Mia Amor Mottley and Ngozi Okonjo Iweala
A multitude of crises have precipitated the world into a deeply unjust economic future. If we are to protect the global commons and create a better life for future generations, we need moral leadership coupled with just strategies that help the most vulnerable.
The COVID-19 pandemic has disrupted economies around the world, and in most developing countries incomes remain well below pre-pandemic levels. Inflation, aggravated by the war in Ukraine, is particularly dramatic in low-income and vulnerable countries, where essential products such as food and energy absorb most of the household budget. Rising interest rates are deepening debt overhangs in much of the developing world, reducing public and private investment and dampening growth. To top it off, the climate crisis is hitting very hard the very countries that have contributed the least to the appearance of the problem and which have the most limited resources to deal with it.
We are already seeing hard-won development gains being undone. The World Bank estimates that the pandemic and the war in Ukraine have pushed 90 million more people into extreme poverty. The World Food Program predicts that nearly 350 million people may face food insecurity in 2023, almost double the number recorded in 2020. In the aftermath of the pandemic, unemployment is higher, gender gaps are taller and the proportion of young people who do not have a job or sufficient education has increased, according to the International Labor Organization.
But this is not inevitable. If we take the global implementation of the United Nations Sustainable Development Agenda as a barometer of progress, it is true that we are on the verge of failure – especially in the case of countries with inherent vulnerabilities. But governments, the private sector and civil society can make the decisions today that will lay the foundations for sustainable development for generations to come.
We need a global transformation strategy that works for everyone, a strategy focused on energy transition, the climate crisis and financing for development, that puts people at the center of the action. It is essential to include a fair industrial strategy and growth strategy, in developed countries, developing countries and least developed countries, large and small: a strategy that decouples economic growth from the deterioration of the environment.
This is where international trade must play a vital role in creating better jobs, adding value and increasing the resilience that countries seek.
Over the past 40 years, global economic integration, supported by the multilateral trading system, has lifted more than a billion people out of poverty.
But even before the pandemic, it was clear that many people in poor countries had not received a fair share of the gains of globalization. And this was also largely the case for the poorest in the rich countries.
The weaknesses exposed in global supply chains by the war in Ukraine and the pandemic should be seen as an opportunity to reinvent globalization and help countries and communities left behind in recent decades to use trade as a means of realizing their aspirations for sustainable development.
At the heart of this reimagined globalization is the idea of bringing many more countries into what would become much less concentrated networks for the production of goods and services.
Companies have already turned to other suppliers located in, for example, Southeast Asia, India and Mexico, either to contain costs or to manage risks. The rapid growth in demand for services delivered via the Internet is creating opportunities around the world. Including smaller and more vulnerable countries in this readjustment process would enable them to use international ideas, capital and markets to create better and more productive jobs.
In addition, attracting more small businesses and women-owned businesses into these production networks would bring multiple socio-economic benefits. Beyond the development and inclusiveness gains, more diverse supply chains would also be more resilient to localized shocks, such as extreme weather events or disease outbreaks.
Open and predictable markets are a prerequisite for this process of reglobalisation. But that is not enough. Access to finance on sustainable and inexpensive terms is essential to creating a more sustainable and inclusive global economy. L’Initiative de Bridgetown, presented by the Government of Barbados, calls for a reassessment of the current global financial architecture to direct multilateral and private financial resources towards climate change mitigation and resilience. The implementation of this initiative could be very useful in meeting the needs of developing countries for financing climate action and, in fact, financing the Sustainable Development Goals.
A strong and efficient trading system would give more impact to the action to be taken in favor of debt reform and green investment: exports are a source of foreign exchange and access to larger markets increases potential returns on investment.
Each element of this program is a major challenge, especially in a context of strong geopolitical tensions. But as governments demonstrated by concluding several multilateral agreements at the WTO Ministerial Conference last June, trade cooperation is always possible. These efforts must continue to ensure that the multilateral trading system enables all economies to seize the opportunities available to them and to overcome the vulnerabilities and challenges that hamper them. Let’s work together, and let’s build on trade to build a fairer, fairer and more resilient economic future.
Her Excellency Mrs. Mia Amor Mottley is the Prime Minister of Barbados.
Dr. Ngozi Okonjo-Iweala is Director General of the World Trade Organization (WTO).
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