Debt Distress and Development Distress: Twin Crises of 2021

Debt Distress and Development Distress: Twin Crises of 2021. Brookings Institution. Homi Kharas and Meagan Dooley. March 17, 2021

Just over a year into the COVID-19 crisis, it is apparent that there is great urgency for governments to address an overlapping set of issues—among them health, climate, nature, resilience, recovery, jobs, and inequality—at a scale far larger than would have been imaginable before the onset of the crisis.

Political leaders have concluded that bold action today on resolving debt and development distress simultaneously is less risky than caution and incremental change, or an effort to sequence debt resolution before development. This recognition draws a parallel between dealing with the pandemic and dealing with broader issues of global equity and fairness. Just as success in the fight against COVID-19 is not achievable until there is almost universal vaccination and the virus dies out, it is equally true that all countries need to shift to a path of sustainable development to build resilience into the global economy. Efforts of all countries are needed to avoid surpassing the tipping point thresholds of greenhouse gas concentration and to conserve the planet’s biodiversity, as extinction cannot be reversed. [Note: contains copyrighted material].

[PDF format, 35 pages].

Unlocking Humanitarian and Resilience Investing through Better Data

Unlocking Humanitarian and Resilience Investing through Better Data. World Economic Forum. 28 January 2021

The COVID-19 pandemic has had a severe impact on fragile social and economic systems, stretching the gap between current financing levels and those required to deliver the Sustainable Development Goals. Humanitarian and Resilience Investing (HRI) is an emerging investment theme aimed at leveraging private capital in a way that directly benefits vulnerable people and fragile communities. This report identifies ways of overcoming a critical barrier to humanitarian and resilience investing, namely the lack of sufficient, decision-ready data. It offers an important first step, providing an assessment of the existing data landscape, and calls for targeted, coordinated action to address gaps and critical areas for development. [Note: contains copyrighted material].

[PDF format, 39 pages].

Rebuilding the Global Economy: A Special Series Outlining Policy Priorities and Solutions in 2021

Rebuilding the Global Economy: A Special Series Outlining Policy Priorities and Solutions in 2021. Peterson Institute for International Economics. PIIE Briefing 21-1. February 2021

Rebuilding the global economy is essential to addressing many interlocking problems at once, including recovery from the COVID-19 pandemic, climate change, inequality, and limiting international conflict. In the summer of 2020, the Peterson Institute for International Economics (PIIE) enlisted scholars and stakeholders to deliver 39 memoranda to a wide range of top policymakers and institutions. The authors called for dozens of specific measures to counter an economic crisis that was activated by a global pandemic but that was also years in the making. The memoranda were originally published from October through December 2020 on the Rebuilding the Global Economy microsite. Some of the recommendations have since been implemented. This PIIE Briefing collects the memoranda in a single volume.

The mandate of the Institute’s “Rebuilding the Global Economy” project has been to connect a long-term strategy with precise policy actions to achieve rapid results at the start of a new US presidential administration. The emphasis has been on advising policymakers and senior officials, as well as the public, in the United States and the European Union, and at the Bretton Woods international economic institutions. At least in the initial phase of the project, PIIE restricted itself to places where the authors had standing and experience to speak. Other nations, regions, and institutions merit the same voice on rebuilding the global economy, so while the Institute does not presume to speak for them, its leadership is encouraging them to engage with the Institute in offering their own similar advice. Many memoranda stress that the disorders they are addressing have accumulated slowly over the last two decades or even longer, culminating with the nationalism and protectionism of recent years and finally in the COVID-19 pandemic and the worldwide economic shock of 2020–21. [Note: contains copyrighted material].

[PDF format, 155 pages].

Technology, Growth, and Inequality: Changing Dynamics in the Digital Era

Technology, Growth, and Inequality: Changing Dynamics in the Digital Era. Brookings Institution. Zia Qureshi. February 12, 2021

Ours is a time of exciting technological change. The era of smart machines holds the promise of a more prosperous future for all. But it demands smarter policies to realize that promise. To capture potential gains in productivity and economic growth and to address rising inequality, policies will need to be more responsive to change as technology reshapes markets. And change will only intensify as artificial intelligence and other new advances drive digital transformation further—and at an accelerated pace in the aftermath of the COVID-19 pandemic.

As technology shifts market dynamics, policies must ensure that markets remain inclusive and support broad access to the new opportunities for firms and workers. New thinking and policy adaptations are needed in areas such as competition policy, the innovation ecosystem, digital infrastructure development, upskilling and reskilling of workers, and social protection regimes. Fostering wider diffusion of new technologies among firms and building complementary capabilities in the workforce can deliver both stronger and more inclusive economic growth. [Note: contains copyrighted material].

[PDF format, 26 pages].

COVID-19 and the U.S. Economy

COVID-19 and the U.S. Economy. Congressional Research Service. Lida R. Weinstock. November 16, 2020

On June 8, 2020, the National Bureau of Economic Research (NBER) announced that the United States entered into a recession in March 2020, a result of the Coronavirus Disease 2019 (COVID-19) pandemic. To prevent the spread of COVID-19, lockdown orders were issued in many parts of the country and travel restrictions were put in place. These measures, along with general fears of the coronavirus, caused swift and large aggregate demand and supply shocks that resulted in the deepest economic downturn the United States has seen since the Great Depression.

In the post-World War II era, the peak unemployment rate of 14.7% in April 2020 was the highest recorded monthly rate, and the second quarter annualized decline in gross domestic product (GDP) of 31.4%, driven by decreases in personal consumption expenditures and gross private fixed investment, was the highest recorded single quarterly decline in real GDP. The pandemic caused relatively low inflation in the aggregate, and prices for certain goods, such as gasoline, decreased by double-digits. Although the economy has improved since the second quarter, including the highest single quarterly increase in GDP (33.1% annualized) in the third quarter and the decline in unemployment to 6.9% in October, most economic indicators show that economic activity has still not fully recovered. In some cases recovery appears to be slowing and the recession is not expected to end until the pandemic subsides. When the public health crisis began, many workers were laid off on temporary furloughs, but since then, many of those temporary job losses have become permanent, leading to concerns that unemployment will remain high for several years.

[PDF format, 21 pages].

The Future of the United States Dollar: Weaponizing the US Financial System

The Future of the United States Dollar. Atlantic Council. Michael Greenwald. December 4, 2020.

The US economy and the power of the dollar have been unmatched since the time of the Bretton Woods agreement. The privilege of having the dollar serve as the global reserve currency enables the United States to weaponize its currency and leverage effective sanctions on rogue nations such as North Korea and Iran. However, some of the same strategies have not worked in relation to other important global players such as China.

It is critical that the United States continues to look forward and prepare for the future. This report provides a comprehensive overview of the impact of COVID on economic statecraft, the role of the dollar in great power competition, and the era of digital currencies. [Note: contains copyrighted material].

[PDF format, 29 pages].

Horizon 2025—End of the Beginning: Development Cooperation in the Pandemic Age

Horizon 2025—End of the Beginning: Development Cooperation in the Pandemic Age.  Center for Global Development. Homi Kharas, Andrew Rogerson  and Beata Cichocka. November 30, 2020

COVID-19 and economic responses to it have amplified and changed the nature of development challenges in fundamental ways. Global development cooperation should adapt accordingly. The focus of our analysis is on the “intelligent reconstruction” phase of 2022-2030, once the immediate stabilization of economies and the health pandemic have taken place. We look at changes in the development context that may have long-term effects: global growth, debt, budget deficits and taxes, aid, capital markets, along with poverty and vulnerability. We suggest that aid is moving beyond altruism to become an instrument of national self-interest and of better planetary management of the global commons. These new objectives for aid put more emphasis on what is happening within each country, rather than across countries. Metrics of environmental sustainability and social inclusion performance, as well as governance, will become more important determinants of aid’s effectiveness. We identify the trade-offs in using aid to simultaneously relieve debt distress and development distress, and conclude that other instruments beyond aid are needed. Prominent among these is far more ambitious use of multilateral and national development banks, and global policies to reduce capital outflows from developing countries. We encourage the delineation of areas of cooperation and competition between geopolitical rivals, to limit the tainting of development priorities with elements of “us” versus “them.” [Note: contains copyrighted material].

[PDF format, 84 pages].

Strategies for Workforce Recovery in Response to the Current Crisis: A Resource for Local Leaders

Strategies for Workforce Recovery in Response to the Current Crisis: A Resource for Local Leaders. Urban Institute. Pamela J. Loprest, Shayne Spaulding, Ian Hecker. November 18, 2020

This resource outlines a menu of actionable strategies for local leaders for workforce-related recovery efforts in response to the COVID-19 pandemic and corresponding recession. These strategies focus on evidence-based interventions and approaches which promote inclusive recovery. We categorize these strategies by goal, type of action, and phase of pandemic reopening so local leaders can choose options best suited for their current circumstances. For each strategy we provide a description, supporting evidence, specific actions for local leaders, and useful examples and resources. [Note: contains copyrighted material].

[PDF format, 37 pages].

The Future of Jobs Report 2020

The Future of Jobs Report 2020. World Economic Forum. October 20, 2020.

The COVID-19 pandemic-induced lockdowns and related global recession of 2020 have created a highly uncertain outlook for the labour market and accelerated the arrival of the future of work. The Future of Jobs Report 2020 aims to shed light on: 1) the pandemic-related disruptions thus far in 2020, contextualized within a longer history of economic cycles, and 2) the expected outlook for technology adoption jobs and skills in the next five years.

Despite the currently high degree of uncertainty, the report uses a unique combination of qualitative and quantitative intelligence to expand the knowledge base about the future of jobs and skills. It aggregates the views of business leaders—chief executives, chief strategy officers and chief human resources officers–on the frontlines of decision-making regarding human capital with the latest data from public and private sources to create a clearer picture of both the current situation and the future outlook for jobs and skills. The report also provides in-depth information for 15 industry sectors and 26 advanced and emerging countries. [Note: contains copyrighted material].

[PDF format, 163 pages].

Epidemiological and Economic Effects of Lockdown

Epidemiological and Economic Effects of Lockdown. Brookings Institution.  Alexander D. Arnon, John A. Ricco, and Kent A. Smetters. September 23, 2020

Orders encouraging people to leave their homes for only their most essential needs during the early months of the COVID-19 pandemic reduced deaths at a lower economic cost than mandatory business shutdowns, suggests a paper to be discussed at the Brookings Papers on Economic Activity (BPEA) conference on September 24.

The paper’s authors—Alex Arnon, John Ricco, and Kent Smetters of the University of Pennsylvania—created an integrated framework that evaluated the health and economic effects of “non-pharmaceutical interventions” by state and local governments at the county level. They focused on three major interventions—stay-at-home orders, nonessential business closures, and school closures. [Note: contains copyrighted material].

[PDF format, 53 pages].