The international lockdowns of the past six months – coupled with uncertainty about the future has caused the global economy to contract sharply by three percent – worse than the deep economic slump of the global financial crisis a decade ago. According to the International Monetary Fund (IMF) the resulting recession could become the worst since the Great Depression.
However, the impact of the pandemic is not purely economic. There are wide ranging social implications to the world pressing pause. For example, the World Bank has warned in one estimate that an additional 40 to 60 million people may be pushed into extreme poverty during the course of 2020, while the International Labour Organisation expects the equivalent of 195 million jobs lost.
Therefore, now the initial shock of the crisis has passed, attention must turn to the plan for global recovery and rehabilitation – and how governments and policymakers can build a future that protects the vulnerable while taking into account social distancing, safety and newly established cultural norms.
According to a new report from the UN Secretary-General, recovery on this global issue; “demands coordinated, decisive and innovative policy action from the world’s leading economies, and maximum financial and technical support for the poorest and most vulnerable people and countries, who will be the hardest hit”. To do this, the report calls for unilateral, multi-stakeholder collaboration and partnerships to pull together resources and knowledge in order to devise the strongest solutions. “Whole societies must come together. Every country must step up with public, private and civic sectors collaborating from the outset,” the report explains.
Partnership and collaboration have been one of the key elements to fighting the coronavirus from the beginning. From manufacturers coming together to produce protective and safety equipment, to 3D printing companies of all size making visors for their local hospitals and the world’s largest pharmaceutical companies sharing knowledge and research in order to develop a vaccine as fast as they can – working together has allowed major leaps forward to be made in unprecedented time.
Therefore, as governments work to devise exit strategies that restart economies and industries, it is critical that these recovery plans consider every sector of society, with neighbouring countries and trade partners contemplated – as recovery in isolation is not a full recovery.
According to a new report by UNIDO – ‘Responding to the Crisis, Preparing for the Future’, “policy actions and technical cooperation and coordination will be crucial in mitigating the impact of the crisis, and ensuring inclusive and sustainable economic development during and at the end.” However, the report states that alongside the urgent demand for future policy roadmaps, “the recovery phase offers a unique opportunity to transform and future-proof productive sectors and foster long-term socio-economic resilience while tackling the climate and environmental emergency.” But only if this approach is not taken unilaterally.
The UNIDO report explains that we are currently at a crossroad; with the end of the shock of the emergency behind us, the path to the future can either be taken by all, or each country can chart its own course. If governments of the world take a ‘me first’ approach, the impact on the less developed economies will be catastrophic. However, if collaboration can facilitate a sustainable economic and social recovery for all, the full impact of the pandemic could be minimised.
For instance, the containment measures put in place by advanced economies in a bid to protect their residents have already started impacting less developed countries. Decreased production, trade volumes and investment flows caused supply chain disruptions that halted the global manufacturing industry, meaning that when commodity prices – particularly oil – crashed in the midst of this chaos, developing countries’ export volumes were hit with a double whammy. According to the UNIDO report, these negative impacts were further exacerbated by unprecedented capital outflows from developing countries, caused largely by the collapse of international financial markets and the tightened liquidity conditions across nations.
Therefore, to ensure revival from this virus is global and leaves no one behind, UNIDO has proposed a comprehensive socio-economic recovery response framework to prepare and contain, respond and adapt, and recover and transform industry and therefore the global economy. As the industrial development arm of the United Nations, UNIDO has a unique and long-standing experience as a platform for business sector cooperation – this framework draws on decades of experience in helping to create sustainable economic development.
UNIDO’s recovery framework is centred upon the development of mutually inclusive partnerships that accelerate the global recovery, alongside capacity building and knowledge exchange based on lessons learned, best practices and best available technologies. In concentrating on developing a collaborative approach to recovery, UNIDO’s framework aims to contain the effects of the crisis, respond and adapt to the emergency and ultimately recover from the socio-economic shock, taking the opportunity to transform the economies of its member states to be inclusive, resilient and sustainable.
Factoring sustainability into recovery plans means including longer-term criteria such as decarbonisation, long-lasting resilience and adaptive capacity, the impact on physical, natural and human capital into almost every sector.
Building a resilient, sustainable economic recovery is therefore a complex balancing act that requires cooperation and collaboration. To help policymakers through this recovery process, the World Bank Group has developed a sustainability checklist that government ministries can use to assess or rank stimulus proposals, in the hope that the decisions made in the next few months could help protect economies for the next few centuries.
The checklist draws heavily on analysis of the 2008 economic crisis and considers whether complementary policy or institutional changes are required to ensure that projects are “shovel-ready”.
One of the key lessons of the 2008-09 recovery programs was how failure to enact basic market reforms or supportive policies leaves many “green projects” at a disadvantage to incumbent technologies – as the crash did not create the momentum to disrupt long-standing development approaches. However, it appears that this time, the energy to transform traditional structures may have been evoked. In some countries including China, Germany, and South Korea for example, the recovery plans put in place include Fourth Industrial Revolution (4IR) technology and ‘green’ elements throughout – acknowledging that unprecedented times call for an unprecedented response.
Indeed, ensuring technology is part of global recovery is also a central tenant of the UNIDO framework. The report calls for a concerted effort to ignite “structural shifts towards the 4IR – including methods of better integrating clean energy and low carbon solutions, transition towards circular economies, as well as adoption of integrated solutions for food systems.”
The strength of this view is down to UNIDO’s belief that technology could make a tangible difference to the speed and state of recovery in less developed countries in particular. Indeed, this effort to ensure technology reaches the societies that need it the most is already underway in several forms. For example, on 15th May, The United Nations Technology Bank, together with the UN Development Programme (UNDP), UN Conference on Trade and Development (UNCTAD) and the World Health Organization (WHO) launched the Tech Access Partnership (TAP) as part of a coordinated approach to strengthen developing countries’ responses to COVID-19 and increase access to lifesaving health technologies. “Now, more than ever, the global community needs to unite to save lives and secure sustainable futures. Inequalities are exacerbating the technology and digital divide when it comes to opportunities for youth, creating a divide that threatens to leave them behind,” says Amina J. Mohammed, Deputy Secretary-General of the UN. “Increasing access to necessary technologies through partnerships, is a crucial component of the United Nations’ COVID-19 health, humanitarian and socio-economic response.”
“Without access to lifesaving technologies, many developing countries are unprepared for the potentially devastating impact of COVID-19,” says Joshua Setipa, Managing Director, UN Technology Bank. “By enabling developing countries to produce these technologies themselves, we can help set them on the path to recovery.”
Although it is likely that we will live with the effects of this virus for many years, as economies and societies begin to open, it is important that the structures and processes we return to facilitate the best possible recovery – one that charts a course for a global economy that is based on resilience, sustainability and fairness.