884 views | Akanimo Sampson | September 29, 2019
A fresh report by the United Nations Conference on Trade and Development (UNCTAD) has unveiled the necessary conditions for meeting the UN Sustainable Development Goals (SDGs) by 2030, just a decade away.
UNCTAD in Trade and Development Report 2019, said, ‘’we can meet the SDGs by 2030, but only if we find the political will to change the rules of the international economic game and adopt policies that scale up the resources needed for a big investment push led by the public sector and set the global economy on an expansionary course’’.
The Director of UNCTAD’s division responsible for the report, Richard Kozul-Wright, said ‘’the global economy does not serve all people equally. Under the current configuration of policies, rules, market dynamics and corporate power, economic gaps are likely to increase and environmental degradation intensify.’’
The report recasts the Depression era’s signature policy on a global scale – a Global Green New Deal – as the right policy framework to make a clean break with years of austerity and insecurity following the global financial crisis, help bring about a more equal distribution of income and reverse decades of environmental degradation.
It proposes a series of reform measures to make debt, capital and banks work for development and finance a deal.
A changing climate is already causing severe damage across the world and posing an existential threat. Decarbonising the global economy will require a significant rise in public investment especially in clean transport, energy and food systems. This will need to be supported by effective industrial policies, with targeted subsidies, tax incentives, loans and guarantees, as well as accelerated investments in research, development and technology adaptation.
The report argues for a new generation of trade and investment agreements to support these policies along with changes to intellectual property and licensing laws. But more specific measures and dedicated financial support will be required in developing countries to help them leapfrog carbon-intensive development paths.
The report sets out a roadmap that can lead to growth rates of GDP in developed economies of 1% to 1.5% above those generated by current patterns of global demand. For developing economies, excluding China, the gains will be larger, ranging between 1.5% and 2% per annum, but more moderate in China.
Can we really have our cake and eat it in a world already under severe environmental stress?
Projecting an annual increase in total green investment of 2% of global output – around US$1.7tn or just one third of what is currently spent by governments on subsidising fossil fuels – could, UNCTAD economists estimate, generate a net increase in global employment of at least 170 million jobs, with cleaner industrialisation in the South and an overall reduction in carbon emissions by the target year of the 2030 Agenda.
But the report also contends that widening the investment challenge to eradicate poverty and meet nutrition, health and education goals will impose unsustainable financial burdens on many developing countries, requiring deeper reforms to the international trade, financial and monetary system if the 2030 Agenda is to be met on time.
Since the global financial crisis, market-friendly solutions to these global challenges have failed to push economies in a more economically, socially and environmentally sustainable direction. This year’s report casts doubt on proposals to do more of the same: to finance the SDGs by maximising development finance through blending public and private sources using products and techniques taken from the playbook of banking conglomerates. These have routinely failed to boost productive investment and were instrumental in the boom-bust cycle that led to the 2008 global financial crisis.
Instead, the report sets out a series of measures and reforms that would give the lead in financing a Global Green New Deal to the public sector and calls on the international community to find the political will to advance such an agenda.
Reversing the decades-long loss of labour income to profits and the shrinking public realm and ensuring corporations pay their fair share is key for the global package to work, due to the positive effect of increased public investment and higher wages on consumption and private investment.
The appropriate policy package will vary from country to country, but all will involve fiscal stimulus, public investment in infrastructure and green energy, and measures to boost wages.
Fiscal expansion, to be paid for with progressive tax increases and credit creation, also becomes more powerful when coordinated, making it more capable of paying for itself. Critical to its effectiveness is the extent to which private investment is stimulated (crowded in) by the initial fiscal impulse. With many economies currently experiencing insufficient demand, the report expects that the fiscal stimulus will boost private investment and, consequently, productivity growth.
According to UNCTAD’s Secretary-General, Mukhisa Kituyi, “meeting the financing demands of the Agenda 2030 requires rebuilding multilateralism around the idea of a Global Green New Deal, and by implication a financial future very different from the recent past.”
The report proposes a series of reform measures to make debt, capital and banks work for development, including: