By Ian Goldin
Oxford University, May 12 2020 (IPS)

Covid-19 is the most significant event since the Second World War. It changes everything.

It brings great sadness to many of us as we lose loved ones, as we see people losing their jobs, and as we see people around the world suffering immensely.

But it also provides an opportunity for a reset and new start for humanity. It teaches us how closely we are all interwoven together, how a problem in one part of the world is a problem for all of us.

It gives us time to pause and reflect about our individual lives, allowing us to reset and reprioritise. And it provides an opportunity for businesses and politicians to reset too. Even isolationist politicians must now understand that we can only thrive as humanity if everyone thrives.

We can only prosper if the world is prospering. And we can only be healthy if people everywhere are healthy.

Covid-19 provides a call for action. Not only to address the medical and associated economic emergency, but to ensure that we will never see a pandemic which could be even more dreadful than this one.

If we can learn to stop pandemics, we would have learnt to cooperate to stop the other great threats that we face, like climate change, antibiotic resistance, cascading financial crises, and cyber and other systemic risks.

We need to learn from history.

The First World War was followed by austerity and nationalist attacks on those who were blamed for the conflict. What followed was the Great Depression, rise of fascism and an even worse world war.

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The aim was to honour the youth that had died in the trenches and to overcome the suffering to provide a vision of a better future.

No wall high enough

The pandemic has risen from what I’ve called in my book of this title, The Butterfly Defect of globalization.

The interconnectedness of complex systems means that what happens elsewhere, increasingly shapes our lives. In the 2014 book I predicted that a pandemic would lead to the next financial crisis, even worse than the one of 2008.

The fact that we are now interconnected makes it imperative that we manage systemic risks, and that we care more about what happens elsewhere.

There is no wall high enough to keep out the great threats that face us in our future, and not least pandemics and climate change.

But what high walls do keep out is the ideas of how to change things, is the sharing of experiences of common humanity, the technologies, the people, the investment, the potential for tourism and exports, and the ability to cooperate.

This is essential because these threats require that we work together. If we bunker down we will see escalating threats.

Pandemics are unusual in that they are the only threat that faces us that can come from any country. This one happened to come from China. But it could equally have come from any country in the Americas, Africa, Europe or elsewhere in Asia.

As technology is evolving, with new capabilities to sequence pandemics and spray viruses from drones, the risk is rising rapidly in richer countries, so both rich and poor countries are a potential source.

As pandemics can come from anywhere stopping pandemics requires global cooperation. For most of the other global threats that we face like climate change, cascading financial crises or antibiotic resistance, a very smaller set of actors account for a very big share of the problem.

Radical ideas become reality

Covid-19 has highlighted the urgency of managing global risks. It also has shown us that these spill over to every aspect of our lives, and are devastating for economies.

Radical economic remedies are being implemented that were previously unacceptable. Being guaranteed an income was regarded as a radical idea six weeks ago and is now adopted many European governments.

The idea that governments would bail out any company and give them a lifeline was unacceptable six weeks ago, and now has been enacted. The levels of debt and deficits that governments are taking on, were regarded as heresy six weeks ago.

We know from the mortality statistics, that young people are far less likely to die from COVID-19 than elderly people. And yet young people are sacrificing their social lives, their jobs, their education, their prospects to protect the lives of older people.

We owe the youth a brighter future. We owe them the promise that this will be the last pandemic of this nature. We owe them the promise that we will address climate change, that we will create jobs, employment and better prospects for them. For this, we are likely to see not only a bigger role for government, but higher levels of taxes.

The pandemic has revealed the extent of health inequality.

The data shows stark differences based on income levels. These are being exacerbated as poorer people are less able to work from home and more likely to be made unemployed. They also have less savings.

The pandemic is increasing inequality within countries, and it is widening the gulf between them. Richer countries have more resources, they have more ventilators, they have more doctors, they have more capacity to create a safety net that is strong, to guarantee everyone a basic income and to ensure the survival of firms. This is not an option for African, Latin American and South Asian countries.

Physical distancing is an impossibility when you’re sharing a small home with six other family members, or when you have to go in crowded transport to work to put food on your table.

The medical emergency in being compounded by an economic emergency, putting hundreds of millions of lives at risk of starvation and creating the biggest shock to development in the post war period.

Covid-19 demonstrates the butterfly defect of globalisation is a dire threat to us all. It poses a test for leaders everywhere. It challenges governments, businesses and individuals to behave differently. How we respond to this test will determine not only our individual prospects, but that of humanity.

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By Ian Goldin and - -
WASHINGTON, Oct 1 2003 (IPS)

If the promise embodied in the name of the Doha Development Round is to be fulfilled after the WTO failure at Cancun, these negotiations must be re-vitalised, writes Ian Goldin, Vice President, External Affairs and United Nations Affairs of the World Bank. In this article, the author writes that rich countries need to take the lead in re-starting the multilateral process by making more ambitious offers than were on the table in Cancun, and developing countries should follow by showing increased flexibility to open their own markets. This will ensure that the developing countries are able to take full advantage of the benefits from investments in research and extension and rural infrastructure to enhance their global integration and trade. The potential benefits for the developing world from global trade reform are estimated to be as high as USD 349 billion per year when dynamic impacts are taken into account. The goal of Cancun was that business as usual cannot continue and that a new equilibrium needs to emerge that will give Africa a chance to benefit from the powerful engine of growth and poverty reduction that trade has proven to be in other parts of the world.

For Sub-Saharan Africa — the world’s poorest region, where almost half the population subsists on less than a US dollar a day — the failure of the World Trade Organisation (WTO) negotiations in Cancun last month was not good news.

If the promise embodied in the name of the Doha Development Round is to be fulfilled, these negotiations must be re-vitalised.

Rich countries need to take the lead in re-starting the multilateral process by making more ambitious offers than were on the table in Cancun, and developing countries should follow by showing increased flexibility to open their own markets. This will ensure that the developing countries are able to take full advantage of the benefits from investments in research and extension and rural infrastructure to enhance their global integration and trade — both with the huge markets in theNorth and with their neighbours in the South.

The potential benefits for the developing world from global trade reform are estimated to be as high as USD 349 billion per year when dynamic impacts are taken into account.

Many African countries have been carrying out reform programmes for two decades now. While these have partially reversed the negative trend, the results have been disappointing. In the 1990s, while per capita GDP in the developing world as a whole grew by 1.7 percent, Africa’s fell by 0.2 percent per year. It was hoped that the combination of improved domestic policies and global trade reform would boost Africa’s exports, particularly those of the agricultural sector, since this accounts for around 35 percent of GDP and 40 percent of export earnings. Yet the region’s share of global agricultural export value has declined almost continually from 8 percent in 1965 to 2 percent in 2000.

Some say that protectionism is not detrimental to African exports, since it primarily affects temperate products. This is misleading. One of the most important strategies for raising incomes of producers of tropical products, as well as reducing the macroeconomic vulnerability that comes from developingcountries’ high degree of commodity dependence, is diversification. This issue is of special importance for Africa: of the 26 highly indebted countries with export concentration of over 50 percent in three or fewer commodities, 20 are in Africa.

Temperate products are viable alternative crops in many countries, so policies that displace developing-country production in these markets obstruct diversification out of the tropical products. Processing of the raw materials in the country of origin would allow producing countries to capture more of the value-added of the final products. But every major developed country (and many developing countries as well) has ”escalated” tariff structures that tax these processed products more highly. These policies — especially those that operate in a counter-cyclical manner — also increase volatility in world markets, forcing producers and consumers in other countries to bear the costs of adjusting to shocks.

Increasing the productivity of African agriculture is another priority. The opportunities for investment and adoption of new research would be enhanced through trade reforms that increase market opportunities and decrease the volatility of prices facing producers, as these erode farmers’ savings and dramatically increase the risks associated with new investments.

Cotton is one of Sub-Saharan Africa’s rare success stories in the last 20 years, during which the continent’s share of world cotton trade rose by 30 percent. Moreover, cotton is a predominantly smallholder crop in Africa, with over two million poor rural households depending on it for their main source of cash income. Beginning in the late 1990s, the sector experienced a severe financial crisis caused by the poor performance of the state-owned enterprises in the West African cotton-producing countries and especially the fall in world cotton prices. This decline was caused largely by agricultural subsidies in the developed world –USD 3.7 billion per year to US cotton farmers, 0.7 billion from the EU.

The African producers in these countries are among the lowest-cost producers in the world. Yet cotton farmers are falling further into poverty. High trade barriers and huge subsidies to farmers are also the norm in many other commodities besides cotton, including rice in Japan and sugar and livestock products in the EU, Japan, and the US, to name just a few of the most egregious examples.

Overall, producer support in the OECD (Organisation for Economic Cooperation and Development) countries averaged USD 235 billion (with total transfers to the agricultural sectors of USD 315 billion) per year in recent years, compared to global official development assistance of USD 50 billion. What makes these policies especially unconscionable is their perverse distributional impacts. Like Robin Hood in reverse, they rob from the poorest of the poor and give to the rich in the richest countries, namely the largest farmers, since most of the payments are doled out in proportion to production or input use.

The goal of Cancun was that business as usual cannot continue and that a new equilibrium needs to emerge that will give Africa a chance to benefit from the powerful engine of growth and poverty reduction that trade has proven to be in other parts of the world. (END/COPYRIGHT IPS)

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