- SISCA


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.


Photography by Presidency of the Republic of El Salvador
Photo: Presidency of the Republic of El Salvador

The COVID-19 pandemic is causing an unprecedented health, economic and social crisis that threatens to leave a deeply negative mark in the SICA region (Central America and Dominican Republic), particularly on employment, poverty, and inequality levels. The depth of the impacts will depend on multiple factors, including the duration of the pandemic, the public policy responses to contain and control it, a country’s economic structure, the strength of its health and social protection systems, and its level of vulnerability to global dynamics. Social protection is a crucial tool to minimize the costs of the crisis; it is also a crucial investment to make the recovery stronger and more inclusive, thus more sustainable.

Measures taken by most countries to flatten the contagion curve, along with the current international environment, have impacted economic activity with direct effects on income generation and living conditions for a large part of the population. According to the latest report of the Central American Economic Integration Secretariat (SIECA), the region’s Gross Domestic Product will contract by 6.8%. The fall in tourism and decline of economic activity in the United States, the main trading partner and the largest source of foreign direct investment and remittances in Central America, are already having negative effects. The Inter-American Development Bank (IADB) estimates remittances could contract by 10% for each point less of growth in the United States. Continue reading

Mitigating the impact of COVID-19 in Latin America: time to be bold

By Nora Lustig, Professor of Latin American Economics, Department of Economics, Tulane University and Jorge Mariscal, Adjunct Professor of International and Public Affairs, School of International and Public Affairs (SIPA), Columbia University


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 of Guatemala City during lockdown, March 2020. Photo: Shutterstock

COVID-19 has hit Latin America hard on two fronts. The pandemic and the lockdowns to contain the spread of the virus have shut down significant portions of the region’s economies. However, even if the pandemic were to miraculously disappear from the region, falling demand for exports and tourism, declining commodity prices, interruptions in the supply chain of inputs, shrinking remittances and unprecedented capital outflows are significantly affecting countries’ growth prospects.

The International Monetary Fund (IMF) in its recent World Economic Outlook (April 2020), predicts that the world economy could fall by 3% in 2020 and in Latin America by 5.2% – higher than that observed during the 2008-09 global financial crisis. Still, the IMF’s growth forecasts for Latin America compared to those for advanced countries seem overly optimistic and will likely be subject to downward revisions. Based on data for 48 countries, the OECD has estimated that each month of containment measures translates to an approximate decline in annual GDP growth of up to 2 percentage points. Considering the extent to which the region’s economies depend on trade, foreign direct investment (FDI), commodities, tourism and remittances, in the absence of strong policy responses, we would add an additional decline equivalent to one-third of the total shock. Latin American economies could thus face GDP contractions of 9-10%. Continue reading

The COVID-19 crisis: income support to informal workers is necessary and possible

By Laura Alfers, Director, Social Protection Programme, WIEGO, Rachel Moussié, Deputy Director, Social Protection Programme, WIEGO and Jenna Harvey, Global Focal Cities Coordinator, WIEGO


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: Shutterstock

Income recovery in the informal economy will require broad and longer-term support

Juana Corman wakes at 2:00 a.m., as she has for decades, to travel across town to the distribution centre where she picks up stacks of newspapers to sell. Normally, she would sell from her dedicated kiosk to pedestrians on Lima’s busy streets, but under Peru’s mandatory stay-at-home order, her work has changed. Now, she sells the daily paper house-to-house – delivering critical information to a city on edge. In one respect, Juana Corman is more fortunate than many other informal workers in the city – as an essential worker she is able to continue working. However, selling door to door has meant a significant reduction in earnings at the same time as her costs have increased due to limited public transport and the need to purchase protective equipment. Continue reading