ISSUE 6

THE WORLD POLICY FORUM GLOBAL SOLUTIONS JOURNAL

RECOUPLING /T20 ITALY 2021 EDITION ABALKHAIL ∙ ALTINTZIS ∙ BOLLRICH ∙ BRADFORD ∙ BUCHOUD BUCK ∙ CASALI ∙ DE CARVALHO ∙ ENGELS ∙ FARRELL ∙ FILGUEIRA FLEURBAEY ∙ GALAL ∙ GÖRLICH ∙ GRIMALDA ∙ GURRÍA HOLTMANN ∙ KASTROP ∙ KIRTON ∙ LIMA DE MIRANDA ∙ LO VUOLO MAGRI ∙ MAIRA ∙ MIYAMOTO ∙ MORO ∙ POITIERS ∙ PONATTU POUSHTER ∙ RAHA ∙ SCHULZE ∙ SNOWER ∙ SOETBEER STEINHILBER ∙ STIEGLER ∙ TRIFONE ∙ TWOMEY ∙ WARREN WEISE ∙ WIKE ∙ YOSHINO THE WORLD POLICY FORUM

ISSUE 6 ∙ JANUARY 2021 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 FOREWORD

tion – an experience from which all G20 COVID-19. You will find many thoughts on Dear Friends and countries can learn. all of this in this Journal. The Global Solutions in 2021 aims to contribute new thinking about the ­Colleagues, »Among the new normal, along with learnings about how to combat pandemics. We hope to be lessons for the able to welcome thought leaders from all segments of society in Berlin on May 27– post-pandemic 28, 2021. As always, there will be public sessions that focus on concrete policy world is the proposals, next to closed meetings and The year 2021 has just begun, and, for sessions of T20 task forces. To prepare Dennis J. Snower the first time, Italy has assumed the G20 need for a for all eventualities, the Summit will be a President, Global Presidency. We warmly congratulate the hybrid event. Solutions Initiative renowned think tank ISPI (Italian Institute shift toward After the rapid innovation and digi- for International Political Studies), a long- talization of the past months, which cul- standing partner of the Global Solutions resilience minated in the Global Solutions Summit Initiative and member of its Council for 2020, we aim to bring together the best Global Problem-Solving, for hosting this in society, of the physical and the digital world. We Markus Engels year’s T20 process. will connect to foster dialogue and the ex- Secretary General, The other G20 engagement groups economy and change of ideas, even more profound rec- Global Solutions have commenced their work as well. We ommendations, greater networks, wider Initiative wish them a successful start. The .« participation and easier access to our Solutions Initiative and its networking community. All of you will have the chance partners are looking forward to support- to contribute and participate – either on- ing the Italian G20 Presidency and its en- Among the lessons for the post-pan- line or onsite in Berlin. gagement groups. demic world is the need for a shift toward Overcoming the COVID-19 pandemic is resilience in society, economy and poli- We look forward to seeing you again soon. still a major priority in all countries, re- tics. Resilience is not the same as effi- gions and international institutions – and ciency. It demands more sustainability, Please stay safe and well! will be for the foreseeable future. The more empowerment of people and more medical and economic challenges of the recoupling between social groups and With hope and confidence, pandemic are obvious, and its impact on sectors of society. The T20 and the other societies cannot be neglected. Solidarity G20-related engagement groups can con- Dennis & Markus in and between societies, as well as mul- tribute to designing the "new normal" and tilateralism, are needed now more than simultaneously ensure that other press- ever. With Italy’s Presidency of the G20, ing challenges are not forgotten. The we look to a country that had an early and fight against and loss of grave understanding of the pandemic. biodiversity, inequality and , as has gained vast experience regard- well as the reform of data governance are ing the complex challenges of COVID-19 mega-projects that cannot wait. Each in and the need for international coopera- its own way is connected to overcoming

4 5 CONTENTS CONTENTS Global Solutions Journal Issue 6

THE FUTURE OF THE G20 DIGITAL GOVERNANCE 14 Italy’s G20: Priorities and challenges of a crucial year 80 Consumer policy after COVID-19: Paolo Magri, ISPI Fostering social cohesion requires an update to digital governance 17 The role and priorities of Italian civil society for the 2021 G20 Presidency Christian Kastrop and Dominic Ponattu, German Federal Ministry of Riccardo Moro, GCAP Justice and Consumer Protection 23 Recovery with resilience for the world of work: 87 Revisiting digital governance Labor’s recommendations to the Italian G20 Presidency Dennis J. Snower, Global Solutions Initiative Yorgos Altintzis, ITUC Paul Twomey, CIGI Maria Farrell, University of Western Australia 29 Engagement group recommendations realized in G20 Summits John Kirton and Brittaney Warren, G20 Research Group 94 Digital services and data flows in global trade Dennis Görlich, Kiel Institute for the 37 A reliable framework for transformation Niclas Frederic Poitiers, Bruegel , German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety 39 Towards an agenda for transforming the global economy: Prospects for Italy’s G20 Presidency 2021 THE NEW NORMAL Dennis Görlich, Kiel Institute for the World Economy 110 Reset, recovery, and resilience alone? 45 Changing the game with China: Elisabeth Bollrich and Jochen Steinhilber, Friedrich-Ebert-Stiftung An “alternative framework” for China-West relations 117 Cities and the future of growth: Towards an economy of well-being? Colin Bradford, China-West Dialogue Nicolas J.A. Buchoud, Grand Alliance Hazem Galal, PwC Katharina Lima de Miranda, Kiel Institute for the World Economy NEW MEASUREMENT Luca Trifone, Municipality of Rome 129 Principle of duality for the new normal 56 Measuring what matters in times of crisis: Jörg Buck, German-Italian Chamber of Commerce Looking beyond GDP to a well-being framework that measures true growth Angel Gurría, OECD 136 A proposal for a global universal basic income: A means to foster through progressive global taxation 64 Measure what is valuable: A plea for a system change Gianluca Grimalda, Kiel Institute for the World Economy Markus Engels, Global Solutions Initiative Fernando Filgueira, Universidad de la República Katharina Lima de Miranda, Kiel Institute for the World Economy Marc Fleurbaey, Paris School of 69 Corporate activism: Rubén Lo Vuolo, Interdisciplinary Centre for the Study of Public Policy A legal framework for “corporate recoupling” in Brazil 143 Towards a new paradigm for sustainable infrastructure: João Bernardo Casali and João Daniel de Carvalho, Iönica A call to action by “The Solutions Lab: Scaling for Sustainable Infrastructure” Manuel Holtmann, GIZ

6 7 CONTENTS

150 A new architecture for : Local systems’ solutions are essential for solving systemic global problems Arun Maira, HelpAge International 158 Bridging the gender gap in leadership: A strategic approach Jouharah Mouhammed Abalkhail, Institute of Public Administration 167 Jobs, growth and sustainability: India’s recovery needs a new social contract to square the “impossible” trinity Shuva Raha, CEEW 174 The role of foundations during a pandemic: The German Federal Environmental Foundation’s funding measures at the nexus of COVID-19 and sustainability Cornelia Soetbeer, German Federal Environmental Foundation (DBU) 181 Building resilience against future crises: The role of Multilateral Development Banks in providing a crucial Ursula Stiegler and Madita Weise, GIZ 189 Citizens want more multilateralism Richard Wike and Jacob Poushter, Pew Research Center 198 Revisiting the public debt stability condition: Rethinking the Domar condition after COVID-19 Naoyuki Yoshino, Keio University Hiroaki Miyamoto, Tokyo Metropolitan University

208 The Global Solutions Initiative

210 Imprint

8 THE FUTURE OF THE G20

Page 14 Italy’s G20: Priorities and challenges of a crucial year Paolo Magri ISPI

The future Page 17 The role and priorities of Italian civil society for the 2021 of the G20 G20 Presidency Riccardo Moro GCAP

Page 23 Recovery with resilience for the world of work Yorgos Altintzis ITUC

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Page 29 Engagement group Page 39 Towards an agenda for recommendations transforming the global realized in economy G20 Summits Dennis Görlich John Kirton, Kiel Institute for the World Brittaney Warren Economy G20 Research Group Page 45 Changing the game Page 37 A reliable framework with China for transformation Colin Bradford Svenja Schulze China-West Dialogue German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety

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ber 2020, and a second wave of the virus the digital transformation is accelerat- Italy’s G20: spreading across Europe and the United ing as remote work and distance learning States. Measures undertaken to contain continues. Digitalization allows us to reap the spread of the virus have plunged our new benefits and creates new opportuni- Priorities and economies into the deepest recession in ties, but it also provides new challenges over a century, with forecasts from the In- in terms of jobs and education, especially ternational Monetary Fund of a -4.4% de- for vulnerable groups. Finding solutions to challenges of cline in global GDP in 2020 (much steeper a world of rising inequalities was already than the -0.1% recorded during the Great important before the crisis, but it is now recession in 2009). imperative for world leaders. a crucial year As 2020 draws to a close, countries have already injected an estimated USD 12 trillion into the global economy, but the »To find viable fiscal room to continue to do so is shrink- ing by the day. In 2021, we will be living in solutions to all Author: “People, planet, and prosperity.” These a “world of debt”. A world in which many are the three Ps, the keywords chosen by more countries are set to experience fis- Paolo Magri these global the Italian government for its Presidency cal stress, with creditworthiness of heavily T20 Italy Chair and of the G20 in 2021. Three Ps that, for sure, indebted developing and emerging econo- Executive Vice President, challenges will need to be tackled together: if we do mies – and beyond – likely put to the test. Italian Institute for International Political not act fast, and if we do not act now, we Unfortunately, defaults and risks of wide- and effectively Studies (ISPI) risk not only having fewer healthy people spread financial crises may be just around on an unhealthy planet, but also less pros- the corner. tackle the perity (and more inequality) in the years To make things worse, the pandemic- and decades to come. 2021 may turn out induced economic crisis is going to have three Ps, the to be a crucial litmus test for multilateral- highly asymmetric effects, heightening ex- Institution: ism, and for the G20 as its major global fo- isting inequalities, both between countries obvious recipe rum. It will not be easy to find multilateral and within them. Unsurprisingly, the World solutions, as tensions continue to run high Bank recently estimated that extreme pov- is cooperation at the international level – all the more so erty is set to rise for the first time in three as hard choices will need to be made – at decades, adding 80 to 150 million more and negotiation The Italian Institute for International Political the same time – for people, the planet, and poor globally by the end of this year. Even Studies (ISPI) is an independent, non-partisan, prosperity. Finding the right balance be- in advanced countries, those who are al- among all non-profit think tank providing leading re- tween the three of them will be tricky. ready at a disadvantage – the less well-off, search and viable policy options to government In particular, when it comes to people women, the young, and minorities – are countries.« officials, business executives and the public and prosperity, we have learned the hard going to be hit harder than the average: at large wishing to better understand inter­ national issues. lesson that national lockdowns may keep according to the University of Oxford, poor When striving to find the right balance the death toll low in many countries, but workers in Europe are set to lose as much between people and prosperity, we also they also risk wrecking the economy. In- as 16% of income, and within-country in- need to include the planet in the equation, Keywords: deed, the COVID-19 pandemic is hitting equalities may rise by 12% on average. making sure that any upcoming recovery G20 Italy, multilateralism, inequality, our societies hard, with over 1.2 million As we reflect on the potentially huge is achieved through climate-friendly in- ­sustainability official deaths globally as of early Novem- political consequences of these trends, vestment, with sustainability at its core.

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However, the pandemic seems to be add- In conclusion, the G20 next year faces ing even more strains to the efforts toward many – maybe too many – urgent chal- The role and ­priorities sustainability and the fight against climate lenges related to the three Ps. Who is go- change. As many countries worldwide ing to pay for all the debt we have been went into national lockdowns or enforced piling up this year? How to manage the of Italian civil other measures to counter the pandemic socio-economic impacts of a more un- in the first half of 2020, carbon emissions equal, indebted, and fragmented world, declined abruptly in April 2020, by around not to mention their political implications? ­society for the 2021 17%. But when the world partially recov- How to face long-term challenges, such as ered in early autumn, greenhouse gas climate change and digital transformation, emissions bounced back, almost returning if we are stuck dealing with emergencies, G20 ­Presidency to pre-pandemic levels. As a result, carbon and in particular the health crisis? concentration in the atmosphere might Once again, the only “new” answer to have broken another record in 2020. all these questions can only revert back To find viable solutions to all these to the “old” answer: multilateralism. global challenges and effectively tackle the Maybe not the same kind of multilater- Author: THE ROLE OF CIVIL SOCIETY three Ps, the obvious recipe is cooperation alism we knew in the past, where some- Democracy is a difficult exercise. Parlia- Riccardo Moro and negotiation among all countries, start- one led and others followed. And neither ments, governments and state institutions ing from big powers. In one word, multi- the “goodwill multilateralism” that some Executive Chair of GCAP should pursue the common good, involv- lateralism. Yet, multilateral institutions countries pledge to protect today, while Member of C20 Steering ing all members of the community in the continue to be strained, and have become acting unilaterally whenever they can. We Committee decision-making process. But the political less and less effective over time. Indeed, need a more inclusive and action-oriented space is often influenced by pressures ex- some might even argue that the last real multilateralism, with new and improved erted by unscrupulous lobbies represent- success of multilateral cooperation dates international institutions holding up its ing private interests, by the temptation of back to 2009, when G20 countries agreed foundations. However, this may risk being power, by easy and simplifying mainstream to strengthen the international financial an ‘academic’ answer, as our preferences Institution: views, more and more often even by per- architecture and coordinated the biggest need to come to terms with reality: the re- verse communications and fake news, global economic stimulus to date. In 2020, ality of a post-pandemic world filled with and by several critical systemic trends instead, international cooperation turned old challenges and new political and so- challenging contemporary societies and out to be much more complicated, as the cio-economic uncertainties. This was the Global Call to Action Against Poverty (GCAP) states. Civil society tries, at the local and global economic stimulus seems to have reality that the Saudi Presidency of the defends and promotes human rights, gender global level, to influence and improve the been largely managed by single countries G20 had to face in 2020. And this is also justice, social justice, climate justice and the public decision-making process. (with the partial and, to some extent, sur- the reality that Italy will likely face dur- security needed for the dignity and peace of all. What do we mean by civil society? It’s GCAP is a network of over 11,000 civil society prising exception of the EU). And yet, the ing its own Presidency, while we wait for an expression used widely, even uncriti- organizations (CSOs) organized in 58 ­National very fact that today’s economic recession signs of hope from a vaccine and from a Coalitions and in constituency groups of cally. This is not a place for a deep analy- has not been followed by a financial crisis revived multilateral engagement of world women, youth and socially excluded people, sis of its different definitions, but we can might stem precisely from world leaders’ leaders to safeguard “people, planet, and among others. use it generally to mean the whole of non- decisions in 2009. prosperity.” governmental organizations (NGOs) work- ing for the global good, focusing on some Keywords: main issues: the respect of human rights, civil society, C20, Italy’s G20 priorities, the protection of the most vulnerable and ­political dialogue, global governance poor, the participation of all citizens –

16 17 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE FUTURE OF THE G20 starting from the most marginalized and dictions and limits, show the need not only UN dimension to establish and implement not respect the freedom of local civil soci- discriminated, and the sane and sustain- to permanently question our “business as international actions, instead of promot- ety actors. able relationship of humankind with the usual” attitudes, but also to identify spaces ing new G20 initiatives as flagships. Even environment. To do all that, civil society for global governance. The multiple inter- one of the most relevant proposals of the organizations (CSOs) on the one hand work connections and mutual (but not always Communiqué, the creation of a permanent »The fundamental to mobilize citizens by “translating” com- balanced) influences require tools and debt restructuring mechanism, is clearly plex issues to make them politically ac- methods to manage complex processes, presented as a UN-led mechanism, asking right to civic cessible to all. They also approach public instead of being managed by the unregu- the 20 countries to be active in promoting it institutions with political proposals, pro- lated competition of interests and powers. and providing adequate debt relief. space is more viding “out of the box” thinking – often as Thus, strengthening the UN multilateral an alternative to the mainstream. Civil so- approach is strategically important, despite HOW THE C20 WORKS and more ciety often challenges the political debate, its limits, while it is equally important to ex- Every year the Civil20 works in parallel to trying to show the (several) elephants in plore all other international spaces. Among the G20. It is chaired by the civil society of frequently the room. To give just two examples, calls those, the G20 plays a quite special role, if the host country and participants come to action by the international Jubilee Debt not unique. It is not a legitimate or official from around the world, not just from the disrespected, Campaign turned around an international institutional space, but, like the G7 in the 20 countries. The process is developed situation in which millions of people were past, it represents a relevant arena for the with several Working Groups (WGs), led by affected by starving, and radically influenced the World international decision-making process. two facilitators, one from the international Bank and IMF’s approach to poverty reduc- Concerned about the relevance of participants and one from the host country. the sirens of tion. Similarly, civil society environmental- global governance, international civil so- Around mid-year, the Face to Face Meet- ism helped build international awareness, ciety, besides its commitment to the UN, ings bring together C20 WGs and the cor- and although not long ago was considered as a deals with G7 and G20 processes, even if responding leaders of the G20 WGs. Then, negligible mania by many. it is critical of their legitimate role. The it publishes the C20 Policy Pack3 to formal- nationalism and At present, international civil society dialogue between civil society and the G7 ize political demands. Later in the year, shares a number of concerns. Among them, became particularly strong during the late before the G20 leaders’ meeting, the C20 by the increasing three seem particularly insidious: the dra- ’90s with the Jubilee Campaigns. Then, organizes its Summit that hosts events and matic increase of inequalities, intensely am- after 2008 and the “resistible rise” of its meetings to amplify its political proposals. attacks plified by the outbreak of the COVID-19; the financial crisis, the G20 took on a more The Communiqué, released during the on freedom.« urgency of “climate justice”; and the shrink- relevant role. As a consequence, space Summit, is the highest political document ing of civic space.1 The last, in particular, is for political dialogue increased around the delivered to the G20 governments. especially worrying. The fundamental right regular meetings of the 20 countries, in- In Japan, during the 2019 C20 Sum- According to the C20 Principles, the to civic space is more and more frequently volving civil society and other actors. This, mit, international civil society delegates C20, led by a Chair and a C20 Sherpa from disrespected, affected by the sirens of pop- in 2013, led to the formalization of sev- approved the C20 Principles4 to guide the the host country, will each year form a ulism and nationalism and by the increasing eral Engagement Groups to facilitate the work of the C20 in the following years. Sev- Steering Committee (SC) and an Interna- attacks on freedom, including the perverse dialogue on the G20 agenda: Civil20, La- eral members of the G20 guarantee a high tional Advisory Board (IAB) representing killings of activists, such the recent murder bour20, Business20, Science20, Think20, level of freedom of association and speech organizations from all over the world. of Indigenous people defending land and Women20, Youth20 and recently U20. to their citizens. But others are among the communities in the Amazon. The C20 has a clear idea of the role most flagrant in disrespecting fundamen- THE C20 2021 IN ITALY the G20 should play. In the C20 Commu- tal rights. The C20 Principles are a tool Italian civil society has been active since G20 AND C20 niqué 20202, released in October 2020, the to prevent a possible obfuscation of the late 2019 in the SC of the C20 as a member The increasing complexity and interactions C20 asks the G20 to be active in serving process in the future, when Summits are of the Troika, formed by the host, the previ- of our societies, together with their contra- the multilateral framework and to use the hosted in countries whose governments do ous and the subsequent country.

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GCAP Italy is the network facilitating bers to provide adequate and permanent tors, of civil society organizations from the 1. An ambitious agenda for debt re- this process. It is formed by a large num- support to this process. The dialogue with 20 countries and beyond. Relevant links lief and long-term debt sustainability, to ber of NGOs and networks and is a mem- C20, which is perhaps rather demanding to international networks and “families” provide adequate fiscal space to indebted ber of GCAP, the Global Call for Action and ‘transgressive’ among the G20 en- (the big international NGOs with national countries to confront the critical develop- against Poverty. Created in 2005, GACP gagement groups, is also for this reason branches) are also assured. ment challenges. This includes measures gathered together the voices of civil so- often presented as a feather in the cap At the beginning of the year, the Steer- on liquidity needs to finance both the short ciety to facilitate the dialogue with public of G20 hosting governments. But this can ing Committee and the International Ad- and long-run sustainable development institutions on implementing the UN’s Mil- only be possible if civil society organiza- visory Committee will be formed and in- agendas and reforms to restore solvency lennium Development Goals. It also played tions are enabled to really participate. vitations for the International Working and debt sustainability a relevant role in negotiations with the UN Groups will be renewed. The Committee is 2. A rigorous initiative to strengthen to shape the 2030 Agenda. Several GCAP working on shaping the WGs, considering and the epidemic prepared- National Coalitions deal with the G7 and »The Italian outcomes of the previous years’ work and ness, by ensuring adequate financial sup- G20 process. In Japan, for example, GCAP the need to enhance connections among port for a strong multilateral UN-centred Japan was one of the actors promoting and Committee sectors. To show the systemic causes of framework, coordinated by WHO and pro- leading the civil society process for the C20 injustice and to influence public decision- moting the needed support to establish 2019. Similarly, GCAP Italy represents civil is committed making with effective coordinated political robust public systems providing universal society in the country to deal specifically proposals, it is important to develop politi- access to health. Increased investments with the G7 and G20 process. During 2020 to continuing cal analyses and discussions that consider are needed also in responsible and col- GCAP, Italy promoted the creation of the sectoral interconnections. That is why the laborative pharmaceutical R&D, condi- Italian C20 Committee to promote an even the efforts action of the Steering Committee and the tioning public funding to affordability and wider participation of networks and organ- Working Groups will be organized enhanc- access to all of the resulting medicines, izations to the process. of the C20 in ing the cross-cutting priorities and the vaccines, diagnostics and related health 2020 has been a quite particular year, interlinkages, while following the specific technologies. There is also the need for forcing the organization of the C20 to move strengthening agenda of each WG and the G20 Ministerial revisiting WTO intellectual property rules online due to COVID-19. The Saudi Presi- Meetings. and for implementing existing resolutions dency of the C20 worked very well in dia- coordination to impose transparency in the price of es- logue with the SC and the IAB. The Italian THE PRIORITIES PROPOSED sential goods, including drugs and medical C20 will need the same flexibility. At the with civil society BY ITALIAN CIVIL SOCIETY devices; writing of this article, it is still impossible During 2020 the Italian C20 Committee had 3. The G20 must renew and increase to foresee how the outbreak will continue networks a permanent dialogue with the Italian gov- its commitment to save planet and peo- in 2021. So GCAP Italy and the Italian C20 ernment and the G20 Sherpa, sharing first ple from catastrophic climate change. Committee are planning for different sce- working on proposals by Italian civil society. This requires maximum support of the narios, and dealing with the government to The proposals have been outlined and all other related UN set up adequate means for a large partici- global thematic along two main priorities. The first con- processes, including special attention to pation. issues, and with cerns political content, the second, meth- de-carbonization, renewable energy and One of the problems each year is fi- odologies. environmental and social criteria to regu- nancing the activities and the Secretariat. the UN.« The first group of priorities aims to late finance, trade and investments. The Civil society organizations are non-profit strengthen G20 support for the 2030 Agen- results of the presidential elections in the actors, working with or formed by the most da for Sustainable Development, the Paris US provides a new optimistic perspective, vulnerable social groups. They can’t count Along these lines, the Italian Commit- Agreement and all related UN systems. In with the most influential member of the on autonomous income, resources or capi- tee is working to ensure links to and par- particular, the Italian CSOs call on the G20 G20 back in the field of countries support- tal. So civil society is calling on G20 mem- ticipation of a large number of Italian ac- to focus on the following points. ing the Paris Agreement.

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4. Human rights at the heart. Women b. Review and strengthen a clear and and girls’ rights and gender equality, social, transparent accountability framework to Recovery with economic, food and climate justice, respect monitor progress in the implementation of for human mobility, universal social protec- G20 decisions; tion and global public goods are fundamen- c. Deepen the engagement with civil ­resilience for the tal for any political initiative. In particular society and other public-interest societal the global response to COVID-19 supported constituencies in all G20 workstreams; by the G20 must be based on a rigorous gen- d. Promote the direct participation of world of work der analysis and human-rights approach communities and social groups primarily and involve active dialogue and participa- affected by the development challenges tion by the most-affected communities and the G20 aims to respond to. Labor’s recommendations to the Italian social groups as well as civil society part- The C20 process in Italy starts in De- ners that can help deliver the response and cember 2021. The concerns are many, G20 Presidency ensure that no one is left behind; worsened by the vulnerability of societies The methodological proposal refers to and economies as revealed by the ongoing 4 points. pandemic. The Italian Committee is com- Author: With the news of Lehman Brothers col- a. Raise the Development Working mitted to continuing the efforts of the C20 lapse back in 2008, the G20 quickly turned Yorgos Altintzis Group to ministerial level, with the or- in strengthening coordination with civil so- from an annual event of finance ministers ganization of a joint meeting of finance and ciety networks working on global thematic Policy Officer, ITUC and central bankers into the world’s rapid foreign affairs/development ministers, to issues and with the UN. In this framework, response force, with regular meetings of make clear the relevance of sustainable a relevant ambition is to effectively create heads of state and ministers covering an development and the 2030 Agenda and the space to raise the voice of the most vulner- ever-expanding list of domains impacted need for coordination. able. by the crisis. On behalf of Labour20 (L20) Understanding that the crisis would take a heavy toll on jobs, workers and the econ- omy, they quickly agreed and coordinated Institution: fiscal expansion that kept workers at work and increased social protection. After union advocacy, a labor ministers meeting was agreed to tune labor policy on a global level. At that time, 25 million jobs had been lost. Fast forward to 2020 and the world is The ITUC’s primary mission is the promotion a dramatically different place. The ILO re- and defence of workers’ rights and interests, ports1 that the pandemic has cost workers through international cooperation between the equivalent of 495 million jobs and USD trade unions, global campaigning and advocacy 3.5 trillion in income. Under a moderate within the major global institutions. The ITUC scenario, the ILO expects another 245 mil- 1 See the Final Declaration of the People’s Assembly held in NY on 24-25 September 2019, in a session represents 200 million workers in 163 countries parallel to the 2019 UNGA, with the participation of delegates from more than 1000 organizations and and territories and has 332 national affiliates. lion jobs to be lost by the end of the year. movements, opened by Amina Mohammed, the UN Deputy Secretary General. https://gcap.global/wp-content/ uploads/2019/10/Peoples-Assembly-Declaration-2019.pdf Millions of enterprises have closed or are 2 https://civil-20.org/2020/wp-content/uploads/2020/10/2020-C20-Communique.pdf at risk of closure. 3 https://civil-20.org/2020/wp-content/uploads/2020/06/2020-C20-Policy-Pack.pdf Keywords: The pandemic’s socio-economic im- 4 https://civil-20.org/2020/wp-content/uploads/2019/11/C20-Principles_final1.pdf recovery, resilience, labor, jobs, governance pacts on women are especially severe.2

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Young people face an ever-bleaker future, Creating sound fiscal space is neces- 25 wealthiest billionaires13 increased their What is worse, when governments with disrupted education and low pros- sary to ensure and create access to social wealth by USD 255 billion between mid- convene to close governance gaps, corpo- pects of finding a job. Millions of migrant protection for billions of people. People March and late-May. Their business mod- rations have abundant power to tilt deci- workers, trapped in exploitative work and need unemployment benefits, skills de- els promote tax avoidance and precarious sions to their interest. Governance capture most often excluded from social protec- velopment, pensions, care services, health and informal work. They are based on sur- disorients and erodes global action. As a tion, are facing destitution. More than insurance. Governments have responded veillance, data harvesting, and advanced result, people have lost trust in global in- 300,000 seafarers are trapped working with emergency social protection7 meas- methods to avoid responsibility. Yet global stitutions and in governments. They voted aboard vessels, and another 300,000 are ures, but most people in need are still ex- governance appears unwilling to regulate in politicians who challenge the principles facing financial ruin at home, willing to re- cluded. A Global Social Protection Fund8 the digital economy. There seems to be no of evidence-based debate and decision- turn to work. would rapidly deliver funds and technical international effort to do so. There is no making. Discord is spreading. Hopeless- Most worryingly, global governance assistance for all countries to support live- international regulatory body for digital. ness and conflict too. is nowhere near a coordinated response lihoods. But the G20 has yet to reach an To the contrary, Big Tech seems to be set along the lines of 2008 and 2009. World agreement on such a scheme. for a regulation-free pass.14 There is no leaders have declared trade wars. There The irony is that with tens of trillions consensus about the issues on the table: »A New Social is no consensus that science is the basis of dollars in tax havens, there is no short- The EU is undecided on many issues, the for evidence. “My nation first” approaches age of resources to ensure recovery and US threatens to raise trade barriers in re- Contract is the have taken over. resilience. It is encouraging to see the sponse to digital taxes, agreements such And it is not only the jobs crisis that OECD making progress on establishing a as the EU-US Privacy Shield are rejected cornerstone needs fixing. The health crisis itself is the global tax floor for corporations, but an by courts, China is reluctant to discuss first priority. After decades of defunding agreement is not guaranteed and risks more concrete regulation other than basic for ensuring public services, many governments found like agreeing on a too-low floor, close to principles, just as US digital companies. themselves unprepared for the pandemic.3 12%, are real. Recent disclosures9 give an- Most importantly in the long term, recovery and Lacking staff and supplies, frontline health other example of misallocation of financial global warming has reached emergency services have struggled to respond ade- wealth. Major international banks are in- levels, with 2020 setting new records for resilience.« quately. Care facilities for the elderly have volved in some USD 2 trillion in illicit finan- forest fires, ice cap loss, and CO2 emis- reported high death rates. cial transfers.10 sions. Governments again are well off Developing countries are running out High debt affects the private sector too. course for meeting the Paris Agreement WORKERS SAY IT IS TIME FOR A NEW of money.4 Access to financial markets is UNCTAD and the OECD have been warning goals and providing a “Just Transition” to a SOCIAL CONTRACT. NOT AS MUCH often prohibitively expensive. Access to that corporate debt of bad quality has been zero-carbon economy. A REBOOT AS REPROGRAMMING THE public money is inadequate, as the G20 did increasing to dangerous levels.11 Inter- It is worrying that in the face of so GLOBAL SYSTEM. not reach an agreement to unlock trillions national organizations are now sounding many risks, multilateralism is in a deplor- A New Social Contract is the cornerstone of dollars in IMF Special Drawing Rights. alarms of a new financial crisis,12 though able state. for ensuring recovery and resilience.19 Printing money is not an option because it the gigantic stimulus (USD 13 trillion) has For decades, people have seen mul- Its fundamentals are a labor protection would inflate weak currencies and lead to probably shunted this crisis-to-come to tilateralism leading a that floor, universal social protection, new other forms of economic crises. a later date. Overhauling the debt-ridden favored the rich,15 exploited the poor,16 quality jobs and opportunities for women In the meantime, developing countries corporate model has strong links to tax and trashed the planet in the process.17 and men, quality public services for all, have had to make their regular debt pay- avoidance and financialization and should Governance gaps have allowed powerful equality, social dialogue, and an ambitious ments. The G20 agreed on an inadequate be prioritized. corporations to abuse workers and natu- plan for a Just Transition to a zero-carbon debt relief5 only for the poorest countries, The pandemic’s winners, data-driven ral wealth and use financial flows unethi- economy. The Labour20 have called on the which covers a mere 3.65%6 of all debt re- and e-commerce businesses, are now ac- cally and often illicitly.18 These gaps exist 2020 G20 Leaders’ Summit to agree and payments. And some, like Zambia, are al- celerating the digitalization of the global because corporations go unpunished for take bold action to lift the world out of the ready on the brink of bankruptcy. economy from a position of strength. The such behavior. crisis.20

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It is absolutely necessary that devel- Social protection is a super technol- rights regardless of gender, immigration to take necessary action on Big Tech. Man- oping countries are able to participate ogy with immense potential for the people. status, employment relationship or any date ethical use of new technologies. in the response and in recovery. The G20 Invest in social protection and extend it to other grounds of discrimination. In the workplace, establish trade un- should unlock the International Financial all, irrespective of employment arrange- Adopt an industrial policy geared to- ion access to workplace data and a say in Institutions’ capacity to increase the flow ments and establish a Global Social Pro- ward decent work creation, domestic mar- data usage, and regulate workplace sur- of money, allocate Special Drawing Rights tection Fund for all to help those in poor ket development, digitalization, in short, veillance. For platform workers, ensure and take all other measures that would countries. structural transformation. Increase the decent work, guarantee worker and trade create fiscal space. Agree on generous distribution of value in the system and union participation in collective bargain- debt relief and debt cancellation including dissolve power concentrations. Govern- ing with the platform employers. Address permanent structures dealing with unsus- »It is absolutely ment procurement, competition policy, market power concentration and unfair tainable public debt. workforce protection and development, lo- practices towards suppliers in the supply For the short-term response, workers necessary that cal content requirements and investment chains of e-commerce giants including are asking the G20 to scale up and contin- screening are valuable tools. competition policy. ue supporting job retention programs and developing Redesign the rules of globalization. The G20 have already committed to workers’ incomes for as long as necessary. Rationalize the investment system. Peo- some of these recommendations. Deliver- To protect frontline workers by declaring countries ple have made clear they will not tolerate ing on these commitments is a totally dif- COVID-19 a workplace disease and ensur- investor to state dispute settlement (ISDS) ferent story though. And implementation ing occupational safety and health stand- are able to and other absurd privileges for foreign in- is a condition without which global govern- ards. To pay for sick leave so that workers vestors. Global governance should hold in- ance is not a thing. who fall ill can take time off as needed in- participate in vestors liable for their violations. Indeed, the G20 have a low implemen- stead of spreading diseases. Ensure trade deals and the World tation rate on their commitments to labor, For the recovery, investment is key. the response Trade Organisation include effective en- climate, social protection, and other areas People need to invest in jobs, in a Just forcement of labor rights and environ- with high people’s interest. The Presidency Transition and in infrastructure to reduce and in mental standards, and that they allow for could make a step towards increasing G20 greenhouse gas emissions, and a rapid affordable drug production by doing away tangible deliverables on the ground. If in- build-up of public services with funding recovery.« with many WTO intellectual property rights troducing independent monitoring of com- and social dialogue and ensured univer- provisions, at least temporarily, to address mitments’ implementation, and peer pres- sal access. Invest in the care economy to COVID-19. Ensure that the WTO rules allow sure procedures increase implementation, create new quality jobs, formalize existing Establish a labor protection floor. That policy space for industrial policy. that would be a step. jobs, and respond to urgent needs stem- is, ILO Fundamental Principles and Rights Regulate Big Tech and the surveillance Trade unions, employers’ organizations ming from the pandemic. With accessible at Work, minimum living wages, maximum business model. This entails the abandon- and other representative groups should be childcare more women would get jobs in limits on working hours, and healthy and ment of the WTO E-commerce negotia- invited to construct a new multilateralism the rest of the economy. safe workplaces. Mandate human rights tions, as they would restrict policy space that enjoys high trust and effectiveness. Set a high minimum corporate tax due diligence and access to grievance and threshold and coordinate progressive tax- remedy for all multinational enterprises ation. Make sure Big Tech pays its taxes. and across their supply chains. Pursue a financial transactions tax, use Close the gender pay gap, increase unitary taxation formulas that treat mul- women’s labor market participation, and tinational companies as a single entity, eliminate all forms of discrimination and and in short, rationalize global taxation so violence by ratifying and actively imple- that the rich start paying their fair share menting the ILO Violence and Harass- of taxes. ment Convention. Ensure all workers enjoy

26 27 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE FUTURE OF THE G20 Engagement group recommendations realized in G20 Summits

Authors: Institution:

John Kirton Founder and Director, G20 Research Group The G20 Research Group is a global network 1 https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/briefingnote/wcms_755910.pdf of scholars, students and professionals in the 2 https://www.weforum.org/agenda/2020/10/phumzile-mlambo-ngcuka-un-women-jobs-reset/ academic, research, business, non-govern- 3 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7218352/ mental and other communities who follow the 4 https://unctad.org/press-material/un-calls-25-trillion-support-package-developing-countries-deal- Brittaney Warren work of the G20 leaders, finance ministers and coronavirus-shock Director of Compliance central bank governors, and other G20 institu- 5 https://www.ituc-csi.org/IMG/pdf/c20_l20_statement.pdf Research, G20 Research tions. It is directed from Trinity College and 6 https://www.eurodad.org/report_g20_covid_debt_crisis Group the Munk School of Global Affairs and Public 7 https://www.ohchr.org/Documents/Issues/Poverty/covid19.pdf Policy at the University of Toronto. 8 https://www.ituc-csi.org/IMG/pdf/ituc_campaign_brief_-_a_global_social_protection_fund_en.pdf 9 https://www.icij.org/investigations/fincen-files/global-banks-defy-u-s-crackdowns-by-serving-oligarchs- criminals-and-terrorists/ 10 https://uk.reuters.com/article/us-global-banking-fincen-stocks/global-banks-seek-to-contain-damage- Keywords: over-2-trillion-of-suspicious-transfers-idUSKCN26C05I G7, G20, T20, engagement groups, civil society 11 https://unctad.org/webflyer/trade-and-development-report-2020; http://www.oecd.org/newsroom/risks- rising-in-corporate-debt-market.htm 12 http://www.oecd.org/newsroom/risks-rising-in-corporate-debt-market.htm; https://unctad.org/system/ files/official-document/tdr2020_en.pdf 13 https://oxfamilibrary.openrepository.com/handle/10546/621044 14 https://www.ituc-csi.org/IMG/pdf/digital_chapters_and_the_impact_on_labour_en.pdf 15 https://unctad.org/webflyer/trade-and-development-report-2018 16 https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=24967&LangID=E 17 https://www.weforum.org/agenda/2018/05/gdp-is-destroying-the-planet-heres-an-alternative/ 18 https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/ wcms_497555.pdf 19 https://www.ituc-csi.org/IMG/pdf/a_new_social_contract_-_crisis_-_recovery_-_resilience_en.pdf 20 https://www.ituc-csi.org/IMG/pdf/04-l20-statement_2020_long-en.pdf

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How much influence can civil society influence and how it can be improved. This all of the subjects the other engagement than the unmatched ones). In 2019, 45% of engagement groups exert on the G20 sum- article takes up these tasks. groups and the G20 do, but without a built- the somewhat more T20 recommendations mits they focus on? This is a critical ques- in political constituency to back them. The matched G20 commitments. This suggests tion on several counts. Rising populism T20 has produced and presented its rec- the importance of the T20 working inde- has challenged the effectiveness and le- »G20 engagement ommendations in various ways since its pendently but interactively with the G20 gitimacy of the G20, G7 and similar global highly informal start for the G20 London host up to and at the summit itself, while governance forms (Slaughter 2020). It has groups have Summit in April 2009. This study compares narrowing the focus and number of recom- supported a shift from multilateralism to its performance with that of the newer, mendations it makes. nationalism, now at a time when COVID-19, attracted a smaller Think 7 (T7), supporting the G7 The newer, smaller T7 since 2018 climate change, biodiversity loss and digi- summit since 2018, and the Business 20 has had a similarly modest influence on talization show ambitious effective global proliferating (B20) doing so for the G20 since the Lon- G7 summits. The more established B20 governance is needed more than ever be- don Summit in April 2009 (Koch 2016). The seems to have had much greater influ- fore. Yet an important response has come network of evidence comes primarily from the Rec- ence. One important factor could be the from the growing array of G20 engage- ommendations Realized Reports produced G20’s preference for engaging with the pri- ment groups that have attracted the time leading non- by the G20 Research Group and G7 Re- vate sector, as demonstrated by the high and talents of a proliferating network of search Group, and the Business Scorecard number of references to the B20 relative leading non-governmental practitioners governmental produced by the International Chamber of to other engagement groups in the G20’s and experts from business, labor, youth, Commerce (ICC). It has been enriched by public communiqués (Warren 2020). Other women, think tanks, cities and elsewhere practitioners John Kirton’s participant observation since factors are the competition and coopera- to make recommendations on what G20 2010 in the T20, the T7, and the informal tion among the engagement groups, and summits should do. and experts Young Entrepreneurs Alliance (YEA) and the limited ability of G20 governors to ab- Most analyses of engagement group Faith 20 (F20). sorb the many hundreds of recommenda- influence on G20 governance emphasizes from business, The Recommendations Realized Re- tions the various engagement groups pre- possibilities and potential or gives an ac- ports match the recommendations made sent on the summit’s eve. count of engagement groups’ creation (see labor, youth, by an engagement group to the collective This suggests the value of having an for example Hajnal 2016). More recent and politically binding commitments the independent process for selecting, from accounts more credibly show the actual women, think G20 leaders made at their summit in the each of the groups, the very best recom- influence they have had (Slaughter 2019; tanks, cities and same year. Recommendations are scored mendations with broad co-benefits, and Chodor 2020; Luckhurst 2019). A recent based on a three-point scale indicating the presenting these high quality, absorbable analysis suggests that among the G20’s elsewhere.« strength of the match with the commit- and attractive synthesis recommenda- formal engagement groups, the business ments: fully matched, partially matched or tions to G20 governors on the summit’s community’s “B20 is the most powerful not matched (unmatched). eve. and influential” while the “T20, a global It does so by mobilizing research to This study finds that the T20’s recom- network of think tanks, has had some in- systematically assess how many engage- mendations’ match with G20 commitments T20 RECOMMENDATIONS REALIZED: fluence … it has been limited” (Warren ment groups’ formal recommendations and compliance since 2016 has generally 2016 – 2019 2020, 136-7). Other research has argued are realized in the G20 leaders’ summit been modest, with highs in recommen- It is ultimately of little value if these rec- that the Civil 20 (C20), or civil society, has commitments and the ensuing compliance dations matched to the leaders’ commit- ommendations are realized as commit- had limited influence too (Naylor 2012). with them, and examining what features ments in 2016 and 2019. The 2016 T20 ments at the G20 summit but are not com- Yet, these analyses are not based on the of the engagement group and G20 process made the fewest recommendations but plied with or implemented by the leaders full array of the latest evidence, assessed impacts this. It focuses on the critical case 89% were matched to commitments made after the summit ends. As such, this sec- in a broader comparative context, to sug- of the Think 20 (T20), which, as an ana- at the 2016 Summit, and they tion reviews the G20’s compliance with its gesting the causes of engagement group lytical rather than advocacy group, covers secured compliance of 86% (or 22% more priority commitments, as selected by the

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G20 Research Group, and reports on this just 64% with unmatched ones. T7 RECOMMENDATIONS REALIZED: 2018 Between 2010 and 2016, the B20 made compliance according to the categories of For the Hangzhou Summit in Septem- The T7-G7 relationship shows a moder- over 400 recommendations to the G20 matched (fully or partially) or unmatched ber 2016, the T20 produced 22 recommen- ate recommendation-compliance match (Hardy and Bonnier 2016). Since 2012, the commitments. dations. They were matched by G20 com- and higher average G7 compliance with ICC, an organization representing busi- mitments at a level of 86% (19 of the 22 matched commitments than with un- ness perspectives, has monitored the recommendations either partially or fully matched commitments, based on the lim- G20’s implementation of the B20’s recom- »The compliance matched) (Tops and Hou 2019). Their com- ited evidence thus far. mendations through its ICC G20 Business pliance by G20 members before the next For the Charlevoix Summit in June Scorecard. Here it reviews a selection of data show that summit averaged 86%, compared to only 2018, the first fully functioning T7 pro- B20 recommendations to monitor across 64% for the unmatched ones. duced 17 recommendations. They were several policy areas. For instance, in 2016 compliance For the Summit in July 2017, matched by G7 commitments at a level 25 B20 recommendations were assessed the T20 produced 89 recommendations. of 41% (seven of the 17 matched recom- for G20 compliance on trade and invest- with the They were fully or partially matched by mendations were partially matched, none ment, anticorruption, infrastructure, en- G20 commitments at a level of 26% (Kir- were fully matched) (Warren 2018). The ergy and environment, financing growth, G20’s priority ton and Warren 2017). Their compliance one matched commitment assessed for employment, and small- and medium- averaged 91%, compared to 86% for the compliance averaged compliance of 88%, sized enterprise (SME) development. commitments unmatched ones. compared to 83% for the unmatched ones. The six scorecards produced between By subject, four assessed Hamburg In comparison, the G7 Research 2012 and 2016, show a small, steady in- is almost commitments fully matched one or more Group’s annual background book for the crease in the G20’s adoption scores (Hardy of the T20 recommendations. These were 2017 Taormina Summit had 28 contribu- and Bonnier, p. 222). Apart from the fifth always higher on financial regulation (tax), the digital tors from the governmental, intergovern- scorecard and some nuances by policy economy, development and gender. The mental institutional and non-governmen- area, each subsequent scorecard reported when there is weighted average of compliance of these tal sectors make 66 recommendations an overall score on par with or better than four commitments was a very high 91%. (Williams 2018). Of the 66, 37 or 56% were the previous one. a preceding Two Hamburg commitments partially fully or partly realized in the 180 commit- matched — one on development and one ments the Taormina Summit made. THE G20 YOUNG ENTREPRENEURS T20 recommen­ on food security — with an average compli- This suggests that fewer recommen- ­ALLIANCE, 2016 ance of a still very high 86%. dations tend to secure higher matched For the informal engagement group of the dation.« For the Buenos Aires Summit in No- commitments and compliance in the most YEA in 2016, a Recommendations Realized vember-December 2018, the T20 produced compact, cohesive G7, composed of demo- report by the G20 Research Group shows Overall, the compliance data show that 135 recommendations. They were matched cratic members alone. that the YEA produced 16 recommendations compliance with the G20’s priority com- by G20 commitments at a level of 24% on July 1, 2016. At least five either partially mitments is almost always higher when (Warren and Kirton 2019). Compliance with BUSINESS 20 or fully matched the G20 Hangzhou’s 214 there is a preceding T20 recommendation the matched ones was 89%, compared to Assessments from the B20 report a small, commitments (Warren 2016). Average com- (see Appendix A). The year with the lowest 86% for the unmatched ones. steady improvement in the G20’s uptake pliance with these matched five was 59%. number of recommendations made, 2016, For the Osaka Summit in June 2019, of the B20’s recommendations over time That on public-private partnerships aver- had the highest percentage of realized rec- the T20 produced 108 recommendations. (Hardy and Bonnier, p. 222). The B20’s as- aged 78% compliance, on SMEs 70%, the ommendations in the G20’s commitments They were matched by G20 commitments sessments measure the G20’s adoption of digital economy 55%, global value chains that year and the largest percentage-point at a level of 46% (Tops and Hou 2020). The its recommendations (in a way equivalent 50%, and skills and education 40%. compliance gap between matched and un- matched ones averaged interim compli- to the matching methodology used above), This again suggests that fewer recom- matched commitments, with the matched ance (by May 10, 2020) of 70%, compared but not its compliance with matched com- mendations secure more matched commit- commitments averaging 86% relative to to 71% for unmatched ones. mitments. ments and higher compliance with them.

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G20 CONCLUSIONS ON ENGAGEMENT major one was the mid-course addition sessed impact of their predecessors, sug- pare and implement the leaders’ commit- GROUPS of special task forces due to the COVID- gest engagement group influence can be ments and which increase leaders’ compli- These findings of relative influence are 19-catalyzed crises, as the T20 and the in- improved in the following ways. ance with their commitments on the same consistent with the public recognition formal Interfaith Forum did. The COVID-19 subjects as the ministerials (Rapson 2020). the G20 has given to these respective en- crisis also inspired more participants from The second is broader, longer promo- gagement groups in its collective com- more countries to participate in most en- »Fewer recom­ tion of a groups’ recommendations, both muniqués. Between 2008 and 2020 the gagement groups than in previous years, privately and publicly, from the time they G20 made 147 references to engagement thus making the groups more inclusive mend­ations are produced until they can become com- groups and other non-state actors in its and accessible to those who would other- mitments at the targeted summit and com- public, collective communiqués (see Ap- wise not be able to participate or attend, tend to secure plied with until the subsequent summit pendix B). Of the official engagement with the caveat that many places around comes. This includes interaction and ac- groups, the B20 has received the most rec- the world lack adequate internet access. higher matched tion in all G20 members, rather than just ognition, with 22 references in total, which Two months before the 2020 Riyadh the host, publicizing the recommendations rises to 58 when counting the 36 refer- Summit their recommendations started commitments on the summit site and engagement group ences made to working or partnering with to appear. The B20, L20 and W20 pro- assessment of how effective their recom- the private sector or businesses. The T20 duced a joint statement with 18 recom- and compliance mendations and underlying processes has received some, but far less, recogni- mendations on April 5; the B20 produced were. It includes direct contact with G20 tion, receiving six references, which rises 25 recommendations on October 3; the in the most leaders themselves, as the B20 and L20 to 12 references when adding “academia” U20 produced 27 on October 5; and the leaders did at the St. Petersburg Summit in with five and “think tanks” with one. Simi- T20 produced a preliminary 131, within 32 compact, 2013, which may be particularly important larly, the Youth 20 (Y20) has six references, overarching proposals, in its draft Commu- for the non-economic engagement groups plus one reference to “youth,” for a total niqué on October 26. In the case of the B20, cohesive G7, to do that have received relatively less pub- of seven. U20 and T20 these recommendations had lic recognition in the G20’s communiqués. Other engagement group recognition been organized from the start and were composed of The third is a synthesis list of priority includes the C20 with seven, plus 22 ref- presented entirely or largely according to recommendations, based on those pro- erences to working with “civil society,” for the Saudi Presidency’s priority summit democratic duced by all engagement groups but eval- a total of 29. This is followed by the La- themes of empowering people, safeguard- uated by an arms-length group of experts bour20 (L20) with 11, plus “trade unions” ing the planet and innovation. The T20 re- members and presented to the G20 on the sum- with one, for a total of 12; the Women’s 20 lied more on its ten traditional task forces, alone.« mit’s eve. This list would feature the most (W20) with five; and the Science 20 (S20) with an eleventh one added in the summer timely, well-tailored recommendations with one, plus “scientific experts” with one, on COVID-19. Al Turki, the chair of the T20 for the summits’ challenges at that very for a total of two. in 2020, noted in a webinar the week before The first is intense, independent in- time, and synthesize the ones that bring October 7 that he had to present 150 T20 teraction with the G20 host and members the best co-benefits for several subjects. RECOMMENDATIONS policy briefs, averaging eight pages each, throughout its year, of the type that T20 Ja- It would be a small enough set for the For the Riyadh Summit on November 21- to the G20 sherpas in five minutes. pan did in 2019, as distinct from T20 China leaders themselves to read, absorb and 22, 2020, all engagement groups were It remains to be seen how these pro- in 2016 (these two countriesʼ experiences act upon. It would contain about 20 rec- forced by the COVID-19 pandemic to con- cesses, all infused by the shock of COV- also could suggest that a cause of en- ommendations, as in the 2016 Hangzhou duct much of their work, and hold their ID-19, will propel the realization of the gagement group influence is the degree of year that had the highest uptake of T20 culminating summits, in virtual rather resulting recommendations in Riyadh’s democratic governance in the G20 host, as recommendations and parallel high com- than in in-person form. Yet each other- G20 commitments and its members’ sub- Steven Slaughter [2019] implies). This in- pliance. It would be far smaller than the wise proceeded much as they had in the sequent compliance with them. At present, cludes aiming at the many expanding lists 2020 total, which combines the 131 from past, with incremental improvements. The however, they and the systematically as- of G20 ministerial meetings, which pre- the T20, the 25 from B20, the 27 from U20

34 35 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE FUTURE OF THE G20 and the many more from the other en- the chairs of all the engagement groups, gagement groups. meeting at the same time to decide the A reliable framework This list could be accompanied by a two dozen or so that all of them agree list of consensus priorities produced by upon. for transformation

Author: The G20 countries are responsible for 80 percent of global greenhouse emissions. Svenja Schulze They generate 85 percent of the global Federal Minister for the gross domestic product and account for Environment, Nature the majority of investments worldwide. Conservation and Nuclear Chodor, Tom (2020). “The G20’s Engagement with Civil Society: Participation Without Contestation?” The G20 is the key to leading the interna- Globalizations 17(6): 903-916. Safety, tional community onto a climate-compati- Hajnal, Peter (2016). The G20: Evolution, Interrelationships, Documentation. (London: Routledge). ble path. Hardy, Jeffrey and Louis Bonnier (2018). “The ICC G20 Business Scorecard,” in Accountability for Effectiveness in Global Governance, John Kirton and Marina Larionova eds. (London: Routledge). Although the COVID-19 crisis is far from Kirton, John and Brittaney Warren (2017). “G20 Insights: T20 Recommendations Realized,” G20 Research Group, over, a growing number of G20 countries November 3. Available at: http://www.g20.utoronto.ca/analysis/t20-2017-recommendations-realized.html. are committed to climate action playing Koch, Madeline (2016). “Connecting G20 Summitry with Citizenry,” G20 Research Group. May 16. Available at: http://www.g20.utoronto.ca/biblio/koch-engagement.html. a major role in their efforts for economic Luckhurst, Jonathan (2019). “Governance Networks Shaping the G20 Agenda.” Paper presented at a panel on recovery. Awareness is building that action The G20’s Role as a Global Governance Innovator at the International Studies Association Annual Convention in must be taken to avoid stranded assets Toronto, March 29. Naylor, Tristen (2012). “Civil Society Inclusion at Los Cabos 2012,” G20 Information Centre. June 26. Available at: Institution: and secure jobs for the long term. Gov- http://www.g20.utoronto.ca/analysis/120626-naylor.html. ernments must create reliable framework Rapson, Jessica (2020). “Raising Compliance with G20 Commitments: Two Evidence-based Instruments,” conditions for economic and technologi- Global Solutions Journal, April(5): 224-233. cal transformation in their countries. The Slaughter, Steven (2019). “Interpreting Civil Society Engagement with the G20: The Qualified Inclusion of the 2014 Civil 20 Process,” Globalizations 16(1): 36-49. binding emissions targets under the Paris Slaughter, Steven (2020). Power of the G20: The Politics of Legitimacy in Global Governance. The Federal Ministry for the Environment, Agreement are most effective for this. (London: Routledge). ­Nature Conservation and Nuclear Safety (BMU) The European Union has set itself the Tops, Julia and Angela Min Yi Hou (2019). “T20 Recommendations Realized: Hangzhou 2016 Summit,” is responsible for a range of government G20 Research Group, November 2. Available at: http://www.g20.utoronto.ca/analysis/t20-2016- goal of climate neutrality by 2050. How we policies that are reflected in the name of the recommendations-realized.html. live and build, how we move from place to ministry itself. The ministry has been working Tops, Julia, Angela Min Yi Hou (2020). T20 Recommendations Realized: 2019 Osaka Summit, G20 Research place, what we eat and produce will then Group, March 7. http://www.g20.utoronto.ca/analysis/t20-2019-recommendations-realized.html. over 30 years now to protect the public from no longer generate more greenhouse gas- Warren, Brittaney and John Kirton (2019). “Recommendations Realized: From T20 to G20 2018,” G20 Research environmental toxins and radiation and to Group, March 12. Available at: http://www.g20.utoronto.ca/analysis/t20-2018-recommendations-realized.html. establish an intelligent and efficient use of raw es than our environment can absorb. The Warren, Brittaney (2016). “2016 G20 Hangzhou Summit Compliance Report on Youth Entrepreneurship,” materials, to advance climate action and to current interim goal, 40 percent reduction G20 Research Group, August 28. Available at: http://www.g20.utoronto.ca/compliance/2016ye/index.html. ­promote a use of natural resources that con- in greenhouse gas emissions by 2030 as Warren, Brittaney (2018). “Think 7 Recommendations Realized in the 2018 G7 Charlevoix Commitments” serves biodiversity and secures habitats. G7 Research Group, June 27. Available at: http://www.g8.utoronto.ca/T7/T7-2018-Recommendations-Realized. compared to 1990, is not sufficient. The html. has proposed a Warren, Brittaney (2020).“G20 Governance of Climate Change through Nature-based Solutions,” Global Solutions Keywords: new target of at least 55 percent, which Journal 5 (April):135-143. climate action, economic recovery, China, I strongly support. The European Coun- Williams, Meredith (2018). “G7 Taormina Recommendations Realized Report,” G7 Research Group, February 28. Available at: http://www.g7.utoronto.ca/evaluations/2017taormina/recommendations-realized-taormina.html. COP26 cil will decide on this proposed target on

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10 /11 December. The Environment Council backs up this international voluntary com- has already reached broad agreement on mitment with national measures and sets Towards an agenda the European Climate Law. itself ambitious interim targets. The adop- There is a well-founded hope that tion of the next five-year plan in the coming resolute action by the EU will also set an year could lay the foundation, which would for transforming the example outside Europe. Many countries then have to be reflected in an ambitious are also currently contemplating how they Nationally Determined Contribution (NDC) can achieve carbon neutrality by the mid- for China. We are eager to hear when Chi- global economy dle of the century. Among the G20 coun- na aims to hit peak emissions. tries, these include the EU and its member After the special summit on December states, , the , South 12, which will be the climate policy high- Prospects for Italy’s G20 Presidency 2021 Korea, , Argentina and Japan. light of 2020, the first ambition cycle will And we look forward to the US rejoining the extend into 2021. Countries that have al- international stage with renewed commit- ready submitted a new NDC in 2020 can ment. still increase their level of ambition. Pri- Author: Institution: mary responsibility lies with the Italian Dennis Görlich G20 Presidency and the British COP/G7 double Presidency to keep up momentum Senior Researcher, Kiel »The G20 is Institute for the World until the G20 summit at the end of October Economy and COP26 in November 2021. We must do The Kiel Institute for the World Economy is the key to Research Coordinator, everything in our power to support them in an international center for research in global Global Solutions Initiative leading the these efforts. economic affairs, economic policy ­consulting, Allied voices from civil society are and economic education. The Institute engages especially in creating solutions to growing stronger by the day. In a number international urgent problems in global economic affairs. of G20 countries, climate change is now Co-authored by Hannah Petersen, It advises decision makers in policy, business, community seen as one of the most serious interna- Global Solutions Initiative and society and informs the broader public tional threats, and public support for cli- about important developments in international onto a climate- mate action has seen strong growth. For economic policy. example, 92 percent of Europeans think compatible that greenhouse gas emissions should be reduced with the goal of making the Keywords: path.« EU economy climate neutral by 2050. This G20, Italy, economic transformation, support must now be clearly reflected in beyond GDP, digital governance political action. The G20 governments can Should China follow through on its build on the intensified activities of non- remarkable announcement of becoming governmental actors like corporations, carbon neutral before 2060, this alone municipalities and social organizations. In would reduce the global temperature rise this way, the G20 can lead the internation- by 0.2 to 0.3 degrees, according to initial al community onto a climate-compatible estimates. Now it is important that China path.

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The COVID-19 pandemic has highlighted digital world in which there is no global TOWARDS ITALY’S G20 PRESIDENCY seat of the important G20 forum, Italy is the interconnectedness of our economies consensus on how to shape the interna- On December 1, 2020, Italy has taken over in a good position to make the United Na- as well as the fragility of many of our re- tional exchange of data. the Presidency of the G20 from Saudi Ara- tions’ stated goal of Building Back Bet- cent achievements. Inequalities that we bia. As the rotating chair of the high-pro- ter” a global strategy and thus to initiate tried to reduce over recent years and dec- file global forum, Italy will convene a num- a global economic transformation so ur- ades suddenly resurfaced en masse as »The ber of working group meetings, ministerial gently needed. Indeed, as Pietro Benassi we faced a truly global health emergency. conferences and, finally, the G20 Leaders’ said at the IAI conference, Italy sees its Gender inequality is a case in point (OECD, constellation of Summit in the coming year. While each task in catalyzing positive global change 2020a), but school closures and high un- presidency continues ongoing discussions after the COVID crisis (Benassi, 2020). employment rates also reinforced existing countries taking and follows up on progress with past com- inequalities between rich and poor, with mitments, it sets its own agenda to high- FAVORABLE PRECONDITIONS FOR potential long-term consequences (e.g. leadership in light issues which it considers important. REVITALIZING­ MULTILATERALISM OECD, 2020b). Travel or export restric- Italy’s G20 agenda is centered around the The preconditions for a strong G20 Presi- tions and hostile political rhetoric quickly global fora three pillars People, Planet and Prosperity dency in 2021 are good. Italy has long eroded trust among long-standing allies , (Magri, 2020). With this bold strategy, the been a supporter of multilateral coopera- built up slowly in the post-war period.. Eu- for two years incoming Presidency has set a focus on tion and its government has made strong ropean solidarity in the EU’s recovery plan sustainability and human well-being go- gains in domestic public support during was a small, yet important, ray of hope in provides ing beyond material well-being. Italy’s G20 the crisis, so this support can be expected this regard. Sherpa Pietro Benassi calls the agenda to underpin its efforts (Statista, 2020). The But multilateral cooperation was un- a unique “a holistic approach, consistent with the Italian G20 Presidency coincides with the der fire long before the COVID-19 crisis, spirit that guides the European Green Deal G7 Presidency of the United Kingdom and as exemplified by nationalist and popu- opportunity and the vision represented in the NextGen- the British-led COP26. Italy and the UK list leaders coming to power across the erationEU plan” (Botti & Bilotta, 2020, in will be succeeded by Indonesia (G20) and globe. A key reason for this was that many for revitalizing Italian). Germany (G7) in 2022, followed by India people no longer believed they could ben- Italy has been hit particularly hard by (G20) in 2023. Indonesia is considered to efit from or even take part in globaliza- multi­ the coronavirus pandemic. Overall Italian be the driving force behind the Associa- tion in the way it developed in past dec- production declined by 17.7% in March tion of Southeast Asian Nations (ASEAN) ades and as supported by the G20 (Wike lateralism.« 2020, and the fiscal budget deficit in 2020 and engages intensively with international & Poushter, 2020). The global economy is expected to be larger than 10% of GDP forums. India and Germany have clearly worked efficiently and improved material The world and its global governance (Boysen-Hogrefe et al., 2020). The country, communicated their willingness to drive well-being for many, but other important system must be better prepared for: (1) like almost all countries in the world, thus a global economic transformation. Indian dimensions of well-being did not follow emergencies such as pandemics and cli- faces the difficult task of rebuilding its Prime Minister , at the re- suit. Social prosperity did not increase mate change so that we are not again economy after a massive economic down- cent extraordinary G20 Leaders’ Summit, alongside economic prosperity, and en- caught off guard, and (2) for emerging and turn. In these rebuilding efforts, the Ital- called for “a new take on globalization in vironmental sustainability was further recurring challenges such as digital trade, ian Presidency appears determined not to the post-corona world,” stressing the need strained (Snower & Lima de Miranda, cross-border data exchange, increased lose sight of important goals around sus- for a humanitarian, not just economic, ap- 2020). The world was not prepared for skepticism towards (the current system tainability and climate change mitigation: proach to globalization (Basu, 2020). Ger- an emergency such as the pandemic be- of) globalization, new global power struc- Ambassador Pietro Benassi stressed at many, during its EU Council Presidency in cause our achievements were not as sta- tures, or interconnected economies. An a workshop hosted by the think tank Isti- 2020, called for multilateral action to en- ble as they could have been. Further com- important forum to prepare this new world tuto Affari Internazionali (IAI) that he sees sure that the current crisis is used to bet- pounding the problem was our increasing and its global governance system is the sustainability not as a cost but as an asset ter prepare for global challenges such as reliance on a new, largely ungoverned G20. in the recovery. In taking over the driver’s digitalization and climate change, and for

40 41 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE FUTURE OF THE G20 the European Union to be a norm-setter ble development agenda. The Sustainable sidered by businesses. Many corporations the necessary data on profits, losses, taxes for a sustainable and fairer future (Federal Development Goals, a set of universally sport sustainability agendas, but meas- or shareholder value, it is very difficult to Foreign Office, 2020). The UK has under- agreed global goals, should guide global ured corporate goals still revolve around assess the overall negative externalities, lined its determination to make COP26 a recovery plans as the “North Star” (see shareholder value and leave the broader e.g. the environmental costs of a firm. To success (Department for Business, Energy Kharas et al, 2020). Once sustainability social and environmental responsibil- really include such negative externalities, & Industrial Strategy, 2020). And the new is deeply entrenched in political thought ity of enterprises unreported. Currently financial markets would need detailed Biden administration in the US can now and narratives, and once it becomes part most companies produce over a hundred information about a firm’s accounting, also be added to the list of the favorable of corporate strategies, the recovery from different financial variables in their an- including more than regular types of cor- preconditions. the coronavirus pandemic can lead to a nual accounts, but corporate goals and the porate income statements. Markets can- The constellation of countries taking real economic transformation. way firms are ranked in financial markets not currently fulfill their traditional role of leadership in global fora for two years pro- mostly revolve around shareholder value allocating resources because they can only vides a unique opportunity for revitalizing MEASUREMENT AND REPORTING alone. This is problematic as the latter assess which firms produce the greater multilateralism if countries take their task OF PROSPERITY does not take negative externalities such shareholder value, but not consistently seriously to build global partnerships, ar- Two important elements of the transforma- as environmental costs and social costs assess other kinds of value including en- ticulate the principles and benefits of mul- tion are measurement and reporting. Clear- into account. Besides this, a strict focus on vironmental, social, and productive value. tilateral action for the people (cf. Kharas ly, we cannot achieve satisfactory progress if shareholder gains can also hurt the com- & Snower, 2020), and set clear targets to we rely only on GDP as a measure of a coun- pany itself, e.g. when shareholder value direct innovation and investment. At the try’s prosperity. Measurement of progress creation stands in the way of R&D invest- »Italy is set annual G20 conference hosted by the In- needs to take the social and environmental ment, customer service excellence or em- dian think tank ICRIER, Nicholas Stern dimension of progress into account – be- ployee upskilling. to catalyze suggested these countries together create yond material gain – because this is what Part of the trouble with gaining a clear a coherent international discussion and matters to humans: a sense of social be- picture of business activity is the distinc- positive global foster cooperation by developing a big- longing and the capacity to shape their own tion between what constitutes a firm (or picture strategic story to revitalize world future. In this context, Snower and Lima company) vs. a corporation (Robé 2011, change after growth (Stern, 2020, minute 17:10, https:// de Miranda (2020) developed a Recoupling 2019, Palan 2020). A household name firm, youtu.be/ouJDwE0TkrM?t=1032). In fact, Dashboard, measuring solidarity (S) and such as Apple, is in fact a cluster of con- the COVID there was a clear consensus at the recent agency (A), two important components of tracts constituting a network of several IAI, ICRIER and T20 Saudi Arabia confer- social progress, alongside the established corporations (often across jurisdictions) crisis.« ences that considering measures GDP (G) and the environmental that develop economic activity. A corpo- separately from sustainability is an ana- performance index (E). Crucially, these four ration is a legal entity or person that can lytical mistake: Sustainable growth is the indexes (SAGE) cannot be systematically own assets, agree to contracts, or incur li- GOVERNING THE DIGITAL WORLD best route out of the crisis (e.g. Stern, substituted for one another. For example, abilities. For example, the specific focus of Another important area, in which global 2020, minute 31:30, https://youtu.be/ any gains from agency and solidarity cannot the US Senate and EU Commission’s legal cooperation is urgently needed, is digital ouJDwE0TkrM?t=1890). automatically be translated into monetary case with Apple Ireland was not the firm governance. It is a field that is currently In its 12 years of existence, the G20 gains, and vice versa: Solidarity is valueless Apple or the Global Ultimate Owner, Apple largely ungoverned at an international has shown that it can do three things: (1) when one is starving in poverty; the power Inc, but Apple Operations Ireland (AOI) and level and in which different paradigms supply top-level political impetus, (2) act to spend has limited value when there is no Apple Sales International (ASI), two corpo- with regard to the exchange of data pre- as norm-setter, and (3) initiate policies environment left for spending. In order to rate entities within Apple’s group network. vail. While we see a steady rise in trade (Görlich & Stein-Zalai, 2020). Especially thrive, people and countries need to meas- Corporate accounting focuses on financial in digitally deliverable services, we do not the norm-setting power is important in ure well on all four indexes. capital almost exclusively and since corpo- see an accompanying rise in digital regula- this moment, as the G20 can create the Adequate measures of social and en- rate accounting is very different to a firm’s tion. A positive agenda and better dialogue preconditions for a successful sustaina- vironmental progress should also be con- annual reports, while it is possible to see around digital governance could help to

42 43 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE FUTURE OF THE G20 deliver on many new opportunities that rent digital and environmental challenges” new technologies could bring. in which “protection of personal data, data Despite the clear benefits of digital sovereignty and consumer protection law products, there are downsides and draw- must be ensured.” These discussions are backs resulting from this fast-moving and likely to be continued by the incoming Por- largely unregulated process. A principal tuguese Presidency. The G20 should take source of problems is that many digital these discussions to the global level and Basu, N. (2020). At G20 video summit, India calls for new take on globalisation in post-coronavirus world. services are provided for free, or at a sig- contribute to reshaping the digital world in ThePrint.in. Online newspaper article. Available online at: https://theprint.in/diplomacy/at-g20-video-summit- india-calls-for-new-take-on-globalisation-in-post-coronavirus-world/389165/. nificantly reduced price, in return for in- a fairer and more sustainable manner. Benassi, P. (2020). Speech at IAI Webinar: Reframing Goals and Priorities of the G20 Agenda in a Post-COVID-19 formation about the users, which is then World. Available online at: https://www.iai.it/it/eventi/reframing-goals-and-priorities-g20-agenda-post-COVID- sold to third parties, including advertis- THE ROLE OF CIVIL SOCIETY 19-world. Berger, A. & S. Grimm (2020). The T20 has come a long way – now it needs to take the next step. Future of ers and “influence sellers.” Due to power As the Italian G20 Presidency is about to Globalisation Blog. Bonn. DIE. Available online at: https://blogs.die-gdi.de/2020/11/18/the-t20-has-come-a- and information asymmetries between begin, and Indonesia starts preparing for long-way-now-it-needs-to-take-the-next-step/. individuals and dominant technology plat- its own turn in 2022, dialogue with civil Botti, F. & N. Bilotta (2020). L'ambasciatore Benassi al webinar IAI: I tre pilastri della presidenza italiana del G20 nel 2021. Conference report. Available online at: https://www.affarinternazionali.it/2020/10/i-tre-pilastri-della- forms, it is almost impossible for users to society also continues. The think tank presidenza-italiana-del-g20-nel-2021/ understand the relationship. Users’ under- community and other civil society groups Boysen-Hogrefe, J., S. Fiedler, D. Groll, S. Kooths, U. Stolzenburg (2020). Mühsam zurück zur Normalität. Kieler standing of the value of their data and also, have an important role to play in shap- Konjunkturberichte Nr. 70 / Q. 3. Kiel: Institut für Weltwirtschaft. Available online at: https://www.ifw-kiel.de/de/ publikationen/kieler-konjunkturberichte/2020/muehsam-zurueck-zur-normalitaet-15065/. users’ consent to the use of their data is ing the economic transformation and ad- Department for Business, Energy & Industrial Strategy (2020). Joint statement on US Withdrawal from the Paris inadequate even though the consequences dressing the aforementioned global chal- Agreement. Available online at: https://www.gov.uk/government/news/joint-statement-on-us-withdrawal-from- of the data-gathering processes are far- lenges. Global partnerships, besides being the-paris-agreement. Federal Foreign Office (2020). Together for Europe’s Recovery: Programme for Germany’s Presidency of reaching and severe. Some digital service entrenched in the SDGs (Goal 17), are key the Council of the European Union. Berlin: Auswärtiges . Available online at https://www.eu2020.de/ providers use complex algorithms to steer to shifting the paradigm from competi- blob/2360248/e0312c50f910931819ab67f630d15b2f/06-30-pdf-programm-en-data.pdf our attention and our information intake in tion to global cooperation (Kharas, 2020, Görlich, D. & J. Stein-Zalai (2020). Reinvigorating Multilateral Cooperation During the COVID-19 Crisis: The Role of the G20. T20 Policy Brief. Available online at: https://raw.githubusercontent.com/T20SaudiArabia/ specific directions resulting in polarized Festschrift). With the G20 and its dialogue PolicyBriefs/master/T20_TF5_PB10.pdf. debates and endangered democratic pro- with civil society (think tanks, business, Kharas, H. (2020). Essay in Festschrift in Honor of Dennis Snower’s 70th Birthday. Available online at: https://www.ifw-kiel.de/experts/ifw/dennis-j-snower/snower-70/festschrift-in-honor-of-dennis-j-snower/ cesses. The network externalities of plat- labor, NGOs, women, science and youth), homi-kharas-brookings/. forms also tend to create winner-take-all the world has important instruments at Kharas, H., D.J. Snower & S. Strauss (2020). The Future of Multilateralism: Responsible Globalization markets, but monopolies create market hand to continue to build a global part- That Empowers Citizens and Leaves No One Behind. T20 Policy Brief. Available online at: https://raw. githubusercontent.com/T20SaudiArabia/PolicyBriefs/master/T20_TF5_PB8.pdf. inefficiencies and often prevent innovation. nership (see e.g. Berger & Grimm, 2020). Magri, P. (2020). Italy’s G20: Priorities and challenges of a crucial year. Global Solutions Journal Issue 6. Berlin: For all these reasons, a course correction With our Global Solutions Initiative, we are Global Solutions Initiative. in digital data governance is necessary. also supporting this goal: For the annual OECD (2020a). Women at the core of the fight against COVID-19 crisis. Paris: OECD. Available online at: The current German EU Council Presi- Global Solutions Summit and our digital https://read.oecd-ilibrary.org/view/?ref=127_127000-awfnqj80me&title=Women-at-the-core-of-the-fight- against-COVID-19-crisis dency for example has highlighted topics Global Solutions Hubs, we bring together OECD (2020b). Combatting COVID-19’s effect on children. Paris: OECD. Available online at: https://read.oecd- such as “digital education,” “access to researchers and decision-makers from ilibrary.org/view/?ref=132_132643-m91j2scsyh&title=Combatting-COVID-19-s-effect-on-children justice in the digital domain” and “a well- politics, business, international organiza- Robé, J.P. (2011). The Legal Structure of the Firm. Accounting, Economics, and Law: A Convivium. pp. 1-88. functioning market in the digital sphere.” It tions and NGOs, in order to ignite change Robé, J.P. (2019). The Shareholder Value Mess (And How to Clean it Up). Accounting, Economics, and Law: A Convivium. https://doi.org/10.1515/ael-2019-0039 is committed to “help consumer protection and progress based on sound research and Snower, D. & K. Lima de Miranda (2020). Recoupling Economic and Social Prosperity. Global Perspectives (1). in the European Union to adapt to the cur- evidence. https://doi.org/10.1525/001c.11867. Statista (2020). Trust in Prime Minister Giuseppe Conte in Italy from April 2019 to October 2020. Available online at: https://www.statista.com/statistics/977223/support-for-prime-minister-conte-in-italy/. Stern, N. (2020). Speech at ICRIER’s annual G20 conference. Available online at: https://youtu.be/ouJDwE0TkrM. Wike, R. & J. Poushter (2020). Citizens want more multilateralism. Global Solutions Journal Issue 6. Berlin: Global Solutions Initiative.

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Pacific Asia region, testify in and of them- modes of governance and mixed economy Changing the game selves to shifts in China’s strategic posture pluralism. If China wants to be accepted as over the last four years, quite apart from a rule maker, it has to commit to comply- the aggressive rhetorical barrage from the ing with and enforcing the foundations of a with China Trump administration. rules-based system. These actions by China indicate that serious strategic tensions exist that can- An “alternative framework” for China-West not be wished away just by turning off the »The focus of rhetorical barrage and offering a “make relations nice” approach to China as if these fun- G20 summits damental tensions did not exist. Halting the “tit-for-tat” Trump tactics is far easier needs to Author: A new US administration takes office on than facing the new realities of Chinese January 21, 2021. Joe Biden is an inter- strategic behaviors and figuring out how Colin Bradford become nationalist and believes in governing, not to get Chinese authorities to accept the re- Non-resident Senior Fellow, just messaging. He has great international alities of a rules-based international sys- Brookings Institution systemic experience. Biden was, after all, chairman tem in which compliance and reciprocity Lead Co-Chair, China-West of the Senate Foreign Relations Commit- are vital. One way is to provide incentives sustainability Dialogue tee. He will want to shift from nationalist for China to shift its behaviors in response Global Solutions Fellow unilateralism to international engagement to new narratives and more professional within and and multilateral cooperation. For this to approaches by the West, especially the work it is essential to shift the US-China United States. between narrative to a more positive dynamic. With- It is crucial to China that the United out changing the game with China, new States and Europe acknowledge China as countries.« global efforts will not work. a leading power. It is imperative that China But even though Biden has been elect- be accepted as a peer and player in the Institution: ed, there are political obstacles to chang- international system for that system to THE POSITIVE ROLE OF THE G20 ing these dynamics. “My country first work. For its part, China will need to ac- IN GLOBAL GOVERNANCE China-West Dialogue nationalism” is strong, even if not domi- knowledge that the international system The G20 is an extremely useful grouping of The China-West Dialogue (CWD) was founded nant, within the American public. The US is more than the economic and financial countries to adjudicate these adherences on the premise that the bilateral US-China election revealed that half the country is institutions that were the foundations of and constraints. But the G20 is an exten- relationship is leading the world toward a nativist and inward-looking, based on ru- the Bretton Woods era, and that this sys- sion of the Bretton Woods institutions fo- bipolar competitive era and that a plurilateral ral roots and values. The recent trends tem extends to broader security and social cused primarily on economic and financial process that involves Europe, Canada, China, in China toward greater centralization of commitments agreed to after WWII which relations, and its limitations lie in being Japan, and the US would create complexity and power in the hands of Chinese President have been further extended by historical represented and dominated by finance dynamics that focus more on substance and less on rhetoric and ideology in addressing and , the growing assertiveness of practice. These commitments constitute ministers in a world with crushing social, negotiating major issues. the Communist Party of China (CPC), the the foundations and ground rules for geo- cultural, humanitarian, environmental and rise of “wolf warrior” Chinese diplomats in political arrangements that accept cul- health urgencies. G20 leaders in the 2020s European capitals, the treatment of Uig- tural differences, and which also require need to assert strategic visions for the fu- Keywords: hurs in Xinjiang province, the new security continuing adherence to fundamental ture that connect with their publics rather alternative framework, key concepts, global law in Hong Kong, the increased military rights of humanity even as the geopolitical than continue to focus on tinkering with orders, pluralism, systemic transformation strength and assertiveness of China in the order evolves to accept political diversity in macroeconomic and financial policy that

46 47 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE FUTURE OF THE G20 can be left to ministers. The focus of G20 global governance to be effective, China’s able to see the potential opportunity pre- • the stage-setting concept is that the summits needs to become systemic sus- participation is imperative and China’s ad- sented by a new administration in Wash- global order is not a single global order but tainability within and between countries. herence to ground rules is essential. As a ington to motivate greater adjustments in consists of eight or more global orders and People-centered and planet-centered pol- result, distinct pressures are on China to internal and external strategic behaviors that the behaviors of China and the US vary icies need to take center stage. understand global concerns about internal to become a more accepted player in the within each of these global orders, which breaches with respect to individual rights broader international system, rather than opens the door to greater pragmatism and and international economic rules. Equally, an outlier and competitive alternative to flexibility; (Johnston, IS, 2019); »In ›effective there are distinct pressures on the West to the previous pretense of Western univer- • it follows from this concept that dis- understand that variants in economic and salism, which will only divide the world aggregating the global order into different multi­lateralism‹, governance practices in terms of the role and usher in a new bipolar competitive negotiating forums depending on the issue of the state in the economy are natural re- era. is a key step to move away from ideologi- cooperation sults of differentiated development paths cally driven position-taking; rather than ideological manifestations and TOWARD AN ALTERNATIVE • disaggregating involves delinking is- moves forward fodder for political posturing. Respect and ­FRAMEWORK FOR THE GLOBAL sue areas from each other, in particular to reciprocity are essential. ORDER avoid having differences on military secu- led by different Clearly, a Biden administration would The China-West Dialogue (CWD), founded rity issues drive differences in other issue immediately recommit the United States to in April of 2018 by a group of Europeans, areas, contaminating global governance in clusters of the Paris Agreement on Climate Change, Canadians, Chinese, Chileans and Ameri- the process, as is currently the case; to NATO, to the Iran nuclear deal, to rein- cans, has been working to develop “an al- • the concept of pluralistic moderniza- countries, stating US support of and investment in ternative framework” in order to “reframe, tion of countries as the driver of develop- the WHO and to multilateralism and global rebalance and reconceptualize China- ment places a premium on differentiation depending on governance. Whereas the details of the West relations”; to “avoid the emergence in pathways toward modernity based on Biden administration’s approach to China of another bipolar competitive era”; and history, culture and politics rather than their capacity to are not yet clear, it is clear that “my-coun- to “pluralize the toxic bilateral US-China positing or implying that modernization is try-first nationalism” would be abandoned relationship” into a broader dynamic that (Chen, GSS2020); agree regardless by the US, and a renewed commitment to is more multifaceted, representative, open • a related idea is the proposal that multilateralism and international cooper- and inclusive. The CWD held a workshop multiple narratives be the core concept for of whether ation would be forthcoming, opening up an on “The Search for a 21st Century Global the global discourse, which enables the opportunity to rebalance cooperation and Order” hosted by Boston University on global order to move away from the promi- significant competition with China. March 20, 2020, which generated a “public nent role that the “Washington consensus” powers do or To what extent Biden will be able to statement” signed by 20 participants and had during the Bretton Woods era (Chen, offer the right mix that both attracts and CWD founding members. The CWD con- V20 panel at the T20 summit in Buenos do not.« compels China to both contribute and tributed a “Global Table” on “The future of Aires in September 2018); comply with global norms, remains to be multilateralism and global governance” to • the notion that “all economies are seen. A shift will occur. What is less clear the fourth Berlin Global Solutions Summit mixed economies” based on historical ex- The capacities of economies and gov- is whether it will be a deep enough shift to (GSS) in May-June 2020. perience is put forward as mixed economy ernments to deliver social inclusion have elicit strong engagement by and with Chi- As a result of these two efforts, CWD pluralism as a means of moving away from to be demonstrated to become fully le- na to forge positive leadership dynamics has developed a set of “key concepts” the dichotomous debate between market gitimate in 21st century societies. And the on a large enough set of issues to make drawn from its participants and members, fundamentalism and state-run econo- future of the planet is at risk. To move for- a systemic change toward a new “global which constitute a first cut at an evolving mies as a false paradigm (Bradford, Po- ward on the human and planetary agen- order for all”. And it is also unclear to “alternative framework for China-West re- laski, BU-CWD Workshop, March 2020; das, global cooperation is essential. For what extent the Xi regime in China will be lations”. The key concepts are: Milanovic, 2019);

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• embracing contradictions and incor- SUMMARY OF CWD Second, the ideas come from thought- put forward by many to engage in alliances porating opposites in decision-making are “KEY CONCEPTS” FOR AN leaders from different systemically im- of like-minded countries based on com- features of party politics in China that seem “ALTERNATIVE FRAMEWORK” portant countries and regions: Europe, mon values which tends to exclude key to have relevance for governance process- The existence of global orders instead of a Canada, China, Japan and the US. The fact players and which seems to intensify ad- es, more generally in providing ways to single global order; disaggregating nego- that these ideas originate from different versarial relations rather than ease them. take advantage of the intrinsic complexity tiating forums; delinking issues; pluralis- national or regional perspectives is impor- And third, the fact that now this set of of most policy issues. This allows the forg- tic modernization as a national narrative; tant because it means that there is repre- ideas exists and is agreed to by CWD par- ing of composite outcomes that contain multiple narratives as a new global dis- sentation in this composite set of concepts ticipants and members means that, despite contradictory elements instead of conceiv- course; mixed economy pluralism as his- that reveals involvement, engagement and all of the increasing, even accelerating, evi- ing policy-making as a process of finding torical reality; embracing contradictions acceptance of diverse ideas. dence of the toxicity of US-China relations compromises in the middle ranges of lin- in decision-making; shifting coalitions at the moment, an alternative framework ear trade-offs between false dichotomies of consensus instead of blocs; delivering for China-West relations exists and has (Brown, 2018; Bradford CWD “Background social outcomes as the new imperative; »There are been demonstrated to have validity given Paper”, GSP 2020); prioritizing addressing global challenges the composition of the group of thought • the dynamic of shifting coalitions over debates over regime types. alternative leaders who created it and agree to it. of consensus depending on the issue ad- These ten “key concepts” constitute This does not mean that this particu- dressed seems now, in this moment, to be the current formulation of an “alternative ways of moving lar formulation is THE “alternative frame- a more propitious concept than the notion framework” for China-West relations de- work” that will be adopted eventually by of “allies,” in that it implies that countries’ veloped by the China-West Dialogue based forward with governments of major countries. Further interests and behaviors may vary from is- on its work thus far. We call this frame- interaction, exchange and discussion of sue to issue and that avoiding “blocs” pro- work “strategic engagement” to contrast it China by these propositions can lead to further vides more opportunity to generate for- with other past and current approaches to elaborations which eventually, when the ward momentum in reaching agreements the international order. (See Alexandroff, involving China political circumstances are right, can be across a range of issues, rather than be- Bradford and Tiberghien, 2019.) We see adopted as a new global governance dis- ing stymied by stalemates between rigid new forms of multilateralism emerging constructively courses, as new narratives, and as path- groups of countries (Bradford 2013 and that include the concept of “effective mul- ways forward toward greater cooperation, Patrick 2010); tilateralism” in which cooperation moves and firmly.« coordination and concerted action by G20 • a keen awareness of the degree to forward led by different clusters of coun- countries and others. which all nations today are facing pub- tries, depending on their capacity to agree “Avoiding another bipolar competitive lic concerns about the capacity of their regardless of whether significant powers Pluralism is a foundational concept of era,” a mantra of CWD, is indeed possi- economies and governance processes to do or do not. (See Tiberghien, Alexandroff the CWD, both as a means for defusing ble. There are alternatives to the current deliver social outcomes that are politically and Bradford, 2019). conflicting narratives and as a means of destructive dynamics. There are alterna- sustainable, and that domestic social is- This set of ideas and concepts is com- constructively working toward understand- tive ways of moving forward with China by sues are now at the top of both national pelling for several reasons. First, each ing, respect and ultimately cooperation. In involving China constructively and firmly, and global agendas (Bitar 2018, Linn 2020, of the ideas has intrinsic validity on its contrast to “like-minded” groupings, CWD based on the urgency of global challenges, and Polaski March 20, 2020); and own, based on historical experience and privileges the notion that diversity of per- the complexity of existing entanglements • the proposition that countries give insights into the current dynamics driv- spectives yields better results by embrac- and the inadequacy of “go it alone” tactics, priority to engaging on global challenges, ing global governance. But their value is ing complexity and even contradiction. This which fail to achieve results while gener- rather than making regime types prerequi- enhanced by the consistency and synergy is a central point which distinguishes the ating tensions that encourage strongman sites for involvement in global governance, between them. They both stand alone and CWD approach from the strong tendency behaviors. is a more realistic path to engagement fit together in a coherent way. The total than value-driven gate keeping. equals more than the sum of the parts.

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Alastair Iain Johnston (2019), “China in a World of Orders: Re-thinking Compliance and Challenge in ’s International Relations,” International Security, Fall 2019. Branko Milanovic (2019), Capitalism Alone: The Future of the System that Rules the World, Cambridge: Harvard University Press. Kerry Brown (2018), China’s Dream: The Culture of Chinese Communism and the Secret Sources of its Power, Cambridge: Polity Press. Colin Bradford (2020), “Embracing Contradictions as a Political Dynamic,” CWD “Background Research” for the BU-CWD Workshop on March 20, 2020, Toronto: Global Summitry Project - China-West Dialogue website: http://globalsummitryproject.com.s197331.gridserver.com/chinawestdialogue/wp-content/uploads/ sites/3/2020/05/Colin-Bradford-New-Political-Dynamics.pdf Colin Bradford (2013), “shifting coalitions of consensus” as a new form of interactions in global governance. https://www.youtube.com/watch?v=ZTRGmgPgW4Uf, Brookings, March 25,2013. Stewart Patrick (2010), “The G20: Shifting Coalitions of Consensus Rather than Blocs,” in Colin I. Bradford and Wonhyuk Lim (eds), Global Leadership in Transition: Making the G20 More Effective and Responsive, chapter 23, Washington: Brookings Institution Press and Seoul: Korea Development Institute. Volumes based on a 2010 Brookings-KDI Symposium for the Korea G20 Summit in Seoul. Sergio Bitar (2018), “Cohesion para la Gobernabilidad Nacional y Global,” Notas de Exposicion en panel “Social Cohesion and Global Governance”, T20, CIPPEC-CARI, Buenos Aires: Palacio San Martin, 2 Febrero 2018 and intervention BU-CWD Workshop, March 20, 2020. Johannes Linn (2020), “Contribution to Session on ‘Mixed Economy Pluralism’,” BU-CWD Workshop, March 20,2020, Global Summitry Project (GSP) website. CHINA-WEST DIALOGUE REFERENCES http://globalsummitryproject.com.s197331.gridserver.com/chinawestdialogue/wp-content/uploads/ st sites/3/2020/05/Johannes-Linn-contribution-China-West.pdf China-West Dialogue Workshop, “China-West Relations: The Search for a 21 Century Global Order,” Boston University Global Development Policy Center, Pardee School of , March 20,2020. Sandra Polaski (2020), “Changing the Narrative on Jobs and Income Distribution: Market-led globalization www.bu.edu/gdp/cwd created social cleavages. Global coordination can help repair them,” BU-CWD Workshop, March 20, 2020, Global Summitry Project, (GSP) website. CWD Global Table at GSS2020 on “The Future of Multilateralism and Global Governance: How is it possible to avoid the emergence of another global competitive era?”, Global Solutions Summit Berlin May-June 2020. http://globalsummitryproject.com.s197331.gridserver.com/chinawestdialogue/wp-content/uploads/sites/ Panel moderated by Yves Tiberghien (UBC; CWD co-chair). Speakers: Kerry Brown (KCL), Chen Dongxiao (SIIS), 3/2020/05/Sandra-Polaski-West-and-China-1.pdf and Susan Thornton (Yale). Keynote by Colin Bradford. Colin Bradford (2019), “Changing the Dynamics: From Conflict to Transformation,” Global Solutions Journal, https://www.global-solutions-initiative.org/global-table/how-to-avoid-the-emergence-of-another-bipolar- st Issue 4, March 2019, pp. 287-292, especially section on “21 Century Values”. competitive-era/ Martin Albrow (2018), China’s Role in a Shared Human Future: Towards Theory for Global Leadership, London: Alan Alexandroff, Colin Bradford and Yves Tiberghien (2020), “The World According to the China – West Dialogue Global China Press: Globalization of Chinese Social Sciences book series, volume 4. (CWD): Four Approaches from American Foreign Policy Making toward China and the Liberal Order,” East Asian Jennifer Rudolph and Michael Szonyi (eds) (2018), The China Questions: Critical Insights into a Rising Power, Forum on Global Summitry Project website. Cambridge: Harvard University Press http://globalsummitryproject.com.s197331.gridserver.com/chinawestdialogue/wp-content/uploads/sites/ Dennis J. Snower (2020),” Global Paradigm Shift,” Berlin: G20 Insights: Overarching Visions, Global Solutions 3/2020/05/Note-by-V20-Principals-The-World-According-to-the-China-and-the-West-Dialogue-Complete- Summit 2020 Policy Brief, April, 2020. Final-May-10-2020.pdf Thomas J. Wright (2018), All Measures Short of War: The Contest for the 21st Century & the Future of American Yves Tiberghien, Alan Alexandroff and Colin Bradford (2019), “Effective Multilateralism: 2019 VISION20- Power, New Haven, Yale University Press. Brookings Blue Report,” April 2019, at www.thevision20.org.

52 53 NEW MEASUREMENT

Page 56 Measuring what matters in times of crisis Angel Gurría OECD

Page 64 Measure what is New valuable Markus Engels Global Solutions Initiative measurement Katharina Lima de Miranda Kiel Institute for the World Economy

Page 69 Corporate activism João Bernardo Casali, João Daniel de Carvalho Iönica

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matters to people and how policymaking them take on a special significance in the Measuring what can truly put people at the centre. This ar- current context of the pandemic. If GDP ticle discusses how the OECD Well-Being “growth” results from the increased pro- Framework can shed light on the full im- duction of outputs that are harmful to the matters in times pacts of the pandemic and guide countries’ planet and detrimental to people’s well- policy responses. being, as for instance the increased con- sumption of wild species and intensive ag- of crisis riculture systems that are associated with »Our assessment the emergence of COVID-19, then this is not real progress or improvement. Looking beyond GDP to a well-being framework of the pandemic Using GDP as a primary means to measure progress also ignores some oth- that measures true growth needs to put er important aspects such as negative ex- ternalities like increased pollution (which front and seems to be a mediating factor of COVID-19 Author: As the world strives to exit one of the larg- deaths) or lower citizens’ trust (which in est sanitary crises ever, the need to meas- some countries has conditioned the abil- Angel Gurría center what ure the right things could not be greater. ity of governments to implement effective Secretary-General, The pandemic is impacting every aspect we value as measures in response to the COVID-19). OECD of people’s lives – their health, their jobs, GDP also fails to capture the positive ex- their ways of connecting and living to- a community.« ternalities of better public health that may gether. To understand how people and so- come from a stronger and better prepared cieties are doing in the wake of the crisis, health system, one of the most dramatic Institution: and to design effective public policies to THE LIMITS OF GDP AS THE ONLY lessons of this pandemic. improve well-being at this critical junc- ­METRIC TO INFORM THE UNDER­ The other fundamental reason why ture, governments need to look beyond STANDING AND RESPONSE TO THE GDP would be an inappropriate measure the functioning of the economy, to also COVID-19 PANDEMIC to guide the policy response to the pan- The Organisation for Economic Co-operation consider a diverse range of other aspects Some might argue that governments have demic is that GDP takes no account of and Development (OECD) is an international of people’s lives. This requires looking be- more important things to focus on right the inedited impacts of the pandemic on organization that works to build better policies yond average numbers to understand who now than measuring people’s well-being. human well-being. COVID-19 has indeed for better lives. Our goal is to shape policies is most affected by the crisis and what are This would be short-sighted. profoundly changed our lives, causing tre- that foster prosperity, equality, opportunity the factors that, going forward, can build While the severe economic fallout of mendous human suffering and challeng- and well-being for all. We draw on 60 years of experience and insights to better prepare the resilience and sustain well-being in the the COVID-19 pandemic calls for efforts ing the most basic foundations of societal world of tomorrow. Together with governments, future. to chart and engineer the pathway to eco- well-being. Beyond the immediate impacts policymakers and citizens, we work to establish The OECD has a strong tradition for nomic recovery, this recovery cannot sim- on health, jobs and incomes, the epidemic international norms and suggest evidence- measuring people’s well-being along ply boil down to an increase of gross do- is increasing people’s anxiety and worry, based solutions to a range of social, economic these lines. Adding to the work of the mestic product (GDP). GDP is a measure affecting their social relations, their trust and environmental challenges. Stiglitz-Sen-Fitoussi Commission in 2009 of the economic output of a country over in other people and in institutions, their (now the Stiglitz-Fitoussi-Durand Com- a given period; but it is not, and was never, personal security and sense of belong- Keywords: mission), the OECD has developed a Well- designed to measure well-being.1 ing. More broadly, health conditions, so- well-being, inequality, inclusive growth, Being Framework that provides a key tool When used as a welfare measure, sev- cial connectedness, trust in others, jobs ­framework, COVID-19 for understanding and measuring what eral limits come to the fore and some of and income are all important drivers of

56 57 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT subjective well-being. In 2018, around 7% While governments need to act swiftly and and living; and reinforcing the capacity of 1. Identifying pre-existing vulnerabilities of people suffered from very low life sat- decisively to contain the spread of the vi- public services and social safety nets to to target support isfaction on average in OECD countries, rus, they also need to assess the impacts react in times of crisis. It should also lead The short- and medium-term impacts of and one in eight people experienced more of the disease and the counter-measures to redoubling efforts to reduce or mitigate COVID-19 increase the vulnerability of the negative than positive feelings on a typical on all aspects of people’s lives, especial- sources of vulnerability associated with job most disadvantaged and risk-compound- day.2 Last but not least, inequalities have ly on the most vulnerable, and integrate insecurity, inadequate housing, poor envi- ing socio-economic divides. These vul- been both exposed and magnified during these various impacts in the policy re- ronmental quality, mental and other health nerabilities stretch across most of the 11 the crisis. sponse. They also need to integrate long- challenges, and social isolation. dimensions of current well-being, as seen This is why our assessment of the pan- term objectives in their short-term recov- in the OECD Well-Being Framework. Ac- demic needs to put front and center what ery plans, for instance by giving priority THREE WAYS IN WHICH WELL-BEING cording to our report, How’s Life? 2020, life we value as a community and what needs to policies and projects in the type of in- CAN MAKE THE DIFFERENCE TO FIGHT was already financially precarious in many to guide our collective efforts to fight this frastructure needed to sustain a shift to a THE FALLOUT OF THE PANDEMIC places before COVID-19 hit. In 2018, 12% unprecedented challenge. low-carbon economy. While racing against There are at least three ways in which a of the population across OECD countries the clock in a complex and uncertain en- well-being lens can help governments lived with an income of less than half of the vironment, countries’ assessments of the throughout and after the COVID-19 crisis: median, while the share of those reporting­ »Public policies COVID-19 crisis need to be holistic and in- tegrated, while aiming at building systemic will only be resilience. Well-being frameworks, such as the Figure 1: The OECD Well-being Framework3 truly effective if one created by the OECD in 2011, provide a powerful tool for measuring the short- they go beyond term and medium-term effects of the cri- sis and inform the policy response. The supporting the OECD Well-being Framework (Figure 1) charts whether life is getting better for economy.« people and covers 11 dimensions of well- being, which focus on living conditions and outcomes at the individual, household and A WELL-BEING LENS MATTERS IN community levels, and describe how peo- THE CURRENT CONTEXT ple experience their lives “here and now”. Public policies will only be truly effective The framework also includes four different if they go beyond supporting the economy. resources, or “capitals,” for future well- While short-term policies are needed to being that refer to the broad systems that save lives and livelihoods today, a simplis- sustain well-being over time. These are of- tic framing of the issue in terms of pub- ten related to public goods, and are affect- lic health versus economic recovery risks ed by decisions taken (or not taken) today. losing sight of other aspects that mat- This crisis should provide the oppor- ter to people’s lives and that are surfac- tunity for longer-term changes to build ing strongly during the second lockdowns greater resilience in the systems that sup- and waves of the pandemic. It would also port well-being over time. This includes ignore the debate on what kind of society building social connections and social we want to see emerging after this crisis. capital; developing new ways of working

58 59 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT acute financial difficulties in European connecting families with each other and with the COVID-19 crisis and containment not measure something at all, it becomes OECD countries was almost twice as high, with public service providers through digi- measures taken by governments (e.g. less neglected and treated as if the problem at 21%. One in five low-income households tal technologies.9 People aged 50 and over travel for business and commuting, chang- does not exist. Therefore, high quality data spends more than 40% of their disposable are almost three times more likely to lack ing global production arrangements) will on well-being is critical to inform policy income on rents and mortgage costs. In social support compared to young people, be permanent enough to affect environ- action. addition, more than one in three people in so in addition to being more physically vul- mental sustainability positively. OECD countries are financially insecure, nerable to the impacts of COVID-19, they Zooming in on social capital (the soci- meaning they lack financial assets to keep are also more socially vulnerable. etal norms, shared values and institutional »This crisis their family above the poverty line for more Since the crisis is having an impact arrangements that foster co-operation), it than three months, should their income on the most important drivers of subjec- is clear that trust in others and in public should provide suddenly stop. There is also growing evi- tive well-being, such as health conditions, institutions are, at the same time, pro- dence that socio-economically disadvan- employment and social connectedness, tective factors against systemic shocks the opportunity taged groups such as low-wage workers, the current pandemic will affect people’s like the current pandemic, and at risk in people living with the threat of domestic mental state, anxiety and stress. Evidence times of crisis. Research from the United for longer- abuse, and ethnic minorities are particu- from , the United Kingdom and the States indicates that the Spanish flu led to larly affected by COVID-19, both in terms United States shows that the share of those long-term decline in interpersonal trust, term changes of death rates and well-being impacts.4, 5, 6, 7 reporting low life satisfaction increased to and that COVID-19 fatalities were lower Moreover, COVID-19 has been found to be more than 20% in March. It also points out in counties with higher levels of trust.14, 15 to build greater much more fatal for men.8 Taking these that those with pre-existing mental health After a general deterioration in the after- pre-existing inequalities into account can problems, including young people, are ex- math of the 2008 financial crisis, trust in resilience in help policymakers to determine who needs periencing a worsening of their symptoms institutions improved by three percentage help the most, and design and target poli- during the COVID-19 outbreak; and that points across OECD countries between the systems cies accordingly. people who are financially vulnerable are 2010 and 2018. Still, less than half of the experiencing more psychological distress population (43%) trusts their national gov- that support 2. Shedding a light on areas not on the than others.10, 11, 12, 13 ernment. More recent evidence from six immediate radar of government OECD countries (Australia, New Zealand, well-being over A well-being lens can highlight the issues 3. Building greater resilience in systems the United Kingdom, Italy, Korea and the that matter the most in people’s lives, some that support well-being over time United States) suggests that institutional time.« of which are not always at the forefront of The crisis should be an opportunity for trust might have risen during the very ear- decision-makers’ minds. For example, longer-term changes to support the re- ly stages of the pandemic,16 but remains Significant progress has been made quality of life includes people’s relation- covery, address present long-term chal- quite fragile. OECD governments will have in this direction, with the OECD’s pioneer ships, which can provide a vital lifeline in lenges, and prepare for future shocks. to put people first in their response to the efforts on this agenda closely informing times of crisis and social distancing. Yet, How’s Life? looks at four types of capital crisis to maintain trust going forward. national measurement initiatives.18, 19 Ad- across OECD countries, one in 11 people (economic, natural, human and social) ditionally, some OECD governments have say they do not have relatives or friends which represent the systemic resources THE STATISTICAL AND POLICY begun to develop tools to integrate well- they can count on for help in times of need. that affect well-being over time. The re- ­AGENDAS ON WELL-BEING ARE ­ being into their agenda setting, strategic The considerable risks of social isolation covery packages that are being designed WELL ESTABLISHED objectives, policy analysis, and budgetary and loneliness, both for physical and men- and implement by countries should feature The relevance of the well-being frame- processes, including when striking a bal- tal health, need to be addressed by policy strong investments in all of these resourc- works transcends the current context. ance between the well-being of different measures. This can be done, for instance, es, and address the risks that might affect “What you measure affects what you do”.17 generations.20, 21, 22 through regular check-ins by social ser- them in the future. It remains to be seen Likewise, if we measure the wrong thing, Governments are also starting to ap- vices, civil society and volunteers, and by whether the structural changes associated we will do the wrong thing; and if we do ply a well-being approach to policy and

60 61 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT budget decision-making, with the objective STRIVING FOR WELL-BEING, of lifting their populations’ well-being, as ­INCLUSION, SUSTAINABILITY for instance in New Zealand, Canada and AND EQUAL OPPORTUNITIES Italy. This requires embracing a whole of The OECD has a long tradition of empiri- government approach, with different gov- cal and statistical work on complement- 1 Dynan, K. and Sheiner, L. (2018). “GDP as a Measure of Economic Well-being”, Brookings Institute Working ernment agencies working together to ing GDP metrics with broader measures Paper, https://www.brookings.edu/wp-content/uploads/2018/08/WP43-8.23.18.pdf 2 OECD (2020), How’s Life? 2020: Measuring Well-being, OECD Publishing, Paris, https://dx.doi.org/10.1787/ achieve well-being objectives, focused on of economic performance and living stand- 9870c393-en inter-generational outcomes, and moving ards, in line with its core mandate to pro- 3 OECD (2020), How’s Life? 2020: Measuring Well-being, OECD Publishing, Paris, https://dx.doi.org/10.1787/ mote “sustainable growth and employment 9870c393-en and a rising standard of living” as estab- 4 Brooks, R. (2020), African Americans struggle with disproportionate COVID death toll, National Geographic, https://www.nationalgeographic.com/history/2020/04/coronavirus-disproportionately-impacts-african- »Better lives lished in its founding Convention of 1960. americans/ Building on this tradition and against the 5 OECD (2020), Women at the core of the fight against COVID-19 crisis, OECD Publishing, Paris, major economic and social fallout of the https://www.oecd.org/coronavirus/policy-responses/women-at-the-core-of-the-fight-against-covid-19-crisis/ for all should 6 OECD (2020), COVID-19: Protecting people and societies, OECD Publishing, Paris, https://www.oecd.org/ COVID-19 pandemic, the aim of the newly inclusive-growth/resources/COVID-19-Protecting-people-and-societies.pdf be the ultimate created OECD Centre on Well-being, Inclu- 7 ONS (2020), “Coronavirus (COVID-19) related deaths by occupation, England and Wales: deaths sion, Sustainability and Equal Opportuni- registered up to and including 20 April 2020”, https://www.ons.gov.uk/peoplepopulationandcommunity/ healthandsocialcare/causesofdeath/bulletins/coronaviruscovid19relateddeathsbyoccupationenglandandwales/ goal of all ties (WISE) is to better serve members by deathsregistereduptoandincluding20april2020. providing them with more integrated analy- 8 Brookings Institute (2020), “COVID-19 much more fatal for men, especially taking age into account”, sis and policy solutions at a time when they https://www.brookings.edu/blog/up-front/2020/05/15/covid-19-much-more-fatal-for-men-especially-taking- policies.« age-into-account/. face increasingly complex and intercon- 9 OECD (2020), COVID-19: Protecting people and societies, OECD Publishing, Paris, https://www.oecd.org/ nected challenges. Through this new Cen- inclusive-growth/resources/COVID-19-Protecting-people-and-societies.pdf to broader measures of success. A well- tre, the OECD will continue to advance its 10 Keeter, S. (2020), People financially affected by COVID-19 outbreak are experiencing more psychological distress than others, Pew Research Center, https://www.pewresearch.org/fact-tank/2020/03/30/people- being focus can be implemented through a data collection, analysis and support by de- financially-affected-by-covid-19-outbreak-are-experiencing-more-psychological-distress-than-others/. range of actions, including amending leg- veloping the measurement agenda on well- 11 Coconel (2020), COronavirus et CONfinement : Enquête Longitudinale, http://www.orspaca.org/sites/default/ islation to embed the setting and reporting being and sustainability; designing policies files/coconel-vague2.pdf. 12 ONS (2020), Personal and economic well-being in Great Britain: May 2020, https://www.ons.gov.uk/ of well-being objectives; developing well- to improve well-being and expand oppor- peoplepopulationandcommunity/wellbeing/bulletins/personalandeconomicwellbeingintheuk/may2020. being frameworks and indicator sets; and tunities; and supporting countries through 13 Young Minds (2020), Coronavirus having major impact on young people with mental health needs – new survey, using well-being evidence to inform prior- bespoke well-being and inclusive growth https://youngminds.org.uk/about-us/media-centre/press-releases/coronavirus-having-major-impact-on- young-people-with-mental-health-needs-new-survey/. ity setting, budget decision-making, and strategies. In the end, better lives for all 14 Aassve, A. et al. (2020), Pandemics and social capital: From the Spanish flu of 1918-19 to COVID-19, regulatory reforms. should be the ultimate goal of all policies. VOX Cepr Policy Journal, https://voxeu.org/article/pandemics-and-social-capital. 15 Borgonovi, F. (2020), “Bowling Together by Bowling Alone? Social Capital and COVID-19”, No. forthcoming. 16 Behm, A. (2020), “Trust is back - and it’s governments we’re putting our faith in”, The Sydney Morning Herald. 17 Stiglitz, J., J. Fitoussi and M. Durand (2018), Beyond GDP: Measuring What Counts for Economic and Social Performance, OECD Publishing, Paris, https://doi.org/10.1787/9789264307292-en. 18 Exton, C. and M. Shinwell (2018), “Policy use of well-being metrics: Describing countries’ experiences”, OECD Statistics Working Papers, No. 2018/07, OECD Publishing, Paris, https://doi.org/10.1787/d98eb8ed-en. 19 Exton, C. and L. Fleischer (2020), “The Future of the OECD Well-being Dashboard”, OECD Statistics Working Papers, No. forthcoming, OECD Publishing, Paris. 20 Durand, M. and C. Exton (2019), Adopting a Well-Being Approach in Central Government: Policy Mechanisms and Practical Tools, in Global Happiness Policy Report 2019, Sustainable Development Solutions Network, New York, http://happinesscouncil.org/. 21 OECD (2019), OECD Economic Surveys: New Zealand 2019, OECD Publishing, Paris, https://dx.doi.org/10.1787/ b0b94dbd-en. 22 Fleischer, L., M. Frieling and C. Exton (2020), “Measuring New Zealand’s Well-being”, OECD Statistics Working Papers, OECD Publishing, Paris (forthcoming).

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For historians, it is fascinating to reflect on focus on a company’s bottom line is even Measure what is what different societies through the ages more entrenched, going back to long be- have considered valuable. There have been fore the 15th century. civilizations that traded with shells, animal If one were to summarize the most valuable skins or stones before what we know as urgent challenges of our age, there are money was introduced. But besides the strong arguments that climate change and means of payment, societies and cultures the loss of biodiversity, divided societies A plea for a system change have also differed widely in other things and the decoupled distribution of wealth, they esteem. Some treasured the elderly, along with shrinking future prospects for others the young. Some societies revered too many people in a disruptive age are the nature as holy, while others placed hu- underlying reasons our planet is in mortal Authors: mans at their center. At least in its mod- danger, and these may also be the causes ern interpretation, the definition of what of future conflicts. One could also argue Markus Engels is valuable is often based on a common that the core of the problem lies in the de- Secretary General, agreement within society. In former ages, velopment of a system in which success Global Solutions Initiative religious authorities or sovereigns decided and progress have been defined as eco- The Kiel Institute for the World Economy is on the value of people and norms. nomic growth. The fact that we have “more an international center for research in global than yesterday” is meant to prove there economic affairs, economic policy ­consulting, is progress. Is this assessment still ade- Katharina and economic education. The Institute quate? If growth is achieved at the price of Lima de Miranda engages especially in creating solutions to »The world destroying natural resources, it obviously Researcher, Kiel Institute urgent problems in global economic affairs. is not a sustainable measure of success. for the World Economy It advises decision makers in policy, business, community and society and informs the broader public If economies measure growth without about important developments in international must either simultaneously analyzing the impact for a economic policy. society, the effect on global and environ- Institutions: work together mental stability and future perspectives for people, it may serve individual interests but Keywords: to save it will not serve to benefit mankind. This new measurement, Recoupling Dashboard, system worked for a while, in some regions THE WORLD POLICY FORUM beyond GDP, beyond shareholder value, the everyone or all with amazing economic success. It led to new normal The Global Solutions Initiative (GSI) is a global technical peaks and innovation and sup- collaborative enterprise to envision, propose and will face hard ported the liberation of many individuals. evaluate policy responses to major global prob- However, the downside is not only conspic- lems, addressed by the G20, through ongoing times.« uous, but pandemics, climate change and exchange and dialogue with the Think20 (T20) migration crises prove that there won´t be engagement group. The GSI is a stepping stone to the T20 Summits and supports various other a safe harbor for the few. The world com- G20 groups. The policy recommendations and Today, our measure of success focuses munity must either work together to save strategic visions are generated through a dis- mainly on GDP and shareholder value. The everyone or all will face hard times. ciplined research program by leading research former stems from an 18th century discus- The UN, the OECD, scientists, art- organizations, elaborated in policy dialogues sion and was established in the mid-20th ists and civil movements have proposed between researchers, policymakers, business century as a guideline for where an econ- measurements in which the impact on the leaders and civil society representatives. omy and a society stands. The business environment, society and the individual

64 65 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT play a significant role and challenge the If governments ensure that fundamen- focus attention on environmental sustain- on the environment, society and the in- system of GDP as an indicator of societal tal human needs are satisfied, in particu- ability can protect natural resources and dividual must become the focus of atten- well-being. Examples of these initiatives lar if solidarity within and between groups human well-being without diminishing tion when assessing well-being. In August include the OECD Better Life Index, the is high and individuals are given agency to economic growth. This highlights the im- 2020, the T20 appealed to the G20 to adopt recent formation of an OECD Centre on help themselves and their social groups, portance of policies that manage econom- a new way of measuring well-being in ac- Well-Being, Inclusion, Sustainability and compliance will be higher and relatively ic, environmental and social issues with cordance with the Recoupling Dashboard. Equal Opportunity (WISE), the Social Pro- easier to implement. On a global scale, the same level of priority. In their final communique, which was gress Index, which measures the social we see that one of the very few significant A paradigm change is also urgently handed over to the G20 on November 1, and environmental health of societies and social and political correlates of COVID-19 needed on the business side, questioning 2020, the T20 reaffirmed this and called on intends to accelerate social progress, or deaths in cross-national studies is so- whether short-sighted shareholder value the G20 to put fundamental human needs the Social Impact Index, which measures cial trust and trust in government – both maximization is an appropriate goal. The at the core of its policies, for example by the social impact of concrete development components of the recoupling dashboard business roundtable, for example, ques- including new measures of well-being in projects. The Global Solutions Initiative is (WZB, Oct. 2020). tioned the purpose of business as busi- the regular reporting of national statistics advancing the Recoupling Dashboard as a ness and proposed a system for the ben- and using these measures as a basis for tool to measure the well-being of societies efit of all stakeholders. This appeal was policymaking. In order for our societies to beyond GDP, which illustrates the interre- »In light of the signed by 181 CEOs. This Value Balancing thrive, the upcoming G20 presidencies in lation between economic prosperity, social Alliance is demanding system change for Italy (2021) and Indonesia (2022) should prosperity and environmental sustain- current COVID-19 a more comprehensive approach in which put fundamental human needs at the heart ability. The underlying solidarity, agency, business performance is seen in a broader of their policies. This includes endorsing a material gain and environmental sustain- pandemic, the social framework. To bring together all the more holistic picture of human well-being, ability (SAGE) framework challenges the different proposals and inspiring ideas is a in particular by including agency and soli- still-too-common perspective of using SAGE framework major mission – one for the thought lead- darity into the regular reporting of national GDP as a normative guide for policymak- ers in politics, science, civil society and in and local statistics, and taking these as a ing. It endorses a more holistic picture can be useful business. But it is a worthwhile challenge. basis for policy making. It is necessary to of human well-being rooted in a modern, The normal in the aftermath of the elevate social development to the same empirical, interdisciplinary understanding in providing a COVID-19 pandemic will be a new normal. level of priority as economic prosperity of human well-being. Of course, we need to overcome the health and public health safety, and to measure In light of the current COVID-19 pan- more balanced crisis, the economic crisis, the social crisis social and human development more ac- demic, the SAGE framework can be useful and the crisis of multilateralism that COV- curately and at a frequency rapid enough in providing a more balanced assessment assessment ID-19 has caused or revealed. This time it to enable quick reaction to shocks. This of human well-being, and in showing what is crucial that we don´t merely make cos- includes giving more attention to the lo- is actually needed for a society to thrive. of human metic changes, but that we eradicate the cal level and to territorialized responses One important aspect of evaluating the ef- fundamental mismatch in our perception and documenting the distribution, not just fectiveness of governments in coping with well-being.« of what is valuable. This is one of the most the average situation, to identify disadvan- the pandemic is to look at how a society pressing challenges for the G20 and its en- taged groups needing special attention. perceives its government’s containment gagement groups in the upcoming years. Furthermore, the contribution of the pri- measures. This impacts people’s well-be- In the Fridays For Future movement, The international community is begin- vate sector should be harnessed by ena- ing and how they cope with the crisis, as our children and grandchildren, the fu- ning to understand that without a new def- bling responsible actors, for example by well as their willingness to comply with the ture leaders, are claiming a fair change inition of prosperity and economic growth, harmonizing and disseminating accurate measures and therefore their success. In for themselves and their own children. The it will be impossible to effectively combat and comprehensive reporting of private order for pandemic containment to be ef- Report of the 2020 Environmental Perfor- pandemics, climate change or global pov- sector impacts on social development and ficient, compliance is key. mance Index asserts that countries that erty. But the effects of economic growth externalities.

66 67 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT Corporate activism

A legal framework for “corporate recoupling” in Brazil

Authors: 2020 has been a year of catastrophic natu- ral disasters and popular uprisings, cer- João Bernardo Casali tainly a historical moment in the making. Chief Regeneration Officer Orthodox economic principles are being and Co-Founder, Iönica questioned and dismissed, while a regen- Founder of the Legal Impact erative agenda is being advanced by pro- Lab, Public Policy Project for gressive advocates around the globe. In Impact Law Promotion this context, holistic methodologies like the T-20ʼs recoupling dashboard could João Daniel de Carvalho provide policymakers with powerful tools Consultant at Iönica and the to merge social and economic prosperity Legal Impact Lab with environmental performance. The Global 500 in Fortune Magazine in- dicates that 69 of the top 100 richest eco- The authors are members of the extended nomic entities are companies, rather than circle of the Young Global Changers program by governments.1 When it comes to the top the Global Solutions Initiative. 200 richest economic entities, 157 listed are corporations, with the top 10 com- Institution: panies accumulating a net worth of over USD 3 trillion in 2017. It is not only about macroeconomics and government analysis anymore. The figures prove how multina- tionals are becoming the “new nations,” A Regenerative Agency that researches, devel- assuming a massive role in the economic ops and implements projects and businesses system. Katharina Lima de Miranda and Dennis J. Snower, Recoupling Economic and Social Prosperity, in Global that generate a positive impact on society, the Perspectives, University of California press, Global perspectives, February 2020 https://content.ucpress.edu/ Unfortunately, the statistics regarding environment and the economy. Iönica works journals/11867_recoupling_economic_and_social_prosperity.pdf climate change and environmental degra- at the intersection of impact business and Think-tank 20 (T20) 2020 (1). Final Communiqué. Nov. 1, 2020, https://t20saudiarabia.org.sa/en/Communique/ dation are terrifying. Our system doesnʼt Documents/T20%20Communique-EN.pdf ­policies, supporting public and private organi- Think-tank 20 (T20) 2020 (2). T20 Statement on Social Development Measurement. https://t20saudiarabia.org.sa/ zations to shift into a new economy. have enough time to make a smooth tran- en/news/Documents/Social_Development_Statement_Aug_12.pdf sition simply by decoupling into an insuf- Wendling, Z.A., J.W. Emerson, A. de Sherbinin, D.C. Etsy, et al. 2020. Environmental Performance Index 2020. Keywords: ficient green growth campaign, otherwise New Haven, CT: Yale Center for Environmental Law and Policy. https://doi.org/10.13140/RG.2.2.21182.51529. (corporate) recoupling, regenerative, legal we will fail to meet our targets for green- WZB. Dashboard: Social and political correlates of COVID-19. WZB Institutions and Political Inequality Group, Oct. 11 2020 framework, positive impact business, Brazil house gas emission reduction, ­biodiversity,

68 69 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT desertification and many other interna- which are now moving beyond an outdated should be taking these approaches into the country vast possibilities for entrepre- tional pacts. shareholder capitalism focused only on account, understanding their interdepend- neurial initiatives, giving rise to concepts We have learned after decades of tradi- profit maximization. ence in a society operating within plane- such as an economy built on the “Amazon tional GDP-oriented economic growth that, tary boundaries. 4.0.,” developing science and technology besides reevaluating how we measure A LEGAL FRAMEWORK THAT SUPPORTS in this area, evaluating environmental as- progress, society may need to scale down POSITIVE IMPACT BUSINESSES sets and blending biomimetism and engi- material production and consumption and The policy brief, “Scaling up business im- »Which legal neering with the digital frontier, all while implement other degrowth strategies2 pact on the SDGs,”3 makes clear that a new bringing Indigenous peoples, traditional worldwide. However, degrowth discus- legal framework could and should signifi- provisions could communities and smallholders to the sions definitely need to tackle inequality, cantly empower civil society, governments center of the discussions. This can surely expanding the welfare safety net and con- and businesses. Moreover, this is closely effectively be expanded to other incredible biomes in sidering the commons in new jurisdiction- connected to the idea that we are expe- our country, such as the Cerrado, located al approaches. riencing a necessary transition to stake- leverage these mainly in the Midwest, and one of the most This comes as no surprise to those holder capitalism. biodiverse savannah regions in the world. engaged in sustainable development; re- First, this agenda focuses on push- sustainability Aside from these very positive views of placements for a GDP-driven economy ing governments to pass legislation that Brazil's future, understanding our corpo- have been discussed for decades. Never- clearly defines what the term “positive im- and prosperity rate ecosystem also offers a keen perspec- theless, the economic world order is still pact businesses” stands for, creating clear tive on the inadequacy of our legislation in sustained by GDP-driven matrixes, con- guidelines for environmental, economic indexes in offering incentives to companies that ad- textualized by the “growth at all costs” and social parameters that will orient the here to impact investing and social busi- paradigm. legal framework to follow. Simultaneously, the corporate ness guidelines. Therefore, the shift to new regenerative the private sector needs to be actively en- For example, the Brazilian government approaches involving the corporate world, gaged in enticing public entities to create ecosystem?« recently issued Decree nº 10.387/2020,4 approaches tied to assessments of the pri- impact-oriented corporate structures. which creates tax incentives for so-called vate sector’s positive impact, raises some There are many initiatives following these “Sustainable Bonds” in infrastructure and defining questions. Which legal provisions trends worldwide, with varying structures BRAZIL: A LEADING CASE FOR energy sectors for businesses that make a could effectively leverage these sustainabil- and outcomes, such as benefit corpora- ­REGENERATIVE PRACTICES positive social and environmental impact. ity and prosperity indexes in the corporate tions in the US, Italy, Colombia and now Ec- Latin America, and more specifically Bra- Although it is an auspicious development ecosystem? Even more ambitiously, how uador, and their mirrored models in other zil, the home to both authors of this article, for the securities market, the decree does can these indexes hold a company's gov- countries, like the “Enterprise à Mission” in is especially receptive to these initiatives. not set forth how these impacts would ernance structures accountable for meet- France, or even steward ownership models With a dormant potential in nature-based be assessed, and instead depends on the ing the most impeccable and stringent prin- of purpose economy, already largely adopt- solutions, the country stands alone as the competent ministries to issue regulatory ciples for human and planetary welfare? ed in the Scandinavian countries. guardian of major hydrological resources, norms later. It’s imperative that govern- It is true that ESG metrics and their These solutions, in their rich variety large rainforests and grasslands of lush ments incorporate clear rules for impact ample universe of ratings and indexes have of propositions, defy “business as usual” green and infinite biodiversity, a bountiful assessment by certified third parties in been widely used by banks, investment assumptions, put the “triple bottom” im- mosaic of ecosystem services with poten- order to give these laws legitimacy and funds and rating agencies. These provide a pact of profits, people and planet at the tial too great for any individual to grasp. transparency. voluntary approach to setting benchmarks core of their missions, and to some degree More than ever, Brazil is positioned as Along these lines, specific corporate for the supposedly best practices in the redefine ownership and stakeholder rela- a major player in a regional bioeconomy structures will need to be defined, made responsible businesses- and impact-in- tionships. This is no ordinary challenge, scheme, which offers innumerable possi- eligible for tax exemptions and given pref- vesting market. Yet they fall short of meet- but it stands at the forefront of redefining bilities for the regenerative development erential access to public funds, in order to ing the ever-growing needs of companies, capitalism for this century. All enterprises of the continent. Our natural riches offer capture the spirit of a new post-capitalist

70 71 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 NEW MEASUREMENT order. Furthermore, positive impact as- Rio+20 in 2012, has issued State Law nº The majority of positive impact businesses In addition, corporate law needs to be sessments must become fundamental 8571/2019,6 creating a legal framework fit this description. They would definitely framed by concepts that emphasize eco- corporate governance tools for any com- for positive impact investments and busi- benefit from wider legal frameworks that centric ideals. These represent larger pany wishing to align its corporate strategy nesses, setting definitions and rules for empower strategic stakeholders and sup- schemes that businesses are slowly in- with this new era, holding its board of di- a receptive environment in this area, al- port the durability of a company’s regen- corporating, translating them into a wider rectors and executives responsible for the beit still lacking the necessary corporate erative vision. movement that instills the triple bottom continuous development of the company's positive impact into every aspect of the economic, social and environmental prac- CORPORATE ACTIVISM AND corporate agenda. B-Corp movement tices. »More than NEW HORIZONS certification worldwide by large publicly Brazil’s corporate law is limited to a It comes as no shock that the new “ESG traded companies surely represents this few corporate structures, but there is still ever, Brazil is fever,” albeit with a number of well-placed important shift and a greater pattern for plenty of room for innovative mechanisms caveats, also brings momentum and vis- market tendencies. and creative solutions. This is certainly a positioned as ibility for new creative pathways in the Society has reached the point of bifur- feasible and necessary step for a shift in entrepreneurial universe. We are witness- cation, after running for a long time far the corporate legal framework for devel- a major player ing the rise of scalable green startups, from equilibrium8. In a world where tradi- oping countries. With so many bureaucrat- including the newly coined term “carbon tional business models have accounted for ic barriers and rising inequality, for-profit in a regional fintechs,” companies that bring digital resource depletion and social fragmenta- businesses created with ecological and technology to greenhouse gas mitigation tion, new regenerative proposals should social missions and whose governance bioeconomy strategies. be the priority for entrepreneurs and com- structures aim to uphold these pillars These initiatives capture the spirit of panies who wish to be agents of change. should have preferential access to mar- scheme, a new generation, oriented by systems- It is a pivotal moment for the corporate kets, public or private. thinking and complexity theory. Authors universe to shift to being part of the solu- As mentioned in the policy brief “To- which offers such as Fritjof Capra and Ugo Mattei, aided tion, contributing to prosperity and moving wards G20 Guiding Principles on Invest- by concepts such as the “Ecology of Law,”7 away from an orthodox growth mentality. ment Facilitation for Sustainable Devel- innumerable offer new ideas for law-making that would It is not only about decreasing GDP and opment,”5 there is currently over USD 100 embed the “commons” at the core of legal other financial metrics. The creation of a trillion in assets under management in possibilities design. In this pivotal and crucial moment, new order is about rethinking our needs and the world. This means there isn't a lack of new possibilities are being created for en- rematerializing our global economy. This available capital for positive impact busi- for the terprises. movement means developing countries can ness, but rather a lack of financial pipe- Current movements may seem like be at the vanguard of creating an enabling lines and legal frameworks to make this regenerative grains of sand in a large and imposing de- environment for emergent solutions. transition happen. development of sert. And it is true that Brazil is experienc- The Global South has a great opportu- Analyzing these trends, they surely ex- ing a considerable underdevelopment of nity to finally reject the conventional eco- emplify the crossroads at which we find the continent.« environmental governance at federal state nomic illusion, reconfiguring the stakes for ourselves. Brazil should, both at a national level. These are unfortunate times. Still, a just, global, post-growth future, where and subnational level, weave solid, inte- we witness policies like the Brazilian Cen- the triple bottom line stands as a cor- grated public policies to expand positive structures best exemplified by benefit tral Bankʼs decision to mandate financial nerstone of development. It is time Brazil impact businesses, supported by the crea- corporations. institutions to follow recommendations by makes a firm stand in the approval of new tion of specific corporate structures. It is fundamental to mention that Brazil the G-20’s Task Force on Climate-related laws and regulatory sandboxes for future- Despite all odds, the Brazilian state has an ample universe of small and me- Financial Disclosures (TFCFD), part of its fit businesses that are willing to change of Rio de Janeiro, which hosted the Unit- dium-sized companies; they are the heart Financial Stability Board (FSB). and catalyze positive impacts for the world. ed Nations Earth Summit in 1992 and and soul of the country’s economic activity.

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1 Accessed in 6th of November of 2020, https://fortune.com/global500/2017/ 2 Hickel, Jason. Less is More. How Degroth will save the world. Penguin Random House, 2020. 3 Murillo, Franklin. Charvet, Estefania. Konya, Kenichi. Ohno, Izumi. Shiga, Hiroaki., Scaling up business impact on the SDGs. G20, accessed 5th of November of 2020, . 4 Accessed in 5th of November of 2020, . 5 Sauvant, Karl. Berger, Axel. Ghouri, Amad. Ishikawa, Tomoko. Stephenson, Matthew. G20, accessed 5th of November of 2020, . 6 Accessed in 5th of November of 2020, 7 Fritjof Capra, Ugo Mattei. “The Ecology of Law”. Berrett-Koehler Publishers, 2015. Ten Principles of Complexity & Enabling Infrastructures 8 Eve Mitleton-Kelly. “Complex Systems and Evolutionary Perspectives on Organizations. Ten Principles of Complexity & Enabling Infrastructures”. Elsevier, 2003.

74 DIGITAL GOVERNANCE

Page 80 Consumer policy after COVID-19 Christian Kastrop, Dominic Ponattu German Federal Ministry of Justice and Consumer Digital Protection Page 87 Revisiting digital governance governance Dennis J. Snower Global Solutions Initiative Paul Twomey CIGI Maria Farrell University of Western Australia

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Page 94 Digital services and data flows in global trade Dennis Görlich Kiel Institute for the World Economy Niclas Frederic Poitiers Bruegel

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The COVID-19 pandemic has highlighted boost the economy with expensive stimu- Consumer policy the need for a new form of digital govern- lus programs and shield consumers from ance to support consumers around the job and income losses at large scale. Thus, world. Digital consumer policy has to be between-country inequality will likely rise after COVID-19 fit for a more digitalized and sustainable sharply due to the pandemic. world and tackle inequality in the post- COVID world. Fostering social cohesion requires an update Governments around the world have »Apart from been showing strong and decisive action to digital governance to tackle the COVID-19 pandemic. Besides digital data numerous measures to safeguard public health, policymakers have focused on sup- protection Authors: Institution: porting firms to prevent large-scale insol- vencies. Central banks’ monetary policies Christian Kastrop we also need as well as special spending programs add State Secretary, to macroeconomic stability in the crisis and German Federal Ministry to enhance cushion the freefall of the global economy. of Justice and Consumer Protection The Federal Ministry of Justice and Consumer Yet, besides firms and production, transparency Protection is a cabinet-level ministry in Ger- COVID-19 has brought massive disruption many. The ministry creates and changes law in to everyday life and hit one group particu- and the digital Dominic Ponattu the classic core areas related to Constitutional larly hard: consumers. Many are suffer- law and also analyzes the legality and constitu- Private Secretary to the ing from straitened budgets – stemming literacy of State Secretary, German tionality of laws prepared by other ministries. from unemployment or short-time work Federal Ministry of Justice Moreover, the Ministry is also responsible for consumers.« and Consumer Protection the area of consumer policy and consumer schemes – and are struggling to meet protection in the digital sphere, the goals of credit charges or to pay rents. Many coun- which are to establish the conditions for safe tries have taken measures to mitigate and self-determined consumer activity. the consequences of the pandemic for But also within-country inequality be- consumers, such as reductions in value- tween consumers could increase quite added tax or prosecution of consumer in- significantly, one reason being the digital Keywords: fractions – like unfair competition, for in- transformation. As a consequence of the digital governance, consumer protection, stance. crisis, many employers – private and pub- ­consumer policy, data economy, digital policy But while such measures are helpful, lic alike – are already or will be investing the rise in global inequality will be signifi- in their digital infrastructure. This devel- cant – and persistent – for several reasons. opment will probably come mostly to the In terms of persistence, the duration of the benefit of highly educated, urban consum- crisis is evident: case numbers have been ers, as several major cities have become climbing due to a “second wave” in many hubs for digital business models. More countries at the end of 2020. In terms of vulnerable consumers, like those living in rising inequality, one thing is clear: unlike rural areas or in less-affluent cities will most of Western Europe and other highly not be exposed to heavy investment in digi- developed economies, developing coun- tal capabilities around them. And moreo- tries do not possess the fiscal space to ver, many of those vulnerable consumers

80 81 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 DIGITAL GOVERNANCE may fear that their jobs could become ob- work well for many consumers given their Indeed, Figure 1 suggests that most ket power across industries has increased solete with digitalization on the rise. potential for better transparency, lower consumers around the world will shift in many sectors, as “super star firms” have prices and more convenience. Moreover, consumption patterns to the online arena, taken a larger share of the economic pie in THE RISE OF DIGITAL PLATFORMS platforms can certainly play a useful part which is likely to strengthen online plat- their respective markets.1 AND MARKET POWER: A BURDEN during the pandemic when physical shop- forms. Apart from digital data protection It is clear that increasing market power FOR CONSUMERS ping should be avoided. But the digital we also need to enhance transparency and of platform firms can prevent new, innova- Finally, there is a further remarkable de- economy also requires stronger consumer the digital literacy of consumers, espe- tive firms from entering markets, and thus velopment that is related to the pandemic- and data protection – where platforms with cially when it comes to the – often opaque – suppress competition and innovation. This induced acceleration in the use of digital already staggering market power have be- use of data in digital services. This ob- is not just bad for consumer prices. When services: the ever more important role of come even more dominant and successful servation comes at a time when digital single firms become too dominant, they digital platforms. Clearly, platforms can with the coronavirus. platforms and tech firms have gained very can set the sole standards for consumer significant market power, mainly through protection when it comes to the increased network effects. The surge in dominance use of digital data in business models. of the firms commonly known as “GAFA” It is becoming clear that both digitali- Figure 1: Anticipated growth (blue) or reduction (pink) in online purchases (Google, Apple, Facebook and Amazon) are zation (partly accelerated by the pandemic) after COVID-19 (%) prime examples of this development. as well as lower incomes and job losses While there appears to be a strong fo- due to COVID-19 are putting severe pres- cus on digital platforms in the public de- sure on consumers. In our view, first and bate, we should also focus on the offline foremost, more consumer confidence can world. Value chains of firms in sectors pave the way out of the crisis. There are such as logistics, food and health have several important points to consider from become increasingly digitalized, which ap- a consumer confidence viewpoint. pears to have helped the already dominant firms in these sectors. Novel research CONFIDENCE IS KEY finds that market concentration and mar- First, consumer confidence will be key to a

Figure 2: Net consumer confidence (%)

Source: McKinsey & Company Source: European Commission

82 83 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 DIGITAL GOVERNANCE swift recovery. Only with rising consumer • Improvement of consumer protection sion will introduce a higher level of re- friendly effects. Beyond times of crisis, trust will firms and the overall economy within financial services. The review and sponsibility in particular for large online consumers should be encouraged to be- be able to recover promptly. The European improved rules of the Consumer Credit Di- platforms. In addition to these regulatory come actors in the green transition. This Union’s single market (the world’s larg- rective (2008/48/EC) should be adjusted to measures, an expansion of quality-based requires innovative solutions, an adequate est economic area) provides a good ex- the digital era while ensuring a high level information and educational offers for legal framework promoting long prod- ample. Figure 1 indicates that consumer of consumer protection. The review should consumers could be useful. Furthermore, uct lifespans and reparability, appropri- confidence in the EU has not yet returned also examine the risks of over-indebted- administrative and regulatory measures to ate information and consumer education. from its low point after the outbreak of the ness in the time of crisis. strengthen competition between platforms Sustainable consumption should not be pandemic and remains well below its long- • Addressing consumer vulnerability. so that consumers also have freedom of dependent on income, but should be ac- term average. Many consumers in the European Union choice should be considered. However, cessible for everyone. Second, consumers are a not a mono- lost their jobs or faced a considerable re- the responsibility of platforms and sellers • Travel and passenger rights. In the lith. Some have been hit particularly hard: duction of their income. As a consequence, should remain clearly distinguishable. past, consumers have repeatedly en- solo self-employed people, single-par- consumers are facing difficulties in com- dured painful experiences with corporate ents, artists, those living in the worst-af- plying with credit / financial obligations, bankruptcies and inadequate bankruptcy fected countries or who themselves work and many find themselves in a vulnerable »Giving protection. Thus, it should be examined in services such as tourism. So generous situation and are experiencing indebted- whether and how insolvency protection support for consumers will be important to ness. This problem needs to be addressed consumers could be improved in the area of transport, keep already-rising inequality at bay. in order to share best practices and infor- especially for air carriers. Against this background, we should mation, and to find a common solution for a say and • Review of the Directive on General ask how a suitable consumer-oriented European consumers. Possible approach- Product Safety. The review of the Direc- policy framework can combine digital gov- es could include promoting inclusion, em- adequate tive on General Product Safety (2001/95/ ernance and consumer protection to make powering consumers regarding their rights EC) should be conducted with a view to consumers a top policy priority. One exam- through consumer-supporting awareness influence in the challenges brought by new technolo- ple of “good practice” could be the EU’s campaigns, and developing common tools gies and online sales to ensure the safety framework on consumer policy, commonly that improve consumer experiences. Stud- shaping digital of non-food consumer products, better en- known as the Consumer Agenda. ies by the European Commission on con- forcement and more efficient market sur- sumer vulnerability should be taken into governance veillance. FOCAL POINTS: account in the process of designing these The full list of areas identified by the RECOMMENDATIONS BY THE measures. We intend to support research will in the end Trio Presidency also includes joint research EU TRIO PRESIDENCY CAN SERVE on the differences in quality of life for con- on vulnerable consumer groups and the AS AN EXAMPLE sumers across European regions and the be conducive monitoring of consumers’ rights during the Recently, the trio presidency of the Council welfare effects of EU regional policy. COVID-19 crisis – both of which would also of the EU – the Netherlands, Slovakia and • Consumer protection on platforms. to liberal be of great value for other G20 countries. Malta – presented a joint paper, “Lessons Due to the considerable increase in Learned from the COVID-19 pandemic”. It fraudulent, misleading and legally non- democracy and EMPOWERING CONSUMERS FOR highlights important areas in which con- compliant offers in e-commerce and on A BETTER DIGITAL GOVERNANCE sumer policy requires immediate action as online sales platforms and “fake shops,” open societies.« Overall, the Consumer Agenda of the Eu- an antidote to the pandemic. such platforms should assume greater ropean Commission is a good example of The recommendations pick up on the responsibility to tackle legally non-com- • Promoting sustainable consumption. how policy frameworks should combine focal points of the Consumer Agenda pro- pliant offers. The Trio considers it there- Some consumers changed their lifestyle the benefits for consumers from digital cess in the EU. They recommendations of fore of central importance that the Digital and consumption patterns in the face of business models and the high level of pro- the three countries include: Services Act announced by the Commis- the crisis – often with environmentally tection needed to empower consumers.­

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Only this way will countries around the the focus of consumer policy should be on world manage to help consumers – and empowering consumers – above all, giv- Revisiting digital thus determine how well all of us can ing them a say and adequate influence in make it out of the crisis. In a broader shaping digital governance, which will in sense, it will thus also determine G20 citi- the end be conducive to liberal democracy governance zens’ sentiments post-pandemic – in par- and open societies. Such empowerment ticular, whether they feel that policymak- in the digital sphere will be ever more im- ers balance the interests of consumers portant as the world becomes much more and businesses. focused on digitalization and a sustainable Thus, it should be noted that consumer environment in the aftermath of COVID-19. Authors: Institutions: policy is also a matter of social cohesion With the right strategy, the “new normal” Dennis J. Snower and thus relevant to the state of civil soci- could be most beneficial to consumers – ety across the globe. On a wider horizon, and the overall economy. President, Global Solutions Initiative THE WORLD POLICY FORUM

The Global Solutions Initiative (GSI) is a global collaborative enterprise to envision, propose and evaluate policy responses to major global prob- Paul Twomey lems, addressed by the G20, through ongoing Distinguished Fellow, exchange and dialogue with the Think20 (T20) Centre for International engagement group. The GSI is a stepping stone Governance Innovation to the T20 Summits and supports various other G20 groups. The policy recommendations and Global Solutions Fellow strategic visions are generated through a dis- ciplined research program by leading research Maria Farrell organizations, elaborated in policy dialogues Senior Fellow, The between researchers, policymakers, business Minderoo Tech & Policy leaders and civil society representatives. Lab, University of Western Australia

The Centre for International Governance In- novation (CIGI) is an independent, non-partisan think tank whose peer-reviewed research and trusted analysis influence policymakers to ­innovate. Its global network of multidisciplinary researchers and strategic partnerships provide policy solutions for the digital era with one goal: to improve people’s lives everywhere. Dorn, D., Katz, L. F., Patterson, C., & Van Reenen, J. (2017). Concentrating on the Fall of the Labor Share. American Economic Review, 107(5), 180-85. De Loecker, J., Eeckhout, J., & Unger, G. (2020). The rise of market power and the macroe-conomic implications. The Quarterly Journal of Economics, 135(2), 561-644. Trio Presidency Paper (2020). Consumer protection in Europe – Lessons learned from the COVID-19-pandemic. Available at www.bmjv.de .

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Daily zoom conferences and remote nected spaces; but lacking democratic for the third-party influence sellers and access to work files, shopping online, vid- input and long term planning they often marketing interests, and without our ac- eo calls to friends and colleagues, online enough create severe problems. A princi- tive awareness. This process undermines webinars instead of face-to-face teaching: pal source of these problems is that many the COVID-19 pandemic has accelerated digital services are provided for free, or The University of Western Australia is the the use of digital solutions in both our pri- at a significantly reduced price, in return »User consent coordinating centre for Frontier Technology, an vate and our working life considerably. Yet for information about the users, which is initiative funded by the Minderoo Foundation for society at large to truly benefit from sold to advertisers and other “influence for what is to advance education on the societal impact of digitalization, the rules and regulation of sellers.” This “third-party-financed digi- new technologies and technological change, this vast and complex conglomeration of tal barter” – involving three-way transac- through providing grants and donations to lead- effectively ing universities. It seeks to drive policy reform different industries need to change. While tions between digital service providers, to ensure accountability in the tech ecosystem it is difficult and indeed pointless to ar- data subjects and influence sellers – cre- ubiquitous and protections from harm for the benefit of gue against the benefits of digital prod- ates a system that is ultimately driven by the public. ucts, the downsides and drawbacks of the influence sellers for private gain. The commercial this fast-moving and largely unregulated objectives of the influence sellers are not process are increasingly in the spotlight. well aligned with the objectives of the data surveillance Keywords: Digitalization is creating space for fake subjects. This system generates great dis- digital governance, recoupling, ­consumer data news and cyber criminality while eschew- parities of information and market power, is inadequate, rights, market efficiency, ­accountability online ing accountability and transparency, and further upsetting the alignment of objec- eroding trust in democracy. Many in the tives between influence sellers and data given power tech industry find themselves uninhib- subjects. ited by what are standards in the offline User consent for what is effectively and information economy such as fair competition rules, ubiquitous commercial surveillance is in- anti-monopoly regulation or appropri- adequate, given power and information asymmetries ate taxation. Quite the opposite, the larg- asymmetries between individuals and est multinational corporations have been dominant technology platforms. Data pro- between able to become true monopolies, creating tection as currently defined and enforced inefficiencies and a dynamic system that is unable to secure user control of data, individuals poses great challenges for government or freedom from commercial and even po- and dominant regulation. litical and social manipulation. Users are not in a position to judge the value of their technology AN UNEVEN PLAYING FIELD data, and neither do they have control over Digitalization includes a myriad of differ- who ends up using it. They have little to no platforms.« ent fields,topics and sectors, such as big control over their personal data and any data, social media, AI, automation, robot- other collective data they generate. The ics, platform economies, and a variety of consequences of this data gathering pro- democratic, social, political and economic players from industries not restricted to cess are far reaching and severe. Digital freedoms, to the point that fundamental what is traditionally considered “tech in- service providers use complex algorithms human rights cannot be guaranteed in dustry” – all of which have the potential to steer our attention and our informa- this kind of online space. All this endan- to disrupt society, culture, politics and tion intake in specific directions while gers our society and democracy, together economy. They are designed to do so, to also structuring social exchange: large- with our economic systems. Lost taxes create better, more efficient, more con- ly with the goal of increasing revenues harm the welfare state and thereby social

88 89 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 DIGITAL GOVERNANCE cohesion, manipulation of information po- when inefficiencies and stark inequalities and “second-party data” generated by a is enabled and privacy rights such as the larizes debate and endangers democratic created by the current system of regulat- second party about the data subject or in- European Union’s General Data Protection process, open debate and thereby also so- ing are addressed. ferred about the data subject from existing Regulation (GDPR) are waived by the user cial cohesion. data. This is data that does not require au- during setup; and not taking part in these A NEW CLASSIFICATION TO PUT USERS thentication by third parties and is not col- platforms or services is often not an op- IN CONTROL OF THEIR DATA lective. It may be data that is volunteered tion due to their monopoly position both in »Customer- This is a job for high level politics. Policy- by the data subjects (such as personal the office and in private, social life. Current makers are the only ones with the demo- photographs), generated by the data sub- rules on data protection are insufficient. facing websites cratic power to change the rules accord- jects (such as location data from mobile ingly to make the online world fairer, more phones), observed (such as a transaction) ELIMINATING POWER ASYMMETRIES and apps should efficient, and more competitive. These or inferred (such as psychological data de- A further step towards protecting personal changes cannot be made by individual duced from web searches). autonomy involves enforcing shared re- be responsible firms themselves and not by local civil We therefore propose the following: sponsibility. Digital service providers can society movements. It is precisely one of • Give individuals genuine control over be made responsible for who they partner for who the main assets of the digital world that it O-Data and P-Data, with easy-to-use tech- with to track or target users. Customer- “knows no borders”; this also means that nical tools and supporting institutions; facing websites and apps should be re- receives access system regulation cannot be undertaken • O-Data should be verifiable from the sponsible for who receives access to their by solitary actors, but that it requires mul- authenticating source (and is subject to users’ data – whether that access is by sale to their users’ tilateral effort. audit); or by placement of trackers and beacons The success of digitalization reform is • Second-party data can only be used on their sites. Therefore, the regulation of data – whether conditioned by how we treat data. And it is in the interests of the people it is about, data governance needs to be changed from important to distinguish between different echoing offline relationships such as doc- the top; starting with EU data protection that access is types of data: tor-patient or lawyer-client. laws, which are at this point among the • Official data (O-Data), which is “offi- • We therefore need to create legal most advanced in the world, if still insuf- by sale or by cial data” that requires authentication by structures and necessary institutional ficient. We therefore propose: third parties for the purpose of conducting support (such as education programs) for • To provide and secure digital rights placement of legally binding transactions and fulfilling the establishment of a flourishing range of of association for individuals that counter- other legal obligations in many jurisdic- “data commons” to allow people, instead balance platform power; trackers and tions. Authentication can come from the of platforms, to manage and benefit from • To provide effective legal protection beacons on state or other legally accepted sources. C-Data, both individually and collectively. for vulnerable digital users; Examples include a name, date of birth, A key issue with the current situation • To ensure (for example via the Digital their sites.« professional qualifications, land registry is that the big digital data providers are Services Act) that competition in the online deeds, or passport number, to be authenti- so very advanced in their knowledge and world is treated the same as that offline, cated by the legitimate parties. skills regarding data as well as so very with greater coherence between competi- For all these reasons, a course cor- • Collective Data (C-Data), is “collec- non-transparent with how and why they tion, consumer rights and data protection rection, if not a revolutionary structural tive data,” which data subjects agree to use it. Most users do not know which data agencies. change, in digital data governance is nec- share within a well-defined group for well- is collected about them and what happens We must consider that commercial essary. The opportunities of the digital defined collective purposes. with that data once it has been collected. and political manipulation of vulnerable revolution can continue to be beneficial to • Private Data (P-Data) may be divid- But even if users go to the effort of un- users through non-transparent, non-ac- all while negative externalities are reigned ed into “first-party data” volunteered by derstanding these things, they rarely have countable collection and usage of their in or softened. Digitalization will only be- the data subject or generated by the data alternative options. Many services do not data without their knowledge can only come truly effective and efficient for most subject and observable by other parties, function properly unless collecting all data be stopped if we change the rules of the

90 91 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 DIGITAL GOVERNANCE game ­dramatically. This would ensure ba- for tax revenues. The reason, obviously, party financial barters in which it is often consistent with the GDPR. Progress on this sic human rights and weaken the attacks is that the free market system works not clearly stated who gains what from the front could put the EU at the vanguard of a on democracy through such measures as through price signals, which digital barter transaction, and tax points would be easier new digital age in which online and offline fake news and unaccountable online hate has eliminated. to set. The new regime will not happen by policy becomes harmonized and the grow- speech we have witnessed in recent years. itself. For the new regime to become suc- ing problems of the current digital regime Pandemics are another very current ex- cessful, it needs broad adoption. For broad are overcome. ample of how a new data governance re- »Only with adoption in the EU, it must become a le- gime would benefit the common good. Only gal requirement. The new digital regime For more information visit: those who can trust that their data will be expansive could play a central role in the creation www.global-solutions-initiative.org/policy- used for the intended purpose alone and of a European digital single market and is advice/revisiting-digital-governance not be sold on are willing to share data to and paradigm track and trace the spread of a virus such as COVID-19. changing Apart from distorting democratic and social norms, this is an issue concerning actions can the fundamental rights and laws in our economic systems. Two necessary (but digitalization not sufficient) conditions for a market system to function in the interests of its become a real participants are that (i) the participants have control over the goods they sell and success story gain control over the goods they buy and (ii) the participants have the opportunity to and lead to engage in voluntary exchange, by trading goods at prices that they have agreed on. societal as well Neither is guaranteed in the digital world as we speak. Furthermore, economic as economic decision-making rests on the percep- tions, beliefs and preferences of market progress.« participants. Each of these determinants is in the hands of the digital service pro- REVISITING DATA GOVERNANCE FOR viders through the flow of digital informa- THE RECOUPLING OF WELL-BEING tion that they manage in the interests of Only with expansive and paradigm-chang- third-party funders. Manipulation is only ing actions can digitalization become a real possible because a market actor, in this success story and lead to societal as well case a data broker, has intimate knowl- as economic progress, rather than leading edge of what makes a target’s decision- to the exclusive gain for a few very large making vulnerable. By encouraging “third digital service providers. States and soci- party-financed digital barter,” the current eties would very directly profit financially regime further undermines the workings from new regulation and redistribution of of the free market system, together with data access: the problem of profit shifting Snower, D., Twomey, P. and Farrell, M. (2020) "Revisiting Digital Governance", Social Macroeconomics Working Paper Series: SM-WP-2020-003. Retrieved from https://www.bsg.ox.ac.uk/sites/default/files/2020-10/SM- the governments that rely on this system is further enabled by non-transparent third WP-2020-003%20Revisiting%20digital%20governance_0.pdf

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INTRODUCTION This article looks at services trade in par- Digital services Digital trade is on the rise, but it is not yet ticular because it is the cross-border data well understood and remains largely un- exchange connected with services trade regulated. Trade is typically considered to that leads to important geopolitical chal- and data flows in be digital when part of the transaction is lenges to be addressed in multilateral fo- conducted electronically, for example buy- rums. ing goods online or consuming a digital The General Agreement on Trade in global trade service (e.g. López González & Jouanjean, Services (GATS) distinguishes between 2017). One key difference of digital trade, four modes of supply for services: compared to traditional trade in goods and • Mode 1: services supplied from one services, is that it involves cross-border country to another (e.g. video conferences); data flows (Aaronson & Leblond, 2018). • Mode 2: consumers or firms making Authors: While simple data exchanges for facilitat- use of a service in another country (e.g. ing the shipment of a good are unprob- tourism); Dennis Görlich lematic, data policies of trading partners • Mode 3: a foreign company setting up Senior Researcher, Kiel and their countries become a central is- a subsidiary or branch to supply a service Institute for the World Bruegel is an independent European think sue when the cross-border data exchange in another country (e.g. a bank with a for- Economy tank that specializes in economics. Its mission involves personal data, business data or eign branch); Research Coordinator, Figure 1 is to improve the quality of economic policy intellectual property. In order to tap the • Mode 4: individuals travelling from Global Solutions Initiative Growth in exports, 2005-2019, in % with open and fact-based research, analysis full potential of digital trade for growth, their own country to supply services in and debate. Bruegel’s membership includes productivity and welfare, regulatoryGoods exports adServices- exportsanother country (e.g. consultants working Niclas Frederic Poitiers EU Member State governments, international EU28 84,6 112,8 corporations and institutions. justments at the global level are required. with clients abroad). Research Fellow, Bruegel USA 81,0 131,4 CHN 248,2 189,8 IND 223,6 310,4 Keywords: digital trade, services trade, cross-border Figure 1: GrowthSource: in exports OECD of (2019a) goods – andBalance services, of Payments 2005-2019, BPM6 in % data flows, digital governance, geopolitics

Institutions:

The Kiel Institute for the World Economy is an international center for research in global economic affairs, economic policy ­consulting, and economic education. The Institute engages especially in creating solutions to urgent problems in global economic affairs. Goods exports Services exports It advises decision makers in policy, business, and society and informs the broader public about important developments in international Source: OECD, . economic policy.

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Services trade, except Mode 3 trade, is Overall, manufacturing trade is still The EU’s domestic value-added share of physically deliverable services before the reported in the Balance of Payments sta- much larger than services trade in terms services is larger than in all other major pandemic. tistics. As shown in Figure 1, which looks of scale. Yet, services are also an essen- economies, amounting to roughly 27%, and The COVID-19 pandemic has prob- at major the trading partners, the EU, the tial element in global value chains (GVCs) about half of the embedded services can ably reinforced this development. While US, China and India, services exports in- of manufactured goods, starting with R&D, be characterized as digitally deliverable travel, tourism, cultural and recreation creased more strongly than goods exports consulting and market analyses in the up- services (see Figure 3). The integration services have contracted strongly due to during the past 15 years, except in China. stream sections of GVCs, and ending with into global service value chains is impor- lockdowns and travel restrictions, some This trend is confirmed by Figure 2, which customer service and repair services in tant for Europe’s industries. digital services such as videoconferencing depicts the share of services in total ex- the downstream sections. For many manu- It is difficult to measure how many and media streaming have expanded. This ports. While the world average share only factured goods the embodied services are services are actually delivered digitally is also true for digitally enabled trade (e- increased slightly between 1979 and 2017, central to product differentiation. Cernat because the transaction data do not pass commerce): production in the retail sector services exports became very important and Sousa (2015) estimated that manufac- by a customs agent. However, it is possible declined steeply during lockdowns while in the UK, India and the US. In Germany, turing is responsible for around 60% of all to look at how many services are traded e-commerce and delivery increased. We which has a large industrial base dominat- EU jobs that are linked to exports. Of all that can potentially be delivered digitally suspect that for some services the mode of ing its exports, the share of services re- those jobs supported by manufacturing ex- (see UNCTAD, 2015, for details on this delivery has changed during the pandem- mained almost constant. ports, 40% are in fact service-sector jobs. classification).Figure As 3 Figure 3 shows, EU-28 ic: for example, consulting services are no exports andShare imports of value-added of digitally of domestc deliver (digitally-deliverable)- longer supplied services with embedded physical inpresence manufacturing un- exports, 2015, in % able services were already growing at a der Mode 4 (individuals travelling to supply significantly stronger Digitalrate thanservices Allthose services of a service) but by video link under Mode 1 IND 4,6 16,7 FigureShare 2: Share of services of services in total in total exports, exports, 1979 1979-2017, to 2017 in % Services refer to economic output of intangible commodities that may be produced, transferred, and consumed at CHN 9,8 23,0 the same time. The share of services in total exports comes from comparing trade in goods and services at current USA 12,5 24,3 US dollars. EU28 12,9 27,2 United Kingdom Figure 3: Share of value-added of domestic (digitally deliverable) services Source: OECD (2020) – Trade in Value Added, Principal indicators & origin of value added in gross exports; own calculatons; classifcaton of digitally-deliverable services based on UNCTAD (2015) and Wetstein et al. (2019). 40% embedded in manufacturing exports, 2015, in % India

United States 30%

World 20% Germany

10% China

0% Digital services All services 1979 1985 1990 1995 2000 2005 2010 2017 Source: CC BY Source: OECD (2020) – Trade in value added, principal indicators & origin Source: Ortiz-Ospina, E. & D. Beltekian (2018). Trade and Globalization. of value added in gross exports; own calculations; classification of digitally Our World in Data, https://ourworldindata.org/trade-and-globalization. deliverable services based on UNCTAD (2015) and Wettstein et al. (2019).

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(service supplied from abroad). In other to market her services in a foreign coun- national trade in digital services. The major not negotiate data protection and privacy words, many services that could poten- try, she might be prevented from doing so economic blocs Europe, the United States issues in trade agreements but relies on tially be delivered digitally but were often by laws requiring the storage of customer and China follow different and incompat- unilateral adequacy decisions. It has cur- still delivered physically, have witnessed a data in a customers’ country of residence. ible paradigms regarding data protection rently established eight adequacy deci- digitalization boost during the pandemic. Trade can also be restricted by residence and privacy. They also differ strongly in sions with relatively small countries2 so While the economic potential ex- or licensing requirements: the profession- market openness for digital services. In that data can be exchanged between these emplified by this digitalization boost is al might be required to be resident in the the following, we look at the EU, the US countries as within the European Union. presumably positive for productivity, it country of her customers or hold country- and China and describe differences in data Outside of countries with adequacy deci- also highlights the challenges for global specific certifications and licenses to carry privacy and trade openness. sions, standard contractual clauses are a governance and regulation arising from out a service. Hence, for the potential of possibility to allow the transfer of private cross-border data transfer in transactions. digital trade to flourish, the regulations data abroad, however these are reliant Digital services trade can be impeded by need to be compatible across countries. »Digital on ensuring GDPR compliance abroad (cf. regulatory hurdles regarding the digital Marcus, 2020). delivery of the services and restrictions on INCOMPATIBLE INTERNATIONAL services trade With regard to market openness for the trade in services itself. Delivery can, REGIMES digital services, the EU is among the most for example,Figure be restricted 5 by data localiza- The regulatory environment is currently open economies, according to the OECD’s Growth in services trade by delivery type, 2010-2018, in % potentially tion requirements: if a professional wants fractured internationally, inhibiting inter- Digital Services Trade Restrictiveness In- Exports Imports offers an dex (Digital STRI), which measures trade Digital delivery 68,8 67,6 restrictions such as data localization re- Physical delivery 46,4 43,1 opportunity quirements. According to the OECD’s Ser- Figure 4: Growth in services trade by mode of delivery, EU-28, 2010-2018, in % vices Trade Restrictiveness Heterogeneity Source: OECD (2019b) - Trade in services - EBOPS 2010, trade in services by partner economy; classifcaton of digitally-deliverable services based on UNCTAD (2015). for developing Index, the EU’s regulation of digital ser- vices is relatively similar to Japan or South countries to Korea, and relatively dissimilar to China participate in and currently also India. United States global value The US paradigm is characterized by a laissez-faire approach and primarily con- chains.« cerned with supporting economic growth and maintaining technological leadership. Hence, it is accommodative of the United European Union States’ very competitive digital industry. While the EU generally supports a free The free flow of data and market access Digital delivery Physical delivery internet and the free flow of data, it puts for US companies are important goals for a strong emphasis on protecting the per- US trade agreements, whereas data pro- Source: OECD (2019b) - Trade in services - EBOPS 2010, trade in services sonal rights of users. In fact, the EU has tection is only a secondary consideration. by partner economy; classification of digitally-deliverable services based on declared the protection of privacy a human Recent restrictions of companies’ usage of UNCTAD (2015). The following services are classified as digitally deliverable: 1 insurance and pension services; financial services; charges for the use of in- right, and having established the General data in California are an exception. Europe tellectual property; telecommunications, computer and information services; Data Protection Regulation (GDPR), it does and the US have twice tried to establish other business services; and audio-visual and related services. not trade off data privacy against com- a framework that would have facilitated mercial interests. Therefore, the EU does transfers of personal data equivalent to an

98 99 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 DIGITAL GOVERNANCE adequacy decision for self-certified com- Other countries are fought out (e.g. the US ban of Huawei seem unresolvable. Notably, some compat- panies, but both attempts were invalidated Some governments try to replicate China’s products and services, Indian ban of Chi- ible approaches are also emerging: Japan, by the EU Court of Justice for not providing approach to digital trade and the internet. nese apps). The incompatibility of digital South Korea, India and the EU seem to be legal protection for EU citizens. Russia and Turkey, for example, have im- regimes, with regard to privacy or trade like-minded countries when it comes to With regard to trade openness, the US plemented data localization requirements openness, increases the risk that the free data privacy and openness. And recent de- is even more open for services than the and limit the usage of data encryption. internet, and therefore the basis for digital velopments of privacy legislation in Califor- EU, according to the Digital STRI. It has India, on the other hand, has established trade, could become fragmented into na- nia show that there may be a shift of the US fewer restrictions such as localization or data privacy as a fundamental right and tional spheres. This not only undermines position on privacy regulation. Yet, it would licensing requirements. However, accord- might seek an EU adequacy decision.3, 4 At the economic potential of digital services be a mistake to expect full convergence ing to the STR Heterogeneity Index, the the same time, India has banned Chinese trade, but it also harms other countries, with European standards, and convergence US is less similar to many countries than software applications from its market, al- especially developing countries, which may is entirely unlikely with countries like China the EU is, in particular to countries with legedly because of concerns over privacy benefit enormously from a conducive glob- and Russia. Safeguarding citizens’ rights high levels of privacy protection. Moreover, infringements of Indian citizens. al environment for digital services trade. requires regulators to limit the free flow of the US is also almost completely open for Digital services trade potentially offers private data while enabling the flow of busi- Mode 1 services trade (services supplied an opportunity for developing countries ness and public data. This requires, among from one country to another), except in fi- »All countries to participate in global value chains. The other things, a clear-cut distinction of data nancial services. countries would benefit from a global level types (Snower et al., 2020). will have to playing field with regard to digital services. China They would also benefit from intensified CONCLUSION The Chinese internet has been largely sep- weigh the international initiatives to ensure internet Negotiations at the global level are re- arated from the global internet and many availability and access, combined with civil quired to make progress on digital govern- non-Chinese websites and platforms are benefits of a society efforts to ensure the freedom of in- ance and tap the potential of digital ser- unavailable for Chinese users. In addition, formation. vices trade for growth and development. the State Security Law of 1993 allows the free flow of As much as market openness and the Yet, national interests feature strongly in government to gain access to data collect- free flow of data, leading to larger markets, digital governance and overarching geo- ed by private enterprises. The closed na- data against is helpful for the development and growth political conflicts complicate debates. The ture of the Chinese digital sphere allowed of the digital services industry, it remains WTO would be a natural place to lead these the Chinese internet to develop largely un- the costs of crucial to maintain high standards on data discussions, but given state of interna- affected by international competition. Yet, privacy. All countries will have to weigh the tional relations, a multilateral agreement the disconnect from the global internet civil liberties, benefits of a free flow of data against the at the WTO level is unlikely to be reached also makes it difficult for Chinese digital costs of civil liberties; with different politi- in the near term. The Japanese G20 Presi- services companies to supply the global with different cal outcomes. dency initiated discussions on “data free market. A look at the three blocs – the EU, the flow with trust,” resulting in the so-called According to the Digital STRI, China is political US and China – depicts the fault lines. While Osaka track. Italy’s G20 Presidency should by far the most restrictive country among the differences with regard to privacy pro- continue the debate and facilitate an agen- the G20 when it comes to market open- outcomes.« tection and openness between Europe and da to help dissolve incompatibilities among ness. One reason for this is the require- the US are large, the differences to China approaches to digital trade. ment that firms active on the Chinese GEOPOLITICAL IMPLICATIONS market store data locally in China. Chinese Global digital governance is a field in which regulations differ significantly from most national interests feature prominently G20 countries; they are most similar to and which often seems to be a battle- Saudi Arabia and Indonesia. ground where other geopolitical conflicts

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1 Charter of Fundamental Rights of the European Union, Art. 8. 2 Japan as a large economy is an exception. 3 See https://www.cfr.org/blog/implications-indias-right-privacy-decision. 4 Reported by The Economic Times on 30 June 2019; see https://economictimes.indiatimes.com/tech/internet/ govt-to-ping-eu-to-align-its-data-law-with-gdpr/articleshow/70442538.cms.

Aaronson, S.A. and P. Leblond, 2018, “Another : The Rise of Data Realms and its Implications for the WTO,” Journal of International Economic Law (21), 245–272, doi: 10.1093/jiel/jgy019. Cernat, L. and N. Sousa, 2016, “The Trade and Jobs Nexus in Europe: How Important Are Mode 5 Services Exports?,” CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(04), pages 65-67, January. López González, J. and M. Jouanjean (2017). Digital Trade: Developing a Framework for Analysis, OECD Trade Policy Papers, No. 205, Paris: OECD. http://dx.doi.org/10.1787/524c8c83-en Marcus, J. S., 2020, “New challenges to transfers of personal data from the EU to the United States,” Bruegel Blog Post, July 2020, https://www.bruegel.org/2020/07/new-challenges-to-transfers-of-personal-data-from- the-eu-to-the-united-states/ OECD, 2020, “Trade in value added,” OECD Statistics on Trade in Value Added (database), https://doi.org/10.1787/ data-00648-en (accessed on 11 September 2020). Snower, D., P. Twomey and M. Farrell (2020). Revisiting digital governance. Social Macroeconomics Working Paper SM-WP-2020-03. Oxford: University of Oxford. https://www.bsg.ox.ac.uk/sites/default/files/2020-10/ SM-WP-2020-003%20Revisiting%20digital%20governance.pdf UNCTAD, 2015, “ in ICT Services and ICT-enabled Services. Proposed Indicators from the Partnership on Measuring ICT for Development.” Technical Note, No. 3, October 2015. Wettstein, S., A. Liberatore, J. Magdeleine, and A. Maurer, 2019, “A Global Trade in Services Data Set by Sector and by Mode of Supply (TISMOS),” WTO Methodological Note, https://www.wto.org/english/res_e/statis_e/ daily_update_e/Tismos_methodology.pdf

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Page 110 Reset, recovery, and resilience alone? Elisabeth Bollrich, Jochen Steinhilber Friedrich-Ebert-Stiftung

Page 117 Cities and the future The new of growth Nicolas J.A. Buchoud Grand Paris Alliance normal Hazem Galal PwC Katharina Lima de Miranda Kiel Institute for the World Economy Luca Trifone Municipality of Rome

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Page 129 Principle of duality Page 143 Towards a new for the new normal paradigm for sustainable Jörg Buck German-Italian Chamber infrastructure of Commerce Manuel Holtmann GIZ Page 136 A proposal for a global universal Page 150 A new architecture basic income for global governance Gianluca Grimalda Arun Maira Kiel Institute for the World HelpAge International Economy Fernando Filgueira Page 158 Bridging the gender Universidad de la gap in leadership: República A strategic approach Marc Fleurbaey Paris School of Economics Jouharah Mouhammed Abalkhail Rubén Lo Vuolo Institute of Public Interdisciplinary Centre for Administration the Study of Public Policy

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Page 167 Jobs, growth and Page 189 Citizens want more sustainability multilateralism Shuva Raha Richard Wike, CEEW Jacob Poushter Pew Research Center Page 174 The role of foundations during a pandemic Page 198 Revisiting the public debt stability condition Cornelia Soetbeer German Federal Naoyuki Yoshino Environmental Foundation Keio University (DBU) Hiroaki Miyamoto Tokyo Metropolitan Page 181 Building resilience University against future crises Ursula Stiegler, Madita Weise GIZ

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The COVID-19 crisis is a crisis like no oth- of sustainable political alternatives. Our Reset, recovery, er, one with serious social consequences: thinking is dominated by the (impending) According to initial estimates, global pov- crises rather than by the idea of a better erty is due to rise again for the first time in future. However, now would be the right and resilience alone? 30 years and push an additional 88 to 115 time to leave the usual political pathways million people into extreme poverty (World and address systemic risks of global de- Bank). Food security is at risk in many velopment, and to bring about transforma- countries. In the most vulnerable socie- tion leading to sustainable economies and ties, COVID-19 is acting like a fire acceler- societies. Authors: Institution: ant for crises and conflicts. In acute crises, the political pressure to act becomes extreme. The quite far- Elisabeth Bollrich reaching measures taken are a reflection Coordinator Dialogue of the possibilities of the existing system. on Globalisation, Global »Now would be The status quo ante is supposed to be the Policy and Development Department, Friedrich- the right time guarantor of a safe existence. By contrast, Ebert-Stiftung Friedrich-Ebert-Stiftung (FES) is the oldest in seemingly “uneventful” crises whose ef- political foundation in Germany with a rich to leave the fects are not yet acutely felt by everyone ¬ tradition in social democracy that dates back although, like ecological crises, they al- Jochen Steinhilber to its founding in 1925. Its work is devoted to ready have massive consequences¬ there the core values of social democracy – freedom, usual political Head of the Department is a corresponding lack of pressure to Global Policy and equality, justice, and solidarity – pioneering change course. Development, Friedrich- for free and strong trade unions, in particular. pathways Ebert-Stiftung This also forms the basis of its programmes It almost seems as if in recent years for international cooperation, as well as and address we have become accustomed to crises. scholarship programmes, and political educa- The increasing prominence of the notion tion. FES maintains offices in more than 100 systemic of “resilience” is an indication of this. The countries in Africa, the Middle East, Asia, Latin aim of promoting resilience is not so much America, Europe and North America. risks of global to change the fundamental structures that trigger crises as to find ways to live with development.« crises by developing the corresponding capabilities. The central message is that in the Anthropocene our most important Keywords: BECOMING ACCUSTOMED TO CRISES: task is to cope with the self-inflicted chaos public services, resilience, inequality, austerity, THE NEW NORMAL? around us. Crises are the “new normal” social-ecological transformation And yet the pandemic is only the most re- and resilience is the skill required to cope cent (and certainly not the last) in an al- with them. Given that more and more peo- ready long series of crises. Economic and ple are affected by acute crises and dis- financial crises, ecological crises, health asters, there are certainly good reasons crises, social crises and “peace crises” are to take the question of adaptation more overlapping and reinforcing each other, seriously. The pragmatism of notions of with the result that we find ourselves in resilience also takes feelings and phe- a permanent crisis mode in which there nomena of crisis seriously by focusing on is hardly any room left to think in terms capacities and resources for dealing with

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­problems. But resilience is a program born on essential health services cannot be ad- Ironically, the World Bank ranks countries treaties and conventions on human rights of necessity. In preparing ourselves for the dressed in isolation from biodiversity loss, better whose social security expenditures and environmental and sustainability, need state of emergency, we fail to remedy the the destruction of natural habitats and are low.3 International research tells a dif- to be taken seriously. causes of the crisis. ecosystem degradation. The UN’s Sus- ferent story: Large-scale social protection In contrast to the 2030 Agenda for Sus- tainable Development Goals (SDGs) do in builds resilience. This shows that the data tainable Development, resilience has an fact take account of such multiple, cross- we use to measure progress and monitor »Resilience is a undertone of conservatism. It demands cutting issues. However, the Least Devel- implementation of the SDGs is contested little and does not offer any solution. oped Countries are facing the prospect of and cannot be separated from political program born Moreover, it is mainly focused on reinforc- a “lost decade” with no hope of delivering considerations.4 ing the capacity of individuals to withstand the 2030 Agenda. The Agenda’s “Decade of However, this also represents an op- of necessity. adversity, something that would require Action” was launched at a time of crisis. portunity. As Stephanie Kelton makes fundamental economic and social change. So the OECD recommends that eco- clear: “I don’t think we can go back to how In preparing Although resilience accords central impor- nomic recovery packages should be de- it was before COVID-19. The fallout has tance to learning how to deal with crises, it signed to “build back better.” The UN’s slo- already been too great. The pieces are al- ourselves for ultimately does so within the existing sys- gan “Building Back Better” is ubiquitous. It ready falling on the ground. … [T]he other tem. And finally, resilience is not a neutral was prominently used for the first time in option is to assemble the pieces in a differ- the state of concept. If we examine concrete social the Sendai Framework in 2015. A decade ent and smarter way.”5 What we see – and contexts, we see that power and interests earlier, it was the tsunami relief effort that what the 2020 Annual Meetings of the IMF emergency, we play a major role and that resilience must had called for a “new kind of recovery that and the World Bank illustrated – is that face normative questions: Whose crisis not only restores what existed previously, civil society and specialized UN agencies fail to remedy resistance is the focus of concern and but … set[s] communities on a better and such as UNCTAD are pushing for green and why? Does the increased resilience of one safer development path.”1 The slogan typi- human rights-centered, anticolonial and the causes of group lead to the greater vulnerability of cally referred to disaster relief efforts, as feminist recoveries that truly avoid aus- the other? And do we want to make certain if disasters were isolated events; yet inter- terity and ambitiously promote the public the crisis.« systems, such as authoritarian structures, linked and concurrent crises aggravate the interest. fossil industries or socially and ecological- likelihood and impact of future disasters. COVID-19 accentuates the need for ly damaging supply chains, more resilient The World Economic Forum started democratic global action and solidarity in INEQUALITY in the first place? its Great Reset initiative, which under- order to achieve the SDGs through COV- The most pressing of the global chal- lines the need not only to restore the way ID-19 responses; boost essential health lenges prior to COVID-19, and at the same WHAT SHOULD BE PRIORITIZED IN things were, but also to address systemic supplies, including vaccines; protect sup- time the most important economic impact RECOVERY PROGRAMS vulnerabilities. It states that we will have ply chains, especially for food and medi- of the pandemic, is inequality. Before the As in the aftermath of the financial crisis of to reinvent capitalism, but solutions pre- cines; establish universal social protec- pandemic, the contrast between extreme 2008, when the discredited structures and sented still stress the importance of the tion, especially by supporting the Global concentrations of wealth and power and interests of global financial markets cel- connection between the private and pub- Fund for Social Protection; and provide ad- ever-growing world- ebrated a “strange triumph of failed ideas” lic sectors; multi-stakeholder initiatives equate development finance, including re- wide, shrinking public services, disem- (Paul Krugman), transformative approach- are supposed to operationalize multilat- sources for the global International Finan- powered minorities and declining security es are again in danger. But the crises we eral solidarity. What is missing is a clear cial Institutions and development banks. for women had become the new normal. need to manage are not only complicated commitment to a human rights-centered Solidarity must start with a commitment Inequality is reinforced by rules of the but also highly complex. In the face of this economy and a policy agenda to tackle to fulfilling all rights for all. This will not global economy. Political choices allowed complexity, we must consciously design economic inequality.2 be achieved without effective governments this situation to become the new normal. new forms of intervention. For example, Solutions offered by the World Bank and a strong public sector.6 Not least, Already today, the high levels of inequal- the devastating impact of the pandemic and the IMF imagine a “resilient recovery.” global standards and benchmarks, such as ity are perceived by many as ­unacceptable

112 113 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL and unjust and as a violation of the “moral only if, in addition to socially oriented (and ity economy. On the other hand, we have lateral reflexes, beggar-thy-neighbor poli- economy” (Edward Thompson). The pan- above all socially financed), crisis-related good reason to be sceptical about who will cies, the renaissance of great power poli- demic is not the great leveler any more economic stimulus programs, key ele- benefit from a “digital dividend,” because tics and self-declared exemptions from than globalization is. The effects of COV- ments of the global economy are revised. the enormous surge in technology over global rules. ID-19 are being felt especially by the most This includes an active global tax policy the past three decades has been accom- As ad hoc measures, efforts to defend vulnerable: people living in poverty, women that combats illicit financial flows, drains panied by an increase in extreme inequal- and, where possible, strengthen existing and children, the working poor, marginal- tax havens, increases corporate transpar- ity. Implementing decent work worldwide multilateral structures will remain impor- ized groups such as migrants and ethnic ency obligations, establishes a register of means, among other things, establishing tant, because international cooperation minorities – i.e. population groups who assets, sets global minimum taxes and en- binding due diligence obligations for com- offers the only prospect of containing the have poorer access than others to health- sures that developing countries also play panies along the supply chain, strengthen- spread of COVID-19. In the medium term, care and basic social services. a role in international tax policy within the ing the activity and rights of trade unions, multilateralism has reached a fork in the The worldwide lockdowns had a ma- framework of a UN tax body. Moreover, introducing basic social protection and liv- road in its 75th year of existence. Will we jor impact on workers, but not on wealth. it calls for a global state insolvency pro- ing wages, implementing the ILO core la- manage to connect up with the multilater- This is why, as Nouriel Roubini notes, we cedure that formulates and implements bor standards, and regulating labor in safe al milestones that were also achieved un- are experiencing a “K-shaped recovery, debt relief options for particularly vulner- and responsible ways. der difficult conditions, such as the Paris characterized by a widening gap between able groups of countries and includes the Agreement, the 2030 Agenda and the Glob- Wall Street (representing big firms, big various groups of creditors, and it calls for al Compact for Migration, and strengthen banks and Big Tech) and Main Street (rep- the restructuring of the financial markets, »Interlinked the foundations of democratic multilateral resenting workers, households and small for example through stricter regulation of action? Or will the pandemic accelerate businesses). … That is a recipe for social shadow banks and a functioning separa- and concurrent the fragmentation and the weakening of and political unrest.”7 Especially when the tion of investment and commercial bank- multilateral action? idea of austerity returns. A recent report ing. Finally, it requires a comprehensive crises by Isabel Ortiz and Matthew Cummins and efficient public service and a trade FUNDAMENTAL CHANGES OF tracks how developing countries in 2010 policy with social and ecological standards aggravate the PUBLIC POLICY AND HOW THE GLOBAL moved from fiscal stimulus in response to backed up by sanctions in all trade and in- ECONOMY OPERATES the global financial crisis to an institution- vestment partnerships. likelihood and The need to respond quickly to emerging alization of austerity as “the new normal.”8 social and economic upheavals is uncon- What the pandemic has shown is that DECENT WORK WORLDWIDE impact of future troversial. But only driving by sight is not typical austerity measures, such as social Strengthening decent work worldwide will enough. The policy of crisis resilience must security reforms, increasing regressive be one of the core tasks in the light of the disasters.« be embedded in recognizable alternatives consumption taxes, and privatizing public consequences of the pandemic. Decent in order to show the exhausted societies assets, left countries with hollowed-out work secures livelihoods, reduces ine- that the crisis mode represents an op- welfare states that had too few resources quality, promotes gender equality, enables INSTITUTIONAL WEAKNESS portunity for change. In a narrower sense, to respond adequately to the crisis. participation and communicates the feel- (Almost) all countries are affected by COV- this means that through targeted adapta- Many countries are on the threshold of ing that one is appreciated. At the same ID-19, but not all are affected equally, and tion concepts we can gain time to shape a new debt crisis or have already crossed time, globalization and the digitalization not all are able to respond equally well. the transition and change to economic it. Rising expenditures on healthcare, of economies will continue to transform For the developing countries, the level of and social forms that address the causes along with falling revenues and massive labor markets and the character of work international cooperation will determine of the crises. Taking resilience seriously, outflows of capital from developing and throughout the world in the coming years. how they cope with the economic reper- in the broader sense of maintaining vital emerging economies, will exacerbate the This creates opportunities for quality jobs, cussions of the crisis. However, the im- systems for human beings, also in many situation dramatically. Therefore, a sus- greater time autonomy and new forms of mediate responses to the pandemic were cases requires questioning, reforming and tainable reduction in inequality is possible employment within a social and solidar- shaped by country-first strategies and uni- controlling established orders, such as the

114 115 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL international financial markets, or power steam, because the interval between ad- structures. Otherwise, resilient socie- aptation and crisis aggravation is becom- Cities and the future ties and individuals will quickly run out of ing shorter and shorter. of growth

Towards an economy of well-being?

Authors: Institutions:

Nicolas J.A. Buchoud President, Grand Paris Alliance

Global Solutions Fellow The Grand Paris Alliance for ­Metropolitan De- velopment (Cercle Grand Paris de l’Investisse­ ment Durable) is an awarded and independent Hazem Galal think tank established in 2011. It focuses on Global Leader, Cities infrastructure finance, innovation and inclusion, and Local Government and the territorialization of the SDGs through Network, PwC cooperation with public and private, scientific, civic and multilateral organizations across the globe. [email protected]

Katharina Lima de Miranda Researcher, Kiel Institute for the World Economy

The Global Lead of PwC’s Cities and ­Local Luca Trifone Government Network includes strategy Diplomatic Advisor 1 Key Propositions for Building Back Better: A Report by the United Nations Secretary-General’s Special Envoy formula­tion and implementation for cities and for Tsunami Recovery, William J. Clinton https://www.preventionweb.net/files/2054_VL108301.pdf to the Mayor of Rome local government entities, the definition of long 2 Global Civil Society Report on the 2030 Agenda and the SDGs 2020: https://www.2030spotlight.org/en term and complex project development in both 3 https://www.ipsnews.net/2020/09/time-end-controversial-world-banks-business-report/ developed and developing market conditions, in 4 Global Policy Special Issue: Knowledge and Politics in Setting and Measuring SDGs. https://www. the Middle East, Latin America, Asia, the United globalpolicyjournal.com/journal-issue/special-issue-knowledge-and-politics-setting-and-measuring-sdgs States and Europe, and work with major global 5 https://news.sky.com/story/after-the-pandemic-why-coronavirus-new-normal-could-help-us-repair- networks and organizations, including the G20, economic-inequalities-in-society-11998794 along with expertise on data, competitiveness, 6 Barbara Adams, 2020: Re-inventing multilateral solidarity: rhetoric, reaction or realignment of power? smart cities and sustainability. 7 Interview with Project Syndicate, reprint: https://tbsnews.net/world/global-economy/whats-next-global- economy-143626 8 http://policydialogue.org/files/publications/papers/Austerity-the-New-Normal-Ortiz-Cummins-6-Oct-2019.pdf

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“As the global population presses towards global growth, with a projected decline of treme poverty alleviation around the globe 9.7 billion by 2050 and expands into wild -4.4% in 2020. The latest prediction from (World Bank, 2020 (1)).1 Careful analysis frontiers, as agriculture becomes more the IMF shows that recovery is expected even shows that global poverty reduction intensive, as cities of greater density and to be “slow and fragile” and many global had started to slow significantly by 2015, The Kiel Institute for the World Economy is scale proliferate, and as the earth grows experts are debating if the recovery will be echoing research underscoring that the an international center for research in global hotter, the threat of new emerging infec- “V”,”W”,“L” or “K” shaped. This coincides COVID-19 pandemic had caught off-guard economic affairs, economic policy ­consulting, tious diseases rises steeply. Outbreaks with record high levels of public and cor- a planet with many combined, prevailing and economic education. The Institute proliferate that can spread swiftly across porate debt, carrying the risk that once the socio-economic and environmental fragili- engages especially in creating solutions to the globe and become pandemics, disrupt- current pandemic-related economic crisis ties. While there is no clear evidence of the urgent problems in global economic affairs. It advises decision makers in policy, business, ing supply chains, trade, transport, and ul- is over, this highly indebted corporate sec- political correlates of COVID-19 mortality and society and informs the broader public timately entire societies and economies.” tor will endanger the stability of the inter- (Bosancianu et al., 2020), there are very about important developments in international Center for Strategic and International national financial system (Snower, 2020), clear indications that “a large share of the economic policy. Studies (CSIS, November 2019) even overshadowing the need to strength- new poor will be urban” regardless of na- When he introduced the OECD report en social infrastructure. tional political regimes (World Bank, 2020 on the Economy of Well-Being back in July (2)). The COVID-19 crisis is not only affect- 2019, United Nations Secretary General ing the global system or countries. It is af- Angel Guria was probably far from imag- »Economic, fecting the global economy through cities The Diplomatic Advisor of the Mayor of Rome ining the massive blow that the COVID-19 and within cities.2 Some areas, some com- is the supervisor of all international activities crisis would inflict on the designated pil- fiscal, social munities, some social groups, have been of the Municipality of Rome. This includes the lars of this new economy, on health, social hit disproportionately harder than others. representation of Rome in international activi- protection and redistribution, on education Although most feedback is still largely em- ties and in international fora of cities and local and health and skills and gender equality. If their res- pirical, communities that largely depend governments, including the Urban 20 engage- ment group within the G20, and supporting toration is urgent, global solutions alone impacts vary on self-welfare are far more exposed to the the Municipality of Rome in its international will not work, as the crisis is very asym- pandemic. Even if they are more creative exposure with respect to Embassies present metrical, with cities at its epicenter. It is significantly in finding solutions, community resilience in Rome, especially in cultural activities, and also deep, with many warnings neglected. remains largely ignored by national or ­relations with the Ministry of Foreign Affairs. As the G20 Italian Presidency is putting not just between global crisis responses. Economic, fiscal, social issues and inclusiveness among social and health impacts vary significantly its priorities to foster long-term reforms, regions, but not just between regions, but between lo- Keywords: tackling the pre-crisis and the new in- cal areas, boroughs and neighborhoods, well-being, disruptions, pandemic, crisis, cities, equalities will require an unconventional between with more severe consequences for in- welfare, infrastructure, G20 combination of research and action and formal economic sectors (Bhan, Smits et substantial leadership. local areas, al., 2020) and on key social activities. As such patterns are repeated locally across HOW WE HAVE LOCKED-IN boroughs and the globe, the urban socio-economic con- THE COVID-19 CRISIS IN sequences of the pandemic have to be ad- OUR CITIES neighborhoods.« dressed globally, otherwise the financial As over 55 million people have been in- deficits of the post COVID-19 crisis will re- fected by COVID-19 across the globe, and There might be even more to it as the doubled by even deeper social losses.3 over 1.3 million registered dead (WHO, current downturn in global prosperity is The impacts and the mismanagement 2020 (1)), the global macro-economic not just conjunctural. Instead, it appears to of the COVID-19 crisis illustrate how little­ data from fall 2020 confirm the reversal of mark the end of nearly thirty years of ex- the multilateral system during the past

118 119 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL two decades has organized its institutions and demographic computerized simula- fragmented major natural habitats, with comparison, investments in preparedness to take into account the complexity of ur- tions were that of a rural and loosely in- impacts on all ecosystems worldwide have been dramatically low, including in banization. Although cities are a scale of terconnected planet, where internet pro- (Coetzee et al., 2020). In this context, the wealthy countries, with “development as- governance that matters globally (UN75, tocols had not yet come out of advanced COVID-19 pandemic resonates as a third sistance an inadequate model for financ- 2020), global macro-economic regulation research laboratories. On the contrary, the major wake-up call, following the disclo- ing this investmen” globally (WHO, 2020). It mechanisms remain largely silent about it, growth patterns that prevailed after the sure of climate and global warming risks looks like the era of big data is also an era as illustrated by the last issue of the IMF end of the Cold War unleashed an unprec- by the International Panel on Climate of staggering economic and social losses. global economic outlook. Post-Cold War edented elevation of the quality of life in all Change (IPCC) and of biodiversity losses This calls for revisiting digital governance agglomeration economics (World Bank, regions of the globe, at the same time trig- by the International Panel on Biodiversity (Snower, Towney and Farrell, 2020) and for 2009) have largely shaped the global urban gering and triggered by urbanization, sup- and Ecosystem Services (IPBES).4 We have putting in place the “sensing” capabilities landscapes from inner-city design to sub- ported by the exponential intensification of not only reached limits of growth, we have that allow cities to detect early warning urban metropolitan peripheries. The rapid digitalization. Since the early 1990s, net- built them ourselves beyond the forecasts signals and to prepare for shocks, as in the global circulation and asymmetric local worked infrastructure systems have built of the Club of Rome and we have locked field of biodiversity (Devictor, Bensaude, distribution of the pandemic mirrors the interconnected (mega)regions and formed them in cities and their infrastructure (Bu- 2016). weaknesses of urban production systems the backbone of growth (Secchi, Riela, choud et al., 2020 (3)). that have been self-reliant on endless 2019), but since the 2008 global financial growth, regardless of previous warnings crisis, revenue distribution has become WE CANNOT “GO BACK TO NORMAL” »Cities could act (Buchoud, 2020 (1), CSIS, 2019). increasingly unequal (Buchoud et al., 2020 As we have reached sizable limits to When the Club of Rome issued the Lim- (2)). In addition, the combined urban and growth and the world economy is ailing, as promoters, its to Growth report of 1972, its economic infrastructure systems have increasingly acute hunger is rising again, along with poverty (FAO, April 2020). The problem is, facilitators we cannot go back to normal. The cur- rent reversal of fortune looks recent, but and enablers Figure 1: Profile and typology of services and activities affected by COVID-19 in cities the crisis is more profound. It seems we moved from “A World at Risk” (WHO, 2019) connecting the Disrupted: service entirely­ Affected: service Unaffected: service to “A World in Disorder” (WHO, 2020) in unavailableUrban services affected for long by COVID -19 impacts anddisrupted response measuresfor long ­delivery as usual just a few months, but the main problem is pieces of a ­periodsDisrupted: Service of time was entirely unavailable for long periods of time ­throughoutUnaffected: Servicethe outbreak was delivered as usual why none of the many warnings have been periods of time throughout the outbreak heard. reform jigsaw Arts and culture 79.10% Public Transportation 66.67% Water 83.33%

Public spaces, parks and recreation 50.00% Care services 62.50% Police 83.33% The tentative mapping of the global ar- Education 37.50% Education 62.50% Energy 83.33% chitecture of health emergency prepared- within the G20.« Care services 16.67% Employment services 58.33% Fire protection 79.17% Public Transportation 12.50% Healthcare 54.17% Waste Water and Sanitation 75.00% ness and response before COVID-19 shows Healthcare 12.50% Public spaces, parks and recreation 37.50% E-Services and digital infrastructure 75.00% levels of complexity that the multilateral Solid Waste Management 12.50% Environmental services 37.50% Solid Waste Management 62.50% Employment services 8.33% Social Housing 37.50% Environmental services 54.17% system could probably not manage due to While cities are the epidemiologic and Environmental services 8.33% Solid Waste Management 25.00% Social Housing 54.17%

Social Housing 8.33% Arts and culture 20.83% Employment services 33.33% its inherent fragilities. Gross COVID-19-re- socio-economic epicenter of the ongoing E-Services and digital infrastructure 8.33% Waste Water and Sanitation 20.83% Healthcare 33.33% lated cost estimates are over USD 11 tril- COVID-19 crisis, economic, financial and Waste Water and Sanitation 4.17% Fire protection 16.67% Public Transportation 20.83% Fire protection 4.17% E-Services and digital infrastructure 16.67% Care services 20.83% lion (and counting) to fund the response, social knowledge consolidation about their Water 4.17% Water 12.50% Public spaces, parks and recreation 12.50% with an additional loss of USD 10 trillion in role remains weak. Countries too rarely Police 4.17% Police 12.50% Education 0.00% Energy 4.17% Energy 12.50% Arts and culture 0.00% earnings (WHO, 2020). That is the equiva- disaggregate social data by geography, lent of the total gross domestic product and this gap weakens nations’ efficient Source: U20 Special Working Group on COVID-19 survey, Q2, 2020 of the European Union, or China or the spatial targeting of national and ­nationally United States in 2019 (OECD, 2020 (1)). By supported recovery policies (U20, 2020

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(1)). Most international institutions still out mentioning smaller scale communi- tion of prosperity and economic growth, perity that has shaped the priorities of the use an outdated and simplistic interna- ties. Unconsidered action bears the risk of it will be impossible to effectively combat G20 Kingdom of Saudi Arabia Presidency is tional/national/local rationale that largely over-complexity and of making future pre- pandemics, climate change and global also part of the Italian G20 priorities, with misses how much the world is now based paredness impossible. We thus argue that poverty. As this would be the right moment an emphasis on inclusiveness, women’s on systems. However, adding cities in the only a paradigm shift can help overcome for a new Club of Rome report about the empowerment, innovation and knowl- pandemic management equation will add the complexity bias. Future of Growth, there are indications edge. Conducting much needed structural more complexity to already overwhelming The pandemic questions the ability of that reshaping prosperity and welfare reforms will need political steering, for complexity. It would indeed include over the G20 to reinvent itself beyond the coor- might be at hand. macro-economics to focus less on “selfish 1,000 metro areas of +500,000 inhabitants dination of rescue packages, among grow- individuals” and more on the mobilization in global statistics along countries, with- ing consensus that without a new defini- of people’s “prosocial motives” (Snower, »The Urban20 2020). This makes the Recoupling Agenda initiated by the G20 German Presidency in could be the 2017 and the Quality Infrastructure Invest- Figure 2: Coping with hyper-complexity. A tentative mapping of the Global architecture ment (QII) principles introduced by the G20 of health emergency preparedness and response before COVID-19. anchor for the Japan in 2019 even more timely. To build and implement a paradigm shift in institu- deployment tions and practice, both agendas should 1) be interconnected, 2) include cities in their of a cross- granularity and scope, 3) be combined to favor a third-way for entrepreneurship and sectoral G20 free-market, differing from laissez-faire and centralized planning (Wilson, 2019), Urban Platform out of a wealth of diverse urban experi- ences, enriching the portfolio of global so- under the lutions to the crisis. As social solidarity and personal G20 Presidency agency are fundamental sources of hu- man well-being, including new measures of Italy.« of well-being in the reporting of national statistics is a priority. The theoretical foun- dations of the SAGE (Solidarity, Agency, WE CAN BUILD A PARADIGM SHIFT Gain, Environment) framework developed Convergence among several engagement through the Global Solutions Initiative can groups of the G20 is rising to the call for co- be strengthened and the corresponding ordinated and transformative action. This Recoupling Dashboard used to assess the is about smart decentralization to improve socio-economic performances of commu- community participation by reconfiguring nity resilience, not just countries. Exam- urban policy (T20, 2020 (1)) or safeguarding ples from participatory slum-upgrading Source: Global Preparedness Monitoring Board, World Health Organiza- tion, 2020. Orange rectangles: Networks and coalitions, Yellow polygons: the planet through national-local collabo- programs resulting in significantly fewer category of institutions, Blue circles: UN and intergovernmental system, ration and empowering people to deliver a cases of COVID-19 than in other informal Green ovals, funding sources more equitable and inclusive future (U20, communities are good indications.5 The 2020 (2)). The triad of people, planet, pros- higher the solidarity within and between

122 123 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL groups and individuals, the higher the trust literature since spring 2020, with analy- social functions (Parnell et al., 2020, Birch cesses (Nigmatullina, 2020). Instead, cities and compliance with socially constraining sis regularly underlining a number of key et al., 2020). Although traditional sources could act as promoters, facilitators and containment policies. Successful exam- sectors yielding “substantial economic of funding such as transfer of national re- enablers connecting the pieces of a re- ples of community resilience can no longer dividends, creating millions of jobs, with sources and local taxes remains key, cities form jigsaw within the G20, devising a new be ignored by national governments and in a great potential to deliver quick, durable can facilitate connections across public range of multilateral solutions protecting the global policy-making arenas, and new and inclusive, health and environmental and private spheres and provide incen- the rights of citizens and the foundations tools to assess well-being are now avail- outcomes” in cities (Gulati et al., 2020, U20 tives as well as sustainable procurement of local democracy, in support of prosper- able (Chevalier et al., 2020). 2020 (1)).7 As we get a sense of the pos- programs. While cities will not manage ity and well-being. The Urban20 could be Among international institutions, the sible components of a “new sustainable to cut through (hyper)complexity on their the anchor for the deployment of a cross- OECD has developed advanced compre- economy” (Belladonna, Gili, 2020), there own, they are the key places where linkag- sectoral G20 Urban Platform under the hensive sets of empirical research tools are indications in the global infrastructure es are experienced to support long-term G20 Presidency of Italy (Buchoud, Miranda, linked with the COVID-19, analyzing the conversation of how international finance transformations. Galal et al., 2020). Based upon cooperation impacts of the COVID-19 crisis across institutions and multilateral development and partnership, it could be a catalyst for levels of governments and prioritizing a banks could help tackle local gridlocks. CONCLUSION. a new growth narrative, mobilizing macro- territorial perspective and SMEs (OECD, The renewal of infrastructure spillover ef- A 24-MONTH PERSPECTIVE economic instruments and international 2020, (2) and (3)). It has used the fresh data fects doctrines focusing on local economy Since the beginning of 2020, the unfolding (financial) institutions’ expertise and lev- provided by the World Observatory on Sub- support (Yoshino and Hendrietty, 2020), the of the COVID-19 pandemic has sometimes erage to consolidate cities and communi- national Government Finance and Invest- re-evaluation of infrastructure resilience resonated as a compilation of bad news, ties’ social infrastructure in support of the ment (OECD, 2019). Now, the institution is systems (Kovarik et al., 2020) or the pro- spurring distrust and a sense that citizens delivery of the global development and en- creating a new WISE center on Well-being, posed foundations for quality and sustain- were losing grasp on decision-making pro- vironmental goals. Inclusion, Sustainability and Equal op- able infrastructure investment principles portunity to devise policy solutions to the focusing on critical infrastructure on land global challenges of inequalities, environ- and at sea (Buchoud et al., 2020 (3)), are mental depletion and climate change. The many ways to connect local and global, emerging global taxonomy of subnational public and private assets. investment and debt issues, combined Lessons learned through climate fi- with a focus on well-being and inclusion, nance, articulating global financial en- 1 ‘The number of extremely poor people has fallen dramatically from 1.9 billion in 1990 to 689 million in 2017’. is a promising way to structure future gineering with local and urban perspec- In Global Action Urgently Needed to Halt Historic Threats to Poverty Reduction, The World Bank, Oct; 7 2020 https://www.worldbank.org/en/news/feature/2020/10/07/global-action-urgently-needed-to-halt-historic- growth along an enduring recoupling nar- tives, illustrated by the launch of the threats-to-poverty-reduction rative. The leverage provided by the G20 City Climate Gap Fund in October 2020 2 For example, in mid-September 2020, São Paulo, which accounts for 12% of the population of Brazil, had 25% can help build on initiatives such as the and the work of the Cities Climate Fi- of the deaths; Buenos Aires, 33% of the population of Argentina, 60% of the deaths, and Mumbai, 8% of the population of India, 10% of deaths. Source: Financing Cities’ Recovery from COVID-19 and Preparing for Future 6 Social Progress Index and “elevate social nance Leadership Alliance, could serve Shocks, U20 Special Working Group on COVID-19 and Future Shocks, Sept. 2020. development to the same priority level as as a benchmark in the COVID-19 context. 3 Survey conducted in the second quarter of 2020 in 21 cities of the Urban 20 engagement group economic prosperity and public health and Following this direction, the U20 Special 4 ‘Pandemics such as COVID-19 underscore both the interconnectedness of the world community and the rising threat posed by global inequality to the health, wellbeing and security of all people.’ IPBES Workshop on safety,” supplementing standard statistics Working Group on COVID-19 set up under biodiversity and pandemics, Oct. 2020. with more precise data on agency and soli- the Urban 20 Riyadh Presidency, actively 5 Example of the Vila area in Buenos Aires, in Nicolas J.A. Buchoud (ed.), R. Almarzoqi, M. Cohen, M. Cook, darity, documenting not only average situ- co-chaired by the city of Rome, together H. Kuhle, J. Meyer, S. Parnell. A Sustainable urbanization and Infrastructure Response to the COVID-19 Pandemic. A T20 Policy Brief., T20 Special taskforce on COVID-19 ations but looking at their actual (territo- with Buenos Aires, has recommended 6 The Social Progress Index aims at measuring the social and environmental health of societies and intends to rial) distribution (T20, 2020 (2)). the creation of a Global Urban Resilience accelerate social progress (https://www.socialprogress.org/about-us). Reference to the Social Impact Index (SII) Using investments to stimulate a green, Fund, intended to support cities in ad- https://impactresearch.center/social-impact-index/#page-content 7 resilient and inclusive recovery has been a dressing and mitigating the impacts of Green construction and retrofits, renewable energy, active transport, nature-based solutions, R&D for clean technologies, clean mobility, waste and resources and circular economy are regularly listed as key sectors. rising theme in global COVID-19-related future shocks on urban services and key See Gulati et al., 2020, Hepburn, Stern, Stiglitz et al., 2020, U20 (1), 2020…

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Belladonna, Alberto and Gili Alessandro, Sustainable Infrastructure for New Growth in the Post-COVID Era, Istituto per gli Studi di Politica Internazionale (ISPI), June 24, 2020 https://www.ispionline.it/it/pubblicazione/ International Monetary Fund (IMF), October 2020, World Economic Outlook. A Long and Difficult Ascent, https:// sustainable-infrastructure-new-growth-post-COVID-era-26537 www.imf.org/en/Publications/WEO/Issues/2020/09/30/world-economic-outlook-october-2020#Full%20 Report%20and%20Executive%20Summary Bhan, Gautam, Indian Institute for Human Settlements (IIHS), Warren Smits, African Center for Cities et al., in Urbanization (and infrastructure) sustainable responses to the COVID-19 crisis. Forthcoming E-Book, Buchoud, International Panel on Biodiversity and Ecosystemic Services (IPBES), Workshop on biodiversity and N.J.A., H. Kuhle and G. Hartmann, ed. 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Gupta, Financing Cities recovery from COVID-19 and Preparing Meadows, D.H. and D.L. Meadows, J. Randers, W.W. Behrens III, The Limits to Growth, A report of the Club of for Future Shocks, Report form the special working group on COVID-19 and future shocks, Urban 20, September Rom’s Project on the Predicament of Mankind, A Potomac Associates Book, Universe Books, New-York, 1972, 2020, https://www.urban20riyadh.org/sites/default/files/2020-10/Financing%20Cities%27%20Recovery%20 http://www.donellameadows.org/wp-content/userfiles/Limits-to-Growth-digital-scan-version.pdf from%20COVID-19%20and%20Preparing%20for%20Future%20Shock_22102020.pdf Nigmatullina, Kamilla and Rodossky, Nick, Social media as pharmakon, In Urbanization (and infrastructure) Bosancianu, Constantin Manuel, K.Y. Dionne, H. Hilbig, M. Humphreys, S. KC, N. Lieber, and A. Scacco, Political sustainable responses to the COVID-19 crisis. Forthcoming E-Book, Buchoud, N.J.A., H. Kuhle and G. 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Author: In its report “Education at a Glance” of September 8, 2020, the Organisation for Jörg Buck Economic Cooperation and Development CEO of the German-Italian (OECD)1 again emphasized the great ad- Chamber of Commerce vantages of vocational education and train- (AHK Italien) and Delegate of the German Industry ing (VET) in Germany. Since the end of the in Italy 1990s, the OECD has regularly highlighted the importance of dual VET as an impor- tant pillar of the German education sys- tem and noted its central role in securing skilled workers for companies in Germany. With a view to the G20 Summit, which will tackle the pressing questions of how we can adapt and improve our societies and economies to make them more resil- ient, I would like to propose, particularly for the post-pandemic “new normal,” a Institution: practice-oriented dualized education ap- proach. This should be established in close cooperation with companies as a support- ing pillar of this social transformation for The German-Italian Chamber of Commerce the future. To address the educational has represented the German-Italian ­business challenges of a “new normal,” a paradigm World Bank, 2020 (2). Poverty and Shared Prosperity 2020: Reversals of Fortune. Washington, DC: World Bank. ­community since 1921. As association it shift towards a “principle of duality” should https://openknowledge.worldbank.org/bitstream/handle/10986/34496/9781464816024.pdf ­operates on behalf of the German Ministry of be introduced into the worldʼs leading edu- World Bank. 2009. World Development Report 2009 : Reshaping Economic Geography. https://openknowledge. Economy and Energy to promote economic cation systems. In this proposal, I will refer worldbank.org/handle/10986/5991 License: CC BY 3.0 IGO.” ­relations ­between Italian and German com- st World Health Organization (WHO) - Global Preparedness Monitoring Board. The World at Risk, 1 Annual report panies and is the official representation of the to my current host country Italy and thus on global preparedness for health emergencies, September 2019. https://apps.who.int/gpmb/assets/annual_ report/GPMB_Annual_Report_English.pdf German economy in Italy. also to the organiser of the G20 Summit, World Health Organization (WHO), 2020 (1). Coronavirus Disease (COVID-19) Dashboard https://COVID19.who.int but the effects tend to be similar in other World Health Organization (WHO), 2020 (2). Global Preparedness Monitoring Board. The World in Disorder, countries and are therefore transferable. September 2020, https://apps.who.int/gpmb/assets/annual_report/GPMB_AR_2020_EN.pdf Keywords: In recent years, I have successfully Yoshino, Naoyuki and Hendriyetti, Nella. Quality infrastructure investment in the face of the COVID-19 crisis: excellence through practice, new normal, established dual vocational training initia- sustainability, profitability and demand versus resilience, T20 Policy Brief, Task force 3 Infrastructure investment and financing, https://t20saudiarabia.org.sa/en/briefs/Pages/Policy-Brief.aspx?pb=TF3_PB14 ­principle of duality tives together with the German Chambers

128 129 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL of Commerce in several countries on three ented. It is therefore imperative that small of education on employment”). Rather, the “EXCELLENCE THROUGH PRACTICE” continents. We have often spoken (and in and medium-sized enterprises (SMEs) are pure output orientation produces a mis- Vocational education and training (VET) some cases still do so today) of the “export actively involved in the process of dual VET, match between the skills of graduates and provides excellently trained skilled work- champion” VET. This is misleading, be- to cultivate a holistic approach to vocation- the real market needs, which is regularly ers due to its direct proximity to company cause the German model, due to its struc- al skills and competencies. criticized by entrepreneurs. practice and is thus the engine of the Ger- ture and deep cultural roots in the econ- The skepticism of the “counter-reform- In my experience, a dual principle man economy. The principle of duality ap- omy, cannot simply be exported. So I do ers” towards the dual vocational training brings the educational offer closer to plied in Germany lays the foundations for not intend to use this article for mission- model is not new – for decades the dual- market requirements and increases the a smooth transition to working life and for ary work – although a large, almost reli- ity between theory and practice has been corresponding match. This “dualization” excellent career and development pros- gious community of reform-minded Ger- a field of tension among educators, politi- is also possible in existing education sys- pects. The right mix of knowledge and man dual education devotees has emerged cians, philosophers and scientists, who ei- tems. However, it requires various actors practical experience thus promotes so- worldwide in recent years – alongside an ther support the idea of academic training from politics, business and education to cial mobility in society and contributes to equally faithful group of counter-reform- or advocate early career orientation and work together as a triad with a clear vi- growth and prosperity. ers of the respective educational estab- vocational and technical training. There sion to guide a society into a dual change. VET is growing into a “community of lishment (to stay with the concept of reli- is no such thing as a coexisting, mutually A duality between theory and practice, i.e. practice,” as Prof. Felix Rauner from the gion). In light of the challenges posed by enriching system – and too often national the acquisition of vocational knowledge Research Group for Vocational Education the new normal, there is now a chance to education initiatives end up in a mono-sys- and skills in conjunction with theoretical and Training Research at the University question old beliefs and choose a practice- temic academization approach for society. knowledge, is a longstanding tradition in of Bremen (i:BB) puts it. As the heart of oriented approach for restructuring our An analysis using Italy as an example clear- Germany. Already back in 1986, the Ameri- VET beats in companies, the VET process education systems. This is because knowl- ly shows that a pure focus on raising ter- can sociologist Harold Garfinkel asserted should also be initiated from there: pro- edge transfer in the future must be highly tiary qualifications does not lead to higher that, in the end, every profession must be fessional competence is the application of individualized, demand- and market-ori- employment (see graphs 1 and 2: “Effects learned practically. knowledge and the reflection of practical

Figure 1: low employment Figure 2: young people employment rate

130 131 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL work experience, which can only take place levels (ELET – early leavers from educa- as a person, because he or she can, for ex- important today and even more so in the in companies. tion and training). This is critical in terms ample, also present his or her work and the “new normal” than ever before. This form of learning, based on the of social and economic policy, as we are company to colleagues and the customer. principle of duality has the great advan- talking about several hundred thousand The success factors of dual VET are the ex- tage of giving young people a high degree young people every year who are left un- perienced understanding of the meaning » The right mix of identification with the world of work in qualified on the labor market; e.g. Italy in of quality, the trained responsibility in the a phase that shapes their personal devel- 2018: 600,000 young people2). Here, as in professional ethical context and the will- of knowledge opment. It helps develop a strong sense of Germany, dual VET programmes can have ingness to perform based on meaningful- responsibility outside the usual peer group a significant positive effect on youth unem- ness. In the process, a professional iden- and practical and fosters professional and personal ployment, because they organize the tran- tity of oneʼs own is formed and can be the commitment. In doing so, it also contrib- sition to work and are thus a guarantee for starting point for an excellent professional experience utes to social mobility and thus to stabi- subsequent employment with good income career. In a permeable education system, lizing our societies – making them more prospects. for example, permanent further education promotes resilient. What makes the place of learning – the opens up professional development oppor- Educational systems that are strongly “company” – special? Dual VET teaches tunities, which can even pave the way for a social mobility mono-systemically geared towards an ex- young people at a very early stage – and subsequent academic career. clusively academic approach show that, this is important – to take on responsibility This makes it clear that vocational in society and as in the example of Italy (see graph 3: outside their peer group, and it confronts schools, universities of applied sciences Education below the European aver- them with the real-world experience of and universities naturally also play an contributes age), a majority of young people ends up companies. In the process, the young per- important role in the system. If dualized on the “education losers side,” with high son learns to appreciate the quality of his training were limited to “learning by do- to growth and drop-out rates in the lower educational or her work and also matures holistically ing” only, it would be far removed from modern VET. Prof. Rauner of i:BB pointed prosperity.« out that 70 to 80 percent of vocational competence is based on a reflected work Figure 3: education level experience3. HELPING TO SHAPE THE PATH TO Consequently, a core task of schools THE DIGITAL ECONOMY in the dualized education process is pre- In the report mentioned at the beginning, cisely this: to reflect and systematize work the OECD points out that in the pandemic, experience gained in the place of learning, vocational education and training (VET) in the “company.” But hands-on work expe- Germany has proved to be an important rience can only be gained in a vocational anchor of stability and will thus continue context, and this is important because it is to play a key role even after a coronavirus- the only way to acquire practical vocational induced economic slump – especially in skills and competencies. Only in practice, the “new normal.” Even in the “old nor- through the young personʼs confronta- mal,” the productivity of German compa- tion with colleagues and customers and nies is on average 30 percent higher than through discussion also outside standard- in comparable companies in the UK4. This ized work processes, will the young person is largely due to the tradition of mastering be enabled to deal actively and success- skills and dual VET. Added to this is the in- fully with the permanently changing de- novation leverage of the dualized educa- mands of the world of work. This is more tion system. Thus, in many development

132 133 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL centers in industry there are quite a large (must) actively participate in training the trepreneurial thinking and acting in its In my view, this open-minded attitude number of skilled workers (highly qualified future generation of employees, whether elementary foundations. Technological in- to change can only be piloted and experi- technicians) alongside academics, where for their own needs or to assume socio-po- novations are increasingly becoming one of enced in the work culture of the learning problems are solved together: with theo- litical responsibility (training more than is the most powerful drivers of our time. The place “company.” Agility and creativity, but retical mathematics and hands-on profes- needed). Successfully implemented mod- education sector will have to adapt to the also conflict management and communi- sional experience of the technicians. els (currently particularly in the German- new requirements of the knowledge soci- cation techniques are not learned in the The driving megatrends of the post- speaking and cultural area) prove that dual ety. As the trend and future researchers laboratory, but only on site in hands-on COVID-19 era will decisively orient social VET strengthens the innovative power and of the Zukunftsinstitut6 (Future Institute) practice. This makes Garfinkelʼs assertion7 values or corporate strategies towards competitiveness of the economy in the long show, creativity, contextualization, person- that every occupation must be learned in more sustainability and digitalization. One term and thus contributes to the growth ality, social skills, and intrinsic motivation practice an imperative for VET – also and framework for this is, for example, the and prosperity of the respective country. are the skills in demand in the labor mar- perhaps even more so for the “new nor- “Green Deal,” which the European Commis- In addition to these increases in pro- ket of the future. mal.” sion has proposed for Europe, or Chinaʼs ductivity and innovation in companies, announcement that it will be carbon-neu- several studies agree that dual VET is by tral by 2060. For a digitized economic model far the most cost-effective form of VET in such as “Economy 4.0” in Germany or “So- an education system,5 with investment in ciety 5.0” in Japan, for example, profession- higher quality training accompanied by a ally qualified people are indispensable. higher return on training. Dual training is The tradition of dual VET decisively not only the cheapest option in terms of strengthens the innovative and competi- VET itself, but also in terms of recruitment tive capacity of Germanyʼs economy, as in costs because of the corresponding posi- high-tech mechanical , because tive effects on competence level develop- skilled workers employed in this sector ment and employee retention. complete a degree in engineering after their So, what is preventing many nations actual VET, thanks to the permeability of the from initiating the change towards a “com- education system. It is not unusual for these munity of practice”? Certainly in many so- graduates to be active themselves later as cieties a corresponding cultural change lecturers and scientists in research and would require vocational orientation to be teaching and to make an important contribu- anchored in the entire education system at tion to the high innovation potential. These an early stage. For such a holistic “duali- 1 are then essential roots for the attractive- zation,” politics, companies, trade unions http://www.oecd.org/education/education-at-a-glance/ 2 https://www.istat.it/it/files/2019/07/Report-Livelli-di-istruzione-e-ritorni-occupazionali_2018.pdf ness and innovative capacity of dual VET. and educational institutions would have 3 https://www.wbv.de/shop/themenbereiche/bildungs-und-sozialforschung/shop/detail/name/_/0/1/6004560/ to work hand in hand to develop socially facet/6004560///////nb/0/category/211.html; https://www.psychologie-aktuell.com/news/aktuelle-news- CULTURAL SHIFT FOR THE valid dual educational opportunities. The psychologie/news-lesen/wirtschaftspsychologie-reflektierte-arbeitserfahrung-ermoeglicht-ganzheitliche- loesungen.html “NEW NORMAL” permeability of the system, i.e. the equali- 4 https://www.iwkoeln.de/fileadmin/publikationen/2014/206400/TR-4-2014_Schroeder_LSK.pdf; also https:// In the consistent implementation of “ex- zation of vocational and academic qualifi- www.independent.co.uk/news/business/news/uk-workers-less-productive-germany-business-france- cellence through practice,” the company cations (e.g. master craftsman becomes a american-sir-charlie-mayfield-john-lewis-be-business-a7834921.html 5 Finanzierung der beruflichen Ausbildung in Deutschland (Aktualisierte Fassung 2020) at https://www.bwp- and the learning place “company” become Dual Bachelor) plays a central role in this: zeitschrift.de/de/bwp.php/de/bwp/show/16616; also 2020 Ausbildung ökonomisch betrachtet Sieben Lektionen the core of dual VET models. The basis for because there is no qualification without zu Kosten und Nutzen beruflicher Bildung aus Sicht von Unternehmen, Samuel Mühlemann und Stefan C. Wolter, Bertelsmann-Stiftung at https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/ this is a clear commitment of the business an integrational approach. GrauePublikationen/Cost_Benefit_LessonsLearned_2020_DE.pdf. community to joint responsibility and also Obviously, the digitalization and green- 6 https://www.zukunftsinstitut.de/artikel/bildung-im-zeitalter-der-wissensexplosion/ the rooted self-conception that companies ing of the economy will change our en- 7 https://link.springer.com/chapter/10.1007%2F978-94-007-2272-9_14

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MANY PEOPLE ARE LEFT BEHIND A proposal for Not leaving anyone behind and creating inclusive societies are the overarching objectives of many national and global a global universal institutions. Nonetheless, the dramatic PSE – Paris School of Economics develops disparities in the way countries can economics research of the highest interna- address the needs of the disadvantaged tional standard and disseminates the results. risk making these objectives a pure basic income It brings together a community of 140 re- exercise of rhetoric. Many low and searchers and around 200 PhD students, and middle-income countries do not have offers teaching in Masters, PhD, Summer A means to foster global citizenship through School and Executive Education programs at the financial means to afford safety nets the cutting edge of the discipline. for their have-nots. This was the case at progressive global taxation time of steady global economic growth, and has become even clearer during the COVID-19 pandemic. While rich countries Authors: Institutions: have an adequate “fiscal space” to afford hoarding their workforce for protracted Gianluca Grimalda periods of time, low and middle-income Senior Researcher, The Interdisciplinary Center for the Study of countries can do so either limitedly or Kiel Institute for the World Public Policy (Ciepp) is an independent center negligibly. The World Bank has predicted Economy The Kiel Institute for the World Economy is for research and dissemination of knowledge that the COVID-19 pandemic will revert the an international center for research in global in Social Sciences, founded in 1989 in Buenos ongoing trend of decreasing poverty, with Aires, Argentina. economic affairs, economic policy ­consulting, an increase in the number of poor people Fernando Filgueira and economic education. The Institute engages of around 100 million people worldwide.1 especially in creating solutions to urgent Full Professor, The United Nations Development Program Faculty of Social Sciences, problems in global economic affairs. It advises Keywords: estimates that the number of people Universidad de la decision makers in policy, business, and society global universal basic income, global República, Uruguay and informs the broader public about important dying of hunger because of the COVID-19- developments in international economic policy. ­citizenship, global taxation, social cohesion triggered economic recession may exceed the number of people dying of COVID-19.2 Marc Fleurbaey The sense of dissatisfaction with po- Professor, Paris School litical institutions was all too clear before of Economics the COVID-19 breakout. Four out of five Global Solutions Fellow respondents stated to the Edelman Trust The Social Science Faculty is the largest international surve3 that, “the teaching and research institution in the social governmental system was not working for Rubén Lo Vuolo sciences in Uruguay in the areas of ­Sociology, them.” In Western countries, the discon- Senior researcher, Political Science, Demographic Studies, tent has taken the form of a surge in sup- Interdisciplinary Centre Social Work and Economics with more than port for anti-establishment parties, which for the Study of Public 400 faculty members and more than 10000 Policy ­undergraduate and graduate students. embrace nativism and xenophobia. This has led to a retreat in multilateralism in global governance. Now that the COVID-19 pandemic is entering a second wave, it is

136 137 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL not difficult to predict that the sense of • Cash payment: it is paid in an ap- exploiting natural resources to which, and legitimacy for global institutions such dissatisfaction will increase – especially propriate medium of exchange, typically up to a point, no one can claim complete as the G20. as governments must enforce measures to money, allowing the recipients freedom to ownership. A GUBI can then be seen as a The social argument highlights the limit citizens’ rights. decide how to use it; social dividend for common ownership.6, 7, 8 increased insecurity that many disadvan- Global institutions, including the G20, • Individuality: It is paid on an indi- Moreover, there is wide consensus in jus- taged people experienced after the 2008 suffer from a perceived lack of legitimacy. vidual basis rather than, for instance, to tice theories and within the general public Great Recession, as the rolling back of the They are often portrayed as embodying the households; that everyone should have the means to welfare state in Western countries led to interests of rich countries at the expense • Universality: it is paid to all, without live a dignified life. A GUBI would provide a reduced social insurance for the very peo- of poor countries and of perpetuating the any means test; building block to attain this goal, although ple who most needed it.10 interests of multinational companies at the • Unconditionality: it is paid under the income level at which this goal can be The economic argument identifies one expense of local business. These trends any circumstances, regardless of the re- achieved is the subject of political delib- of the reasons for under-development and are worrying, and if not thwarted may even cipient’s condition in the labor market. In eration. the persistence of poverty as the lack of lead to institutional collapse. Furthermore, particular, it is not conditional to being un- The political argument hinges on the access to credit. A GUBI would be a way other major global crises are bound to fol- employed, or to performing public utility consideration that global cooperation has to empower individuals economically and low COVID-19, starting from the looming work. never been as necessary as today, given give them the necessary tools to break out climate change crisis that will force many A GUBI is a UBI extended to all citizens economic inter-connectedness and the of the poverty trap. In countries utilizing people to migrate. Retreating within na- of the world. global scale of major challenges such as unemployment subsidies, a GUBI is also a tional borders may be neither desirable nor pandemics and climate change. It is para- way to prevent unemployed workers from effective as these threats become reality. doxical that the answer to these challeng- falling into a poverty trap. They can avoid In a policy brief developed for the »A Global Basic es has thus far been one of entrenchment disproportionately high levels of taxation Think20’s Task Force on Social Cohesion,4 into nationalism and . If any- when taking a job. A GUBI is particularly we have advocated for the adoption of a Income provides thing, this nationalist turn signals a basic effective under the irregular work con- Global Universal Basic Income (GUBI) as failure of the democratic nation-state in tracts brought about by digitalization.11 a way to simultaneously address (a) the safety nets, coping with systemic challenges. need to provide automatic safety nets to A GUBI would be a powerful instru- FUNDING A GUBI the most vulnerable in crises situations; fosters global ment to revert this trend, improving social The funding of a GUBI should come from (b) foster a sense of global citizenship, all cohesion and global governance. It would global taxation because this is functional the more needed at a time of nationalistic citizenship, mold a global collective sense of identity to fostering a sense of global citizenship. entrenchment; (c) improve legitimacy for in individuals worldwide, regardless of If a GUBI were seen as a form of aid from global institutions. improves global their conditions or provenance. Granting rich to poor countries, this would compro- a universal right to a dignified life would mise the goal of fostering a sense of global WHAT IS A GLOBAL UNIVERSAL BASIC institutions’ endorse the view that nobody should be citizenship. A GUBI should be understood INCOME? left behind on the global scale. Institut- as a right, not as an act of liberality. Our According to the Basic Income Earth Net- legitimacy.« ing a GUBI would be consonant with T.H. computations show that global taxation work,5 a Universal Basic Income (UBI) is a Marshall’s9 concept of “social citizenship,” at relatively low tax rates would suffice to periodic cash payment unconditionally de- as it would grant every individual in each fund a meaningful GUBI. The tax we pro- livered to all on an individual basis, with- THE FOUNDATIONS OF A GLOBAL society at a given moment the material set pose would combat global public bads and out means tests or work requirements. A UNIVERSAL BASIC INCOME of resources necessary to lead a dignified negative externalities: climate change, basic income has the following five char- A GUBI can be justified on philosophical, life, and would then boost people’s sense financial and economic instability, and ex- acteristics: political, social, and economic grounds. of their “political citizenship” at the global treme wealth concentration. • Periodicity: it is paid at regular inter- The philosophical argument rests on the level. This new sense of global inclusion • Global wealth tax. A wealth tax is an vals – e.g. every month; idea that wealth creation is the result of will reverberate into increased support annual tax levied on the net wealth that a

138 139 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL household (or an individual) owns above compensatory transfers should be under- of world GDP. Adjusting for PPP, the GUBI agency to lead this process. Civil society an exemption threshold. There have been taken to overturn the regressive character would cost around 3.12% of world GDP. movements, such as the Global Basic In- recent proposals for a wealth tax not only of the carbon tax.16 Relying on a specifically created UN agen- come Foundation and the World Basic In- as a way for the European Union (EU) to • Tobin tax: The volume of world’s fi- cy for the management of the GUBI, and come organization, have advocated directly fund debt emitted to face fallout from the nancial transactions is worth around USD for the World Bank, the IMF, and regional for the institution of a GUBI and have cam- COVID-19­ pandemic,12 but also at the glob- 12 quadrillion. Taxing these transactions banks to be involved in revenue collection paigned for the implementation of global al level13. We make the prudent assump- at the rate of 0.1%, would generate around and handing out the benefit, the marginal taxation in the three domains indicated tion that a progressive global wealth tax 7% of global GDP as revenue, even al- administrative can be estimated to be 0.5% above. These organizations will have to be would contribute revenues close to 1% of lowing for tax base erosion by half due to of global GDP. involved to build consensus and promote world GDP.14 either elusion or evasion. Other forms of The revenue capacity examined above support. • Carbon tax: A global system of carbon taxation, such as a digital tax, may be used would then be more than sufficient to fi- The GUBI could be first established in taxation could raise around USD 1.6 trillion to complement the revenues from a GUBI. nance a GUBI set at the poverty threshold a club of “virtuous” countries, forming a per year between 2020 and 203015 – equiv- of USD 1.95. In fact, a prudent estimate is “coalition of the willing” under the aegis of alent to around 1.86% of current GDP. As COSTS OF A GUBI that the GUBI could be set at a level of USD the UN. This would be formed by a group the transition toward a decarbonized world A reasonable target is that every citizen 2.7 and still be below the available finan- of economically developed countries that proceeds, this carbon tax revenue would in the world receives enough to overcome cial resources. Figure 1 shows the evolu- agree to implement international forms decrease and other sources of funding the absolute poverty threshold of USD tion of a GUBI as a percentage of GDP for of taxation in at least one of the three do- would need to be found. A carbon tax may 1.95 per day. Without adjusting this sum these two thresholds. mains illustrated above and use the related be regressive, in that it may weigh more on for Purchasing Power Parity (PPP), the We favor the idea that the GUBI may revenues to fund a GUBI. A group of eco- the poorest of the population. In that case, GUBI would be equivalent to around 6.3% be integrated by additional schemes of nomically developing countries would also UBI in richer countries to make it a sig- be part of the coalition. They would have nificant policy tool in rich as well as poor the obvious advantage of being net ben- countries. eficiaries of the GUBI. The club could be Figure 1: Evolution of GUBI costs as percentage of world GDP extended to a broader, potentially univer- sal, set of countries. For developed coun- »A GUBI should tries who did not subscribe to the GUBI in the first place, the major direct incentive be understood would be to comply with their voters’ de- mand to have the GUBI established. The as a right, not willingness to have a positive global repu- tation might be sufficient for this purpose. as an act of Additional incentives may also be consid- ered, such as the possibility of subscribing liberality.« to preferential trade agreements with the countries participating in the GUBI. The institution of a GUBI will undoubt- A ROADMAP TO ESTABLISH A GUBI edly require time and effort. Nevertheless, The process of establishing a GUBI will in- many past reforms looked like utopian clude an initial stage of building consensus prospects before eventually becoming es- at the political, social, and economic level. tablished, and it is precisely at times of Source: World Bank online database The G20 is one of the most effective glob- crisis that reforms have a more concrete al institutions, thus it would be a natural chance to be shaped.

140 141 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL Towards a new paradigm for sustainable infrastructure

A call to action by “The Solutions Lab: Scaling for Sustainable Infrastructure” 1 World Bank (2020) Poverty Overview. https://www.worldbank.org/en/topic/poverty/overview#1. Accessed on 3.11.2020. 2 th https://unglobalcompact.org/take-action/20 -anniversary-campaign/covid-related%20hunger-could-kill- Authors: Peter Head more-people-than-the-virus. Accessed on 3.11.2020. Manuel Holtmann 3 Edelman (2020). “2020 Edelman Trust Barometer.” Edelman webpage. Last updated January 19, 2020. Manuel Holtmann https://www.edelman.com/trustbarometer. Holger Kuhle on behalf of the members of 4 Grimalda, G., Filgueira, F., Fleurbaey, Lo Vuolo, M. R. (2020). Building global citizenship through global basic Anuj Malhotra income and progressive global taxation, T20 Task Force on Social Cohesion and the State. The Solutions Lab: Scaling for 5 Basic Income European Network (BIEN) (2020). The Basic Income Earth Network’s Definition of Basic Income Sustainable Infrastructure Elizabeth Maloba since the GA 2016. Accessed online at: https://basicincome.org/wp-content/uploads/2020/07/Basic-Income- Noura Mansouri definition-longer-explanation-1.pdf Elias Otieno 6 Paine, T. (2000). Paine: Political Writings. Cambridge University Press. Saud Ayid Alshammari 7 Meade, J. E. (1995). Full Employment Regained? (Vol. 61). Cambridge University Press. Apoorva Bajpai Eva Philippi 8 Van Parijs, Philippe and Yannick Vanderborght. 2017. Basic Income: A Radical Proposal For a Free Society and Vanessa Bauer Sunita Pitamber a Sane Economy. Boston: Harvard University Press. https://doi.org/10.4159/9780674978072. Rowan Palmer 9 Marshall, T. H. (1963). Citizenship and social class. Sociology at the Crossroads, 79. Ryan Bartlett 10 OECD. 2011. Divided We Stand: Why Inequality Keeps Rising. Paris: OECD Publishing. Amar Bhattarcharya Ricardo Rivera 11 Atkinson, Anthony B. 2015. Inequality: What Can Be Done? Cambridge: Harvard University Press. Gabriela Canales Gallardo Gamelihle Sibanda https://doi.org/10.4159/9780674287013. Özlem Taskin 12 Landais, Camille, Emmanuel Saez and . 2020. “A Progressive European Wealth Tax To Fund Nicolas Buchoud the European COVID Response.” Article on Vox EU website. Last updated April 3, 2020. https://voxeu.org/article/ Cristina Contreras Casado Cédric Van Riel progressive-european-wealth-tax-fund-european-covid-response. Mountaka Wahabou Ibrah 13 Piketty, Thomas. 2018. “Capital In the 21st Century.” In Inequality in the 21st Century, edited by David Grusky and Edoardo Croci Jasmine Hill, 43-8). New York: Routledge. https://doi.org/10.4324/9780429499821-9. Steven Crosskey Barbara Weber 14 Such would be a tax structure of marginal tax rates of 1%, 2%, and 3% for net wealth above €2 million Paramita Datta Dey Laurin Wuennenberg (close to the top 1% threshold for wealth), €8 million (close to the wealth top 0.1% threshold), and €1 billion, respectively. Zeinab El Bakri Lorena Zemp 15 Jacob, Michael, Claudine Chen, Sabine Fuss, Annika Marxen, Narasimha D. Rao and Ottmar Edenhofer. Sergio Forte 2016. “Carbon Pricing Revenues Could Close Infrastructure Access Gaps.” World Development 84: 254-65. https://doi.org/10.1016/j.worlddev.2016.03.001. Lori Benita Kerr 16 Schwerhoff, Gregor, Thang Dao Nguyen, Ottmar Edenhofer, Gianluca Grimalda, Michael Jakob, David Klenert Gabriel Lanfranchi and Jan Siegmeier. 2017. “Policy Options For a Socially Balanced Climate Policy. Economics: The Open-Access, Open-Assessment E-Journal 11 no. 2017-20: 1-11. https://doi.org/10.5018/economics-ejournal.ja.2017-20. John Hauert

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Institutions: The outbreak of the COVID-19 pandemic To help turn promise into reality, the ingful interventions, including a panel on brought health systems even in advanced Deutsche Gesellschaft für Internationale “COVID-19 & the Reinforced Case for Sus- economies to the brink of collapse. From Zusammenarbeit (GIZ) GmbH has been tainable Infrastructure”2 at the 2020 Global Italy to the US, images of people collapsing facilitating sustainable infrastructure de- Solutions Summit. The community since As a federal enterprise, GIZ has over 50 years outside hospitals and stories of busy emer- velopment, including through support for established several workstreams includ- of experience in a wide variety of areas, includ- gency hotlines left scars on the psyche of project preparation and innovative solu- ing (1) Upstream Policy Considerations, (2) ing economic development and employment many communities and shook their confi- tions such as the Sustainable Infrastruc- Sustainable Infrastructure Project Prepa- promotion, energy and the environment, as well dence in the resilience of public services. ture Tool Navigator.1 The latter helps pub- ration, and (3) Gender-Responsive Infra- as peace and security. GIZ works in demand In developing countries, the situation is lic and private stakeholders navigate the structure. What is more, its recommen- around the globe – from the German govern- ment to European Union institutions, the United often compounded by a fundamental lack complex universe of sustainability solu- dations have been taken up in various T20 Nations, the private sector and governments of of infrastructure services: the absence of tions and works to uphold their commit- policy briefs available at GSI’s G20 Insights other countries. The main commissioning party health and sanitation facilities as well as ment to improved sustainability integra- platform.3 is the German Federal Ministry for Economic inadequate communication, transport and tion. Yet, the public and private sectors still Cooperation and Development. energy networks still affect the well-being struggle to put in place infrastructure that of billions of people. To close this infra- serves the goal of recoupling economic »Unsustainable structure service gap and thus to lay the and social progress within our planetary very foundation on which societies can boundaries. To tackle this problem, a con- infrastructure build the prospect of a more prosperous, sortium of three GIZ programs and the THE WORLD POLICY FORUM resilient and inclusive future, additional Global Solutions Initiative launched “The expansion has The Global Solutions Initiative (GSI) is a global investments of around USD 18 trillion Solutions Lab: Scaling for Sustainable In- collaborative enterprise to envision, propose and must be mobilized by 2040. frastructure” in October 2019. contributed evaluate policy responses to major global prob- At the same time, it is becoming in- The Solutions Lab was a 10-month lems, addressed by the G20, through ongoing creasingly clear that infrastructure can also co-creative journey that brought together profoundly to exchange and dialogue with the Think20 (T20) incur negative effects on people and planet. 28 experts from academia, policy, finance engagement group. The GSI is a stepping stone Unsustainable and uncontrolled infrastruc- and infrastructure development to identify to the T20 Summits and supports various other climate change G20 groups. The policy recommendations and ture expansion too often turned a blind eye sustainable infrastructure approaches that strategic visions are generated through a dis- to involuntary resettlements, has contrib- can be scaled across regions. The kick-off and facilitates ciplined research program by leading research uted profoundly to human-made climate- took place in Berlin (November 2019) fol- organizations, elaborated in policy dialogues change and the associated destruction of lowed by a second meeting in Mexico City the spread between researchers, policymakers, business ecosystems, and facilitates the spread of (February 2020) and the collaboration has leaders and civil society representatives. zoonotic diseases like Ebola or COVID-19. continued virtually. To facilitate social in- of dangerous In both ways positive and negative, infra- novation, the organizers borrowed from structure touches upon all dimensions of the “Social Lab” methodology, which, rath- zoonotic Keywords: sustainability: economic, institutional, so- er than taking a linear approach, is par- sustainable infrastructure, transformation, cial and environmental. It was therefore a ticipatory and responsive to the changing diseases like resilience milestone for the G20’s Osaka Declaration nature of the challenge addressed. At the to emphasize that the world does not sim- time of the Berlin meeting, for instance, COVID-19.« ply need “more infrastructure,” but “quality participants could not have predicted the infrastructure.” In other words, sustainable outbreak of a pandemic that would fun- In this paper, The Lab presents to you infrastructure is now recognized as key damentally reshape our understanding of a Call to Action for a global shift towards a to realizing the Sustainable Development resilience. Yet the format allowed them new, holistic paradigm for sustainable in- Goals (SDGs) and the Paris Agreement. to collaborate flexibly and produce mean- frastructure delivery. Please note that the

144 145 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL thematic deep dive in Part II mirrors the phies and organizations, came together in and adaptation to climate change (envi- Committed abovementioned workstreams and does not a 10-month collaborative process to iden- ronmental), to enhancing equity of public to contributing our collective insights to- disregard the importance of other areas. tify and overcome barriers to sustainable service delivery and empowerment of all ward improved delivery of sustainable in- infrastructure development at scale; segments of society (social), thus playing a frastructure, we issue the following Call to decisive role across all dimensions of sus- Action: »Put Believing in tainability; and… the central role of sustainable infrastruc- the need for improved synergy across II. CALL TO ACTION sustainability ture for attainment of the SDGs as well the increasing number of initiatives, tools • Adopt a new, holistic paradigm of as for the sustainability of the natural and information available to support the infrastructure delivery that integrates at the center environment and climate, and in the ur- integration of meaningful sustainability meaningful economic and financial, social, gent need to scale up impact to enhance criteria into the infrastructure lifecycle, so environmental and institutional sustain- of COVID-19 the sustainability of infrastructure invest- that together they can drive the transform- ability and risk criteria throughout the full ments everywhere, especially in the devel- ative change needed to meet our Global lifecycle, is rooted in long-term strategies recovery oping world; Goals, including the SDGs, Paris Agree- for sustainable development and which is ment, Sendai Framework and Convention flexible and resilient enough to respond measures Concerned on Biodiversity; to interlinked global challenges, including that converging global crises in climate, climate change, biodiversity loss, public and invest in biodiversity, and health as well as widen- Noting health crises, growing social and econom- ing social inequalities call for a fast and the multitude of constraints to sustainable ic inequality, rapid urbanization, and new infrastructures concerted pivot away from the current infrastructure provision, including the in- technologies. unsustainable trajectory of infrastructure ability to transform needs into investment • Work with public and private stake- that set our delivery that consumes ever more natural opportunities, inadequate mobilization of holders to give traction to this new para- resources and exacerbates fragility and private capital, stakeholders working in digm, including by strengthening sus- societies on the risks of future crises; silos culminating in a lack of integrated tainability criteria in upstream policy and upstream planning and coherent down- institutional foundations, in project prepa- a resilient Having convened stream implementation, as well as the ration (platforms), in scaling up finance for pathway in different parts of the world with experts need for capacity-building to empower sustainable investments, not least from from various disciplines to deliberate how public sector officials and infrastructure the private sector, and by shifting finance towards zero- sustainability considerations can be more practitioners to overcome technical and away from unsustainable infrastructure. systematically integrated throughout the financial implementation barriers; • Move beyond traditional ESG risk emissions full infrastructure lifecycle [from strategic management approaches at the asset lev- planning all the way to the decommission- Agreed el and embrace a holistic, systems-level and ecological ing/repurposing of an asset]; through consensus on the following defini- view of the long-term positive and nega- tion of sustainable infrastructure: tive impacts of infrastructure development regeneration.« Cognizant “Sustainable Infrastructures are built through integrated planning approaches of the fact that sustainable infrastructure or natural systems that provide services that begin “upstream” and include proper dividends range from the jobs created and in a manner that ensures economic and valuation of ecosystem services, biodiver- I. DECLARATION its ability to generate greater connectivity, financial, social (including gender), envi- sity and of interlinked human and ecologi- We, productivity and economic activity (eco- ronmental (including climate resilience), cal health as public goods. the twenty-eight participants of the Solu- nomic), through the regeneration of natu- and institutional sustainability in line with • Develop better indicators for meas- tions Lab: Scaling for Sustainable Infra- ral resources and restoration of biodiversi- the Global Goals and over the entire infra- uring the sustainability of infrastructure at structure, drawn from a diversity of geogra- ty and ecosystem services to the mitigation structure lifecycle”; the aggregate level, based on its ability to

146 147 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL meet public need for services sustainably III. UPSTREAM CONSIDERATIONS & and investment communities. works for gender equality that are linked and inclusively. These indicators are need- INTEGRATED PLANNING • Ensure that expertise and knowledge to long-term strategic development plans. ed to effectively measure progress towards • Increase funding for integrated up- are made readily available and digestible • Systematically identify positive spill- SDG target 9.1 and to inform integrated stream planning through existing multi- to guide project preparation on the ground. over effects of gender-responsive infra- long-term infrastructure planning that ac- lateral platforms and dedicated national structure and act on its centrality to deliv- counts for impacts at the landscape scale. integrated financing frameworks. V. GENDER-RESPONSIVE ering all 17 SDGs. • Facilitate inclusive and transparent • Create policies and capacity-building INFRASTRUCTURE • Apply relevant frameworks, tools and public participation processes in infra- programs that incentivize regional and lo- • Acknowledging that infrastructure is standards to ensure that gender is main- structure development to enhance social cal scale risk-based integrated planning not gender-neutral, systematically collect streamed across all stages of the infra- benefits and leave no one behind. Special and strengthen planning functions at all and analyze gender-disaggregated data to structure lifecycle. efforts should be made to include the most governance levels through multidiscipli- cater to the differentiated needs and use- • Empower women and disadvantaged vulnerable groups like women and girls, nary teams. patterns of girls and women and set-up groups to partake in infrastructure deci- the rural poor, and Indigenous peoples. • Promote the use of digitalization gender-sensitive platforms for consulta- sion-making, including at leadership lev- • Systematically collect, share and use and systems modelling at all scales from tion with end-users. els, through equal employment measures, data to enable informed decisions along global to local to improve data collection • Promote the implementation of na- capacity-building and gender-sensitive the infrastructure lifecycle including on across the infrastructure lifecycle, support tional policy, legal and regulatory frame- procurement among other measures. service gaps and investments, biodiversity, evidence-based decision-making, and im- emissions, data for material passports, in- plement performance-based procurement. cluding gender-disaggregated information • Apply integrated approaches that on needs and use patterns. explicitly consider nature-based solutions • Mobilize financial and technical as- and evaluate climate risks while connect- sistance to build the technical and insti- ing to project-level sustainability and resil- tutional capacities necessary to tackle the ience standards. sustainable infrastructure challenge, from integrated upstream planning, to the sus- IV. SUSTAINABLE INFRASTRUCTURE tainability of individual assets, to the mobi- PROJECT PREPARATION lization and transformation of finance. • Follow the lead of forward-leaning • Align fiscal policies and incentives project preparation institutions in integrat- with sustainability to create an enabling ing sustainability up- and midstream to at- environment that is conducive to leverag- tract private capital at the asset level. ing the necessary private capital to close • Engage in cross-stakeholder co- the USD 18-trillion infrastructure service ordination to ensure that the push from gap by 2040. the private sector and the pull from the • Put sustainability at the center of public sector for improved sustainability COVID-19 recovery measures and invest are aligned and responsive to market de- in social, environmental and economic mands. infrastructure that promotes job crea- • Support harmonization of sustaina- tion, expands access to critical services, bility criteria among Multilateral Develop- strengthens natural systems, increases the ment Banks and other initiatives to provide 1 https://sustainable-infrastructure-tools.org/ resilience of our societies and economies to a clear definition of a sustainable asset as 2 https://www.global-solutions-initiative.org/global-table/covid-19-and-the-reinforced-case-for-sustainable- future shocks and puts them on zero-emis- well as guidance on quantitative and quali- infrastructure-development/ sion, ecological-regeneration pathways. tative indicators for project preparation 3 https://www.g20-insights.org/

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eties, which were already high, have been Humanity is facing two crises at the A new architecture exacerbated. same time: a governance crisis and an Many pre-existing conditions that GDP epistemic crisis. The two are intertwined. growth numbers did not reveal required for global governance treatment before COVID-19. Realizing this, the UN already adopted 17 Sustainable »The problem Development Goals (SDGs) in September Local systems solutions are essential for 2015. These cover a wide range of prob- policymakers lems – inequalities in economies, persis- solving systemic global problems tent poverty, poor education and health (and experts) services, as well as an environmental st crisis. The goals describe the morbidities have in the 21 Author: Economies everywhere have been severely that societies and economies were suffer- shaken by COVID-19. The only “vaccine” ing from before the pandemic struck. They Arun Maira century is that medical experts have been able to pre- were too weak to tolerate the shock of the Chairman, HelpAge scribe, until a vaccine safe for humans is lockdown medicine. there are many International developed, is enforced physical separation Global institutions created after World Former Member, Planning of people to prevent the virus spreading. War II to solve global problems coopera- problems, and Commission India Meanwhile, extensive trials of vaccines tively, such as the UN, which led the adop- Global Solutions Fellow are underway to ensure they will not have tion of the SDGs, and the WTO, which mor- all must be harmful side-effects. phed from GATT, have been struggling to Tragically, the side-effects of the un- keep the world united. As “globalization” solved tested treatment already prescribed – has accelerated with larger flows of trade lockdowns and physical separation – have and finance across national borders since simultaneously.« damaged many systems on which humans the 1990s, these institutions have been un- depend for their well-being. They revealed able to keep the world united. The WTO is the fragility of public health systems in in limbo. The WHO, required now to coordi- AN EPISTEMIC CRISIS: many countries. Supply chains to provide nate responses to the pandemic, is caught THE BREAK-DOWN OF “SYSTEMS essential supplies, even for medical needs, in the crossfire between the US and China. THINKING” Institution: were broken. Diversion of medical resourc- Mismatches between the capabilities of Before jumping to any solution, one must es for COVID-19 prevented treatment of institutions and the global problems they first understand the problem. The prob- patients with other ailments. Livelihoods must address in this century have been lem policymakers (and experts) have in were disrupted when people could not go starkly revealed. the 21st century is that there are many out to work, and business stopped. Many, A new way must be found. Economists problems, and all must be solved simul- HelpAge International is the secretariat to a living on the edge, slipped into starvation. are searching for a “new normal.” To para- taneously. The problem cannot be simply global network of organizations promoting The damage is not over. Malnutrition phrase Albert Einstein, it is madness to broken up into easier-to-solve pieces. So- the right of all older people to lead dignified, of children will stunt their development. try to solve intractable problems with the lutions to environmental problems that healthy and secure lives. Schools have not been able to open prop- same approach that caused them. Clearly, aggravate problems of livelihoods cannot erly. The disruption of education may af- a pandemic is the time to consider why the be good solutions. The same goes for so- Keywords: fect the further development of well-off prevalent approaches to problem-solving lutions to economic problems that aggra- systems solutions, community action, ­ children too. Less well-off people have are inappropriate for solving complex vate environmental problems. Solutions to economic resilience, social cohesion suffered the most. Inequalities within soci- global problems. increase GDP that also increase inequity

150 151 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL will not help to make the world better for Components of systems must be in har- ity of agriculture with mechanization, and think ecologists are standing in the way of everyone. mony with each other for the system to re- the management of water resources, have growth. Sociologists say economists do not main healthy. Lockdowns to prevent COV- produced the unintended consequence understand that people are human beings ID-19 are an example of the unintended that Delhi has become the most polluted and not commodities in labor markets. »Components of consequences of a good solution that were city in the world! Sadly, as the wheels of In the prevalent paradigm of manag- not foreseen because the whole system the economy have begun to turn again, ing complex systems in governments and systems must was not kept in view. Two examples from pollution is back in Delhi’s air. The old nor- large corporations, each part of a complex India also illustrate the harms that can be mal may be returning. system is managed by specialists report- be in harmony caused to systems by policies designed by ing up to the top. There, they try to coor- specialists. Education of girls dinate the whole system. All have their with each other The other example is from rural Rajasthan. programmes and their budgets and each Clean air The education of girls gives many benefits passes down instructions to its subordi- for the system An unintended benefit of the economy’s to society. Retention of girls in schools nates in the localities who are responsible wheels grinding to a halt, with the se- in Rajasthan’s poorer, water-scarce dis- for only a part of the system. to remain vere lockdown imposed in India, was that tricts has increased in the last ten years, Delhi’s residents saw clear blue skies in with concerted efforts by the government A CRISIS IN GOVERNANCE: healthy.« the day and stars at night, which they had and NGOs to improve education. Also, wa- EXPERTS TAKING POWER AWAY not seen for years. The severe air pollu- ter conservation programs reduced the FROM THE PEOPLE tion Delhi has been experiencing in the distances women have to carry water to Recovery from COVID-19 is an opportunity Scientific advances since the European last decade is an example of good policies their homes, thus reducing pressures for to create economies that are more resil- Enlightenment have multiplied the num- combining to produce bad effects. Ever adolescent girls to stay home to help their ient and fair. Two architectural principles ber of specialists. An abundance of experts since mechanization was introduced in the mothers. Two good things together – bet- must apply. now available to solve diverse problems 1980s to improve farm productivity, farm- ter education and better water manage- The first principle is, economies of should be a blessing. However, their abun- ers in Punjab have burned the paddy stub- ment – produced the desired outcome. “scale” should be replaced by economies dance has become a problem because ex- ble the machines leave. Later, alarmed by However, in the last two years girls have of “scope.” A complex global economy in perts are too narrowly focused on separate the impact thirsty paddy growth was hav- noticeably begun to drop out of secondary which local producers obtain scale (and pieces of the system: they are not able to ing on dwindling ground water resources, school. Investigations reveal that the ad- lower costs) by supplying products for comprehend the whole system. Specialists the government passed the Preservation dition of another good program, Swatchh global markets is vulnerable to shutdowns in diseases of the heart do not understand of Subsoil Water Act in 2009. It stipulated Bharat, to provide toilets in homes, was anywhere. Local economies that have a sufficiently the effects of their interven- that farmers postpone by one month the the cause. The toilets required more water variety of capabilities within them, albeit tions on other systems in the human body, sowing and transplanting of paddy so that to be brought home, so mothers needed on smaller scales, are more resilient. and patients must turn to other specialists it was closer to the onset of the monsoon. their daughters at home again. Therefore, local economic webs must be for treatment of the side-effects of the so- This reduced the need for drawing water One property of complex systems is strengthened, in preference to global sup- lution to their heart problems. Often, they from underground for the transplanted that many good things interacting with ply chains. end up with a mental health specialist to paddy. each together may unwittingly produce COVID-19 has settled, for now, the de- help them manage their confusion and However, the burning of the stubble bad outcomes. The epistemic problem is bate between free-trade evangelists and depression, and their anxiety about the post-harvest was also postponed by one that experts mentally break complex sys- advocates of industrial policy. The “Make in cumulative cost of their wonderful treat- month. It now coincided with the onset of tems into parts and then try to improve India” program of the Indian government, ments. winter in the North when wind movement them separately. Thus, economists worry which was dismissed by econo- The economy, society and ecology are is low and atmospheric moisture content about the economy, sociologists about so- mists as a reversion to protectionism, has integrated in a system. Changes in any one is also high. Thus, two good things to- ciety, and ecologists about ecology. And become a necessity – to maintain supplies of these components will affect the others. gether: the improvement of the productiv- they quarrel with each other. Economists of essentials and to create employment for

152 153 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL the hundreds of millions of Indians with tain economic growth, their model would their religion, as India has, governance is necessary for such global systemic prob- fragile incomes who have been badly shak- be incomplete. not by the people. People are managed by lems. The solution is, responsibility for en by the lockdown of the Indian economy. Hardin’s “Tragedy of the Commons” experts, who are supposed to know what the governance of complex systems must The second principle is, local systems leads to the conclusion that human beings is best for the people, and who must ap- be devolved to communities in their locali- solutions are essential for global systemic are incapable of managing something that ply their expert knowledge to find solu- ties. However, not only politicians, but also problems. Garrett Hardin coined the ex- does not belong to them personally. It is tions for the people. This is the common experts at the top, are reluctant to let go pression, “The Tragedy of the Commons,” an extension of the belief that humans are approach, whether the government is a of their power. They claim that the locals in 1968, for the proposition that a resource purely rational and self-interested actors, totalitarian one as the Soviet Union was, will not have the capability to manage, and belonging to everybody will not be cared although it has been known to poets and or a democratic one like the US, where the so the centre must take on the burden of for by anybody. This supported policies to politicians for ages that humans have pas- President’s councils of expert advisers de- managing the locals. privatise public property, ostensibly for the sions and emotions too. Moreover, what sign policies. benefit of everybody and became the domi- the world needs now is humans who care REDESIGNING THE ARCHITECTURE OF nant school of economics from the 1970s about their . GLOBAL GOVERNANCE INSTITUTIONS onwards. “Capitalists” often cite Hardin in Economists explain that welfare is »Local Resentment of elitist experts who look their quarrel with “socialists.” produced for everyone by an “invisible down on them as they govern them is a Elinor Ostrom, who was awarded the hand,” even when everyone is purely self- economies that reason for the rise of populist movements Nobel Prize for economics in 2008 (the interested. Ostrom made visible some in many countries. It caused Brexit in Brit- first woman economics laureate, after 62 principles by which the invisible hand have a variety ain and the election of Donald Trump in the men), offered a different explanation for works. The rules by which humans agree US. In India, Prime Minister Modi declared, the tragedy of the commons. She argued to govern their affairs, and the powers of capabilities “We need hard work, not Harvard.” that common resources are well-managed they assign to institutions to implement The Indian Constitution requires power when those who benefit from such re- the rules on their behalf, are systems of within them, to be devolved to elected bodies in towns sources the most are in close proximity to governance created by humans. Institu- and villages. It has not happened in prac- them. For her, the tragedy occurred when tions of electoral democracy and con- albeit on tice even in seventy years since the Con- external groups exerted their power (po- cepts of limited liability corporations are stitution was adopted in January 1950. litically, economically or socially) to gain a creations of the human imagination made smaller scales, India’s economy has been growing quite personal advantage. She was greatly sup- concrete. Now institutions must change well since the 1990s, after India joined the portive of the “bottom-up” approach to is- rapidly to improve the health of socie- are more global economy which was also growing sues: government intervention could not ties, economies and the environment to well. For many years India’s economy was be effective unless supported by individu- achieve the SDGs. resilient.« the fastest growing large economy follow- als and communities, she asserted. Changes must be made in the design of ing China’s. However, India’s track record business institutions: their purpose must of improvement of social and environmen- THE “NEW NORMAL” not be purely the business of making prof- As explained before, this is the wrong tal indicators has not been good. For India The economics profession rules the shap- its for investors; they must also account approach for solving complex problems, to achieve the SDGs, India’s approach to ing of public policies around the world. for their impacts on the environment and which manifest in different shapes in dif- governance must change. Solutions must Since the financial crisis in 2008, which social conditions. ferent places. For example, environmental be found and implemented by communi- economists could not predict, and which “Government of the people, for the problems combine with livelihood prob- ties, and not by experts in Delhi or in the was evidence that their models were in- people, and by people” is the essence of lems in different ways in the Himalayan state capitals. complete, economists have been search- democratic governance. However, even mountains in the North of India, in the dry India changed the charter and name of ing for a “new normal” for the global econ- where there is constitutional democracy lands of Rajasthan in the middle, and in the its central planning institution in 2014. The omy. After the pandemic it is clear that, with equal voting rights for everyone, lush coastal regions of Kerala in the South. old Planning Commission was replaced by even if they could find a new model to sus- rich and poor, men and women, whatever Therefore, local systems solutions are the National Institution for Transforming

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India (NITI Aayog). The top-down budget- nutrition, education, agriculture and wa- rigid structure nor a large body. It can UN, and the Security Council. Because, as controlling powers of the Planning Com- ter resources, financial inclusion and skill shape itself to be a catalyst of change in Einstein said, humanity will not be able to mission were withdrawn. NITI was char- development, and basic infrastructure. global governance – even guiding changes find a new, harmonious and a sustainable tered to build capacities for governance in NITI is playing the role of cheerleader and in other global institutions like the WTO, the normal with old mind-sets of governance. the states and in local bodies, and to pro- score-keeper, and also provides a platform mote cooperative federalism. for sharing lessons learned. An evaluation of progress so far by in- dependent Indian and US think tanks has »Responsibility shown the efficacy of this approach of partnerships on the ground to solve com- for the plex systemic problems. The aspirational districts are improving much faster all governance around than they were with the previous top-down, expert-driven approach. The of complex reasons for some of them improving even faster than others are found to be: the fa- systems must cilitative role played by the local govern- ment leaders; and the willingness of ex- be devolved to perts from the philanthropies to trust the people to find the best solutions rather communities than forcing best practices from else- where onto them. in their This turns on its head the belief that when problems are large and global they localities.« need an expert-driven, central organization to solve them “at scale.” Governance within countries must devolve further down, not Names are easy to change, behaviors move up, to solve complex problems. And more difficult, and it is never easy to give freedoms to govern must move down to up power. It has taken a while for trans- countries from international bodies. formations in NITI to show up. Its innova- The role of central bodies within coun- tive “Aspirational Districts Program” (ADP) tries, and internationally too, must be to gives great hope. Two years ago, NITI fo- help locals build their own capacities for cussed on 112 of the country’s 640 districts. solving their problems. Central bodies can These are the furthest behind in terms of convene the locals to share learnings, and the SDGs, and economically poorest too. to deliberate on rules for governing their Partnerships were formed in each district collective commons. They must resist the between local government functionar- temptations of power – both political pow- ies, NGOs, and corporate philanthropies. er as well as expert power. The districts were provided score-cards of The G20 is in a special place among where they stood with respect to conditions global institutions. It does not have a long that mattered to the people – health and history, it is young. It does not yet have a

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leadership positions in the G20 countries, family obligations, a lack of appropriate Bridging the gender to varying degrees. According to the World experience in management and a lack of Economic Forum (2020), only 24.7% of the competencies among women as a result global political empowerment gap was of their absence in leadership positions. gap in leadership: closed in 2020. This means that the gender Several researchers note that during the gap in leadership positions still exists in last three decades women have signifi- many countries within the G20 (Indonesia cantly increased their human capital and A strategic approach reaches 55%; Russia and the United States acquired experience in management posi- reach 40%; China, Japan, Republic of Ko- tions. However, this has not significantly rea, Saudi Arabia, and Turkey are below increased their presence in top leadership 20%; the remaining G20 countries range positions because it is linked to structural between 26% and 39%). See Figure 1. factors (Ren & Caudle, 2020). The organi- Author: Women’s equality with men in leadership A well-developed body of literature zational level presents invisible obstacles positions presents a unique challenge in all indicates three levels of interrelated fac- like “glass ceilings,” segregation, a lack of Jouharah Mouhammed Group of 20 countries. This issue requires tors behind the gender gap in leadership: access to training, networks, and mentors, Abalkhail a multidimensional approach, including individual, organizational and societal. At and gender-based discriminatory hiring Associate Professor of updated policies and redesigned programs the individual level, these factors include methods. The societal level holds values Management & Public Administration, Institute that target and empower women. This of Public Administration, policy brief recognizes the importance of Saudi Arabia gender equity for women, as well as its value as a crucial driver of social cohesion, Figure 1: Female-male share in legislators, senior officials, and managers economic prosperity, and national income Institution: growth. The brief proposes a strategic ap- proach to gender equality in leadership that is based on five approaches: imple- menting gender quotas in decision-mak- ing; designing policies to target gender The Institute of Public Administration is a body- stereotypes; developing work-life balance corporate, autonomous government agency policies; developing gender-equity policies with the purpose to increase the efficiency and practices for the assessment process; and education of public employees in order to and designing specific leadership train- raise the level of administration and support ing programs. Saudi Arabia’s government the foundation of national economic develop- ment. In addition, the IPA contributes to the is committed to fostering gender equal- administrative organization of government ity and promoting women’s empowerment departments, offers consultations on adminis- across the G20 agenda, which provides an trative problems referred to it by government opportunity to bring this issue forward in ministries and agencies, undertakes adminis- the G20 2020 discussions. trative research works, and enhances cultural ties in the field of public administration. CHALLENGES Women across the world are gaining vis- Note: The European Union (EU) is a G20 member but is not listed because data is only Keywords: ibility and recognition as professionals. reported at the national level. (World Economic Forum, 2020). gender, gap, leadership, strategic, ­approaches. Yet they remain underrepresented in top

158 159 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL and beliefs about gender-based social en’s mindsets on leadership (e.g., family tions. (Catalyst, 2018). In the Arab world, call for action could include the following roles and expectations (Abalkhail, 2019). choices or a desire to avoid politics). Ad- specifically Saudi Arabia, a 20% quota for measures: The subsequent allocation of specific so- dressing these issues will benefit women, women in the country’s legislative branch, • Provide guidance on the effective and cial gender roles indirectly supports gen- society and the economy. the Shura Council, was imposed in 2013. beneficial enforcement of gender quotas. der stereotyping because the types of Therefore, tackling the determinants Yet, women remain underrepresented in • Ensure the ratio between women and activities women commonly perform in of the gender leadership gap requires five leadership in politics worldwide. men is 40:60 or 50:50 (and appropriate their allotted social roles are not seen as interconnected policy recommendations, sanctions for failure to comply). reflecting the personal qualities that are which are implementing a gender quota, • Gain support for the introduction of necessary for leadership. This social ste- tackling embedded gender stereotypes in »Governments quotas among senior managers. reotyping, in turn, creates and encourages the workplace, considering work-life bal- • Ensure women’s participation in all discriminatory attitudes toward women in ance, ensuring that the evaluation pro- must apply levels of leadership and in a range of insti- the workplace (OECD, 2018). cess in organizations is fair, and designing tutions like parliaments, political parties, The gender gap in leadership positions specific leadership programs for women. a gender public administration, and the judiciary is a prominent obstacle that limits women These recommendations will support G20 and private sectors. from reaching their full potential. There- countries in fostering gender equality in lens in their fore, tackling the gender gap in leadership leadership and achieving strong, sustain- DESIGNING POLICIES TO TACKLE is a challenging topic that requires a joint able, balanced, and inclusive growth. legislation, GENDER STEREOTYPES IN THE effort to achieve a positive effect on organ- WORKPLACE izations, institutions, the overall economy, IMPLEMENTING GENDER QUOTAS policies, and As seen in Figure 1, the share of women and women themselves, as well as mean- IN DECISION-MAKING in leadership roles is still low. In fact, only ingful outcomes for society as a whole. To achieve an impetus for quota policies, programs as modest growth has been made in most the 1995 United Nations (UN) Beijing Con- G20 countries since 2012 (OECD, 2019). A POLICIES ference on Women called for governments they reform well-developed body of literature suggests Given the existing gender gap in leadership to ensure equal representation of women that persistent gender stereotypes are the positions, there is a corresponding need at all decision-making levels in national relevant root of unequal representation and evalu- for comprehensive, multi-dimensional, and international institutions (UN Women, ation of women. Women in the workplace long-term strategic approaches to attain 2020). Gender quotas refer to reserving a laws and are traditionally seen as being responsible gender equality. certain number or percentage of leader- for the household, and therefore men are Developing policies to accelerate the ship positions for women. In many coun- regulations.« often considered more suitable for lead- process towards gender equality is a top tries, policymakers have introduced gender ership roles. The ascription of different priority in G20 countries. This priority has quotas in politics. For example, Norwegian Every G20 member should commit to roles to each gender may affect women in become more fundamental since they quotas are established in politics, and they introducing gender quota policies by 2025, several ways. First, it can be argued that adopted the Brisbane goal to reduce gen- were later implemented in the private because gender quotas can increase fe- women’s characteristics may conflict with der inequality in employment by 25% by sector. Norwegian law has required that male representation in leadership posi- the demands of a leadership role. As such, 2025. In order to bridge this gender gap in public-limited companies have a minimum tions by eliminating invisible obstacles like they will be excluded from leadership posi- leadership, the G20 should address struc- of 40% representation of each gender on the glass ceiling, overcoming discrimina- tions. Also, the assignment of certain roles tural barriers women face (e.g., gender their board. Other European countries tion by mandating that certain positions be may create internal barriers for women bias and stereotypes). Governments must also have government-mandated quotas reserved for women, and correcting nega- managers, which will influence their con- apply a gender lens in their legislation, for women on corporate boards. In the UK tive beliefs about female leadership style. fidence, commitment, and motivation (UN policies, and programs as they reform rel- and the US, neither the state nor compa- In addition, it improves men’s perceptions Women, 2020). evant laws and regulations. Also, it is im- nies are inclined toward the introduction of of women as leaders and helps eradicate In 2020, the UN Women reported that portant to acknowledge and address wom- gender quotas for decision-making posi- self-imposed stereotypes. Therefore, a gender stereotypes in the workplace harm

160 161 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL women because stereotypes justify gender 2. Involvement Balance: Equal levels ten required to care for elderly parents. • Ensure on-site childcare or the pay- discrimination more broadly and reinforce of psychological involvement in both work Therefore, WLB policies alone will not be ment of all or some part of approved off- and perpetuate historical and structural and family roles. effective without addressing the embed- site arrangements. patterns of discrimination. The World 3. Satisfaction Balance: Equal levels of ded values and assumptions that under- • Ensure at least 14 days per year of Bank suggested that, along with removing satisfaction in both work and family roles. pin the workplace culture. Also, more is carer’s leave to provide personal care to a legal barriers for women, more interven- needed to ensure that fathers take on a relative (e.g., elderly). tions need be implemented to eliminate bigger responsibility for unpaid work (Ren the influence of stereotypes on women’s »Persistent & Caudle, 2020). DEVELOPING GENDER-EQUITY career choices. One way to address gender WLB policies (e.g., paid maternity POLICIES AND PRACTICES FOR stereotypes is through education. The ed- gender leave, paid and unpaid childcare leave, ASSESSMENT PROCESSES ucational system should promote gender- flexible scheduling, on-site childcare, el- FOR LEADERSHIP POSITIONS free subjects and encourage all students stereotypes dercare) have been shown to be beneficial Hidden gender discrimination, which is to break down gender expectations when to an individual’s health and well-being, embedded in organizational practices, it comes to career choices. Hence, G20 are the root and to lead to positive outcomes for the has been internalized as “normal” and policy­makers can play a vital role in tack- employing organization (e.g. increased job “natural.” Examples are the process of job ling gender stereotypes in areas like lan- of unequal satisfaction and productivity) (Hideg et al., evaluation and practices for selecting and guage, laws and practice, justice systems, 2018). WLB policies have been proven to promoting candidates for senior positions. media and education. These stereotypes representation reduce work-family conflict and strengthen Gender bias in assessment processes in should be addressed with different organi- family relationships (Wayne, et. al., 2007). organizations is a major reason for the zations, public authorities, enterprises and evaluation Hence, this can be a vehicle for social unity scarcity of women in top management and individuals (UN Women, 2020). Con- or solidarity because social cohesion is positions. This includes recruitment, per- sequently, the following recommendations of women.« learned and experienced through families formance evaluation, appraisal processes, are put forward: (Eurofound, 2018). and processes that operate to identify • Allocation of adequate resources for G20 policymakers must accelerate the “fast-track talent.” Evidence of gender programmes targeting gender stereotypes All G20 countries are promoting bet- development of measures and policies bias was found in several G20 countries through advocacy and awareness-raising ter WLB through paid maternity leave that support gender equality and help all (Gupta, 2020). The argument states that campaigns to change mindsets concerning and at least four months’ parental leave employees balance career and family life. women and men have different leadership the “appropriate” role of men and women. (for care of the child up to a certain age). Therefore, the following measures are put styles. In addition, men and women value • Use gender-neutral language for job This social arrangement aims to provide forward for the WLB policy: different styles of management. As such, descriptions to reduce gender biases and a better WLB for parents, as well as use- • Ensure the inclusion of flexible work the style valued by women is not favored stereotypes. ful labor market opportunities for women. schedules to allow employees to choose in organizations. Therefore, women are not • Provide career education and coun- More efforts should be undertaken in the when they work (designing their work selected and promoted to top positions. It selling at work that challenges gender ste- context of long-term care, including care schedules or being able to choose from has been reported that masculine models reotypes among workers. leave provisions (OECD, 2019). Also, evi- several options). of leadership still feature heavily in the dence suggests that paid parental leave • Ensure off-site working options (for workplace (Abalkhail, 2019). DEVELOPING AND IMPLEMENTING that lasts at least a year is a threat to a example, work from home some or all of The Organisation for Economic Co- WORK-LIFE BALANCE POLICIES woman’s career promotion (Ren & Cau- the time), setting particular days or times operation and Development (OECD) high- To achieve work-life balance (WLB), the dle, 2020). Women, due to the pressures at the worksite and/or via platforms like lighted that having gender balance in pub- following interconnected components of social norms and expectations, tend to telephone, e-mail, or Skype, for communi- lic decision-making is considered a key should be considered: take on the greater part of the burden of cating with colleagues and/or supervisors. governance success metric because it is 1. Time Balance: Equal time for both caring for children. In addition, women, • Ensure at least 14 days per year of pa- related to fairness, transparency, and in- work and family roles. due to increased life expectancy, are of- ternity leave on a “non-transferable basis.” clusive policy outcomes. This is because

162 163 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL gender equality and different policymakers • Integrate women’s career develop- der differences in working styles, and the • Ensure WOTP are tailored to meet can have the “know-how to” tackle the dif- ment to leading positions as part of main- nature of career development (Abalkhail, women’s specific developmental needs. ferent needs of citizens (OECD, 2015). stream human resource development. 2019). However, without proper develop- • Integrate mentorships and coach- • Use open-recruitment tools (e.g., ment and implementation, WOTP for lead- ing programs alongside WOTP to improve advertising and employment agencies vs. ership could fail. Therefore, WOTP should women’s competencies and boost self- »G20 policy­ informal social networks or referrals to fill be implemented within a framework of confidence and self-efficacy. positions). suggested career-development initiatives makers can play for women leaders, such as mentoring and CONCLUSION DESIGNING SPECIFIC LEADERSHIP coaching. Also, training programs must be G20 member countries have to take action a vital role in TRAINING PROGRAMS FOR WOMEN fully embedded in the organization and en- in alleviating gender imbalances in lead- Leadership development programs are gage men as strategic partners. For these ership through accelerating their efforts tackling gender an important tool for preparing men and reasons, G20 nations should commit to towards the achievement of the Brisbane women for leadership roles because they supporting women’s needs in training and 25 % by 2025. This is for several benefits. stereotypes can increase their human capital (knowl- provide more opportunities for them to un- First, it would lead to better outcomes edge and skills). However, many leader- leash their potential and promote gender for women by recognizing their talents in areas like ship training programs are traditionally equality. Therefore, a call to action could and promoting inclusion, social mobility, designed around the male-career model include the following measures: and empowerment. Second, it is a crucial language, laws (a linear career path), which does not ad- • Ensure human resource development driver of social cohesion, economic pros- dress women’s needs for skills or pro- practitioners design WOTP that promotes perity, and national income growth. For and practice, fessional knowledge (Chuang, 2019). A gender equality in the workplace, empow- these reasons, the suggested policies for one-size-fits-all approach may not be ap- ers women, and increases their partici- bridging the gender gap in leadership are justice systems, propriate in training different genders. pants’ placement in leadership positions. important for all G20 countries to achieve. A customized gender-specific training media and program (women-only training program (WOTP) for leadership may be a reason- education.« able solution to promote gender equality and address related gender issues in the G20 countries should amend their laws workplace (Chuang, 2019; Clarke, 2011). to support women’s access to top man- The WOTP for leadership can have numer- agement levels. This, in turn, would fos- ous benefits as evidenced by the Cranfield ter women’s economic empowerment and School of Management in the UK (Cranfield achieve gender equality. Therefore, the fol- University, 2019), Stanford Graduate School lowing measures are proposed: of Business in the US (Chuang, 2019) and • Use fair criteria during evaluation the Institute of Public Administration in processes (i.e., recruitment, selection, and Saudi Arabia (IPA, 2020). Literature sug- promotion) to limit the influence of deci- gests that WOTP for leadership could pro- sion makers’ conscious and unconscious vide women with specific skill-development biases. (for example, decision-making), increase • Train senior managers on gender-re- their confidence, encourage them to apply lated issues like hidden and overt discrimi- the strength of their feminine qualities in nation and bias that may occur during the their work, and enhance their knowledge evaluation process. on organizational power and politics, gen-

164 165 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL Jobs, growth and sustainability

India’s recovery needs a new social contract

Abalkhail, J. (2019) Women’s career development in an Arab Middle Eastern context, Human Resource Development International, Vol, 22 Issue 2. to square the “impossible” trinity Baker, M., Ali, M., & French, E. (2019) The impact of women’s representation on performance in project-based and non-project-based organizations. International Journal of Project Management, 37(7), 872-883. Catalyst (2018) Women on corporate boards globally, New York: Catalyst. Author: Almost eight months have passed since Chuang, S. (2019) Exploring women-only training program for gender equality and women’s continuous India imposed one of the world’s strict- professional development in the workplace. Higher Education, Skills and Work-Based Learning, 9(3), 359-373. Shuva Raha est nationwide lockdowns to control the Clarke, M. (2011) Advancing women’s careers through leadership development programs. Employee Relations, Head – New Initiatives, 33(5), 498-515. spread of the COVID-19 pandemic. The Council on Energy, Cranfield University. (2019) The Female FTSE Board Report 2019: Moving beyond the numbers. Cranfield caution was warranted, as 1.35 billion citi- School of Management: Gender, Leadership and Inclusion Centre, https://www.cranfield.ac.uk/som/expertise/ Environment and Water changing-world-of-work/gender-and-leadership/female-ftse-index zens were at risk of contracting the deadly, Eurofound (2018) Social cohesion and well-being in Europe. Publications Office of the European Union, contagious disease with no vaccine or Luxembourg. cure. The Government of India, amid deep Gupta, N. (2020) Rationalizing gender inequality at scientific research organizations: A reproduction of the Indian uncertainty and with limited resources, socio-cultural context [not yet published]. Equality, Diversity and Inclusion. Hideg, I., Krstic, A., Trau, R., & Zarina, T. (2018) The unintended consequences of maternity leaves: How agency chose to save lives over livelihoods. interventions mitigate the negative effects of longer legislated maternity leaves. Journal of Applied Psychology, As weeks of economic inactivity turned 103(10), 1155-1164. into months, millions of formal and infor- IPA. (2020) The Institute of Public Administration , Saudi Arabia, https://www.ipa.edu.sa/en-us/pages/default. aspx mal workers lost their jobs, leading to a hu- OECD (2015) OECD recommendation on gender equality in public life. Paris: OECD. Retrieved from Institution: manitarian crisis during the health emer- http://www.oecd.org/governance/2015-oecd-recommendation-of-the-council-on-gender-equality-in-public- gency. Migrant workers trudged hundreds life-9789264252820-en.htm. of kilometers from urban hubs to their OECD (2018) Achieving gender balance in corporate leadership in the Middle East and North Africa, https://www.oecd.org/gender/data/achieving-gender-balance-in-corporate-leadership-in-the-middle- native places in the searing Indian sum- east-and-north-africa-mena.htm mer. Between May and October 2020, over OECD (2019) Women at work in G20 countries: Progress and policy action. https://www.oecd.org/g20/summits/ osaka/G20-Women-at-Work.pdf The Council on Energy, Environment and Water 4,600 trains were deployed to transport 6.3 1 Ren, X., & Caudle, D. J (2020) Balancing academia and family life: The gendered strains and struggles between (CEEW) is one of Asia’s leading not-for-profit million migrants to their home states and the UK and China compared. Gender in Management, 35(2),141-165. policy research institutions. CEEW uses data, over 2.7 million citizens2 stranded abroad UN Women (2020) Gender-discrimination-and-negative gender stereotypes effective policy https://www. integrated analysis, and strategic outreach were repatriated by flight. unwomen.org/en/news/stories/2011/7/countering- gender-discrimination-and-negative-gender-stereotypes- to explain – and change – the use, reuse, and In parallel, starting in March, the gov- effective-policy-responses. misuse of resources. CEEW is consistently Wayne, J. H., Grzywacz, J. G., Carlson, D. S., & Kacmar, K. M. (2007). Work-family facilitation: A theoretical ranked among the world’s top climate change ernment rolled out a phased economic and explanation and model of primary antecedents and consequences. Human Resource Management Review, 17, 63-76. think tanks. comprehensive package worth USD 263.5 Wilson, S. (2020) Pandemic leadership: Lessons from New Zealand’s approach to COVID-19. Leadership, 16(3), billion (10% of 2019-20 GDP) with measures 279-293. for immediate relief, liquidity, and payment World Bank Group. (2020). Gender equality: Why it matters, especially in a time of crisis,https://www.worldbank. Keywords: deferrals.3 The first stimulus included USD org/en/news/opinion/2020/04/13/gender-equality-why-it-matters-especially-in-a-time-of-crisis India, COVID-19, economy, agriculture, industry, 23 billion to provide food, cooking gas and World Economic Forum (2020) The Global Gender Gap Report 2019, http://www3.weforum.org/docs/WEF_ GGGR_2020.pdf energy, sustainability cash to the poor, and interventions by the

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Reserve Bank of India worth USD 86 billion and the enterprise, built on a commitment The agriculture sector employs 41.5% energy (DRE) and prudent water use, and to support businesses, especially micro, to jobs, growth and sustainability, and a of India’s workforce8 and contributed 16.5% assessing the impact of reforms on farm- small and medium enterprises (MSMEs). razor-sharp focus on tail-end risks. to its Gross Value Added in 2019-20.9 How- ers, on-farm labor workforce, and rural- Medium- and longer-term structural ever, decades of intensive cultivation have to-urban migration. reforms paving the path to economic re- led to water stress, chemical fertilisers India’s economic recovery hinges on covery followed, with the ambition to build »India’s have damaged soil health, and draconian its millions of small businesses and their an Aatmanirbhar Bharat (Self-reliant In- regulations have impoverished producers workers. The MSME sector comprises 90% dia) upon the five pillars of economy, in- economic and stunted agri-market development. of India’s unincorporated industrial units frastructure, technology-driven systems, The lockdown crashed farmgate pric- and contributed to 45% of its total indus- demography and demand. Major schemes recovery hinges es, disrupted supply chains, and ruined trial value addition and almost half its ex- include landmark reforms to deregulate millions of tonnes of produce due to inad- ports – 48%, worth USD 147.4 billion, in the agriculture sector and formalise MS- on its millions equate offtake and storage facilities. The 2018-19. About 96% of the estimated 63.4 MEs, prioritising public spending in infra- government stepped in with the world’s million MSMEs13 are proprietary, and most structure, promoting policies to enhance of small largest food security program,10 doubling operate outside formal trade and banking market liquidity and drive foreign direct in- the monthly allocations of staples for 800 systems. About 90% of India’s estimated vestment (FDI inflow from April to August businesses million poor, and in September, passed 450 million-strong workforce is also infor- 2020 grew by about 13% year-on-year4), new agri-trade and farmers’ welfare bills11 mal; MSMEs employ about 40% of these and incentivising states to deliver reforms. and their to bring in deep reforms. workers.14 The choice to direct the nation’s efforts The new policies aim to deregulate The MSME sector was in distress even and resources to protect the people has workers.« the sector – while assuring minimum before the lockdown, mostly due to a per- limited the number of cases to 8.1 million crop prices – by giving farmers and trad- ceived lack of creditworthiness. While (0.6% of the population) cases as of Octo- ers open access to inter- and intra-state short-term inputs can ease working capi- ber-end, with 7.37 million recoveries (91.2% During an economic crisis, sustain- agri-produce commerce, and the option to tal constraints, sustained revival will de- recovery rate) and 121,100 casualties.5 ability tends to lose priority; however, it market directly to end-consumers, thus pend on formalizing them through struc- The crisis galvanized and united diverse is a powerful lever to access new areas of removing the need for intermediaries. Also tural and regulatory reforms. stakeholders to adapt to the lockdown and growth. Achieving the trinity of jobs, growth on the anvil are a national e-trading plat- On July 1, the government launched innovate to meet its unique demands: by and sustainability depends on evolving the form; a support network of 10,000 farmer the Udyam online system to register and September, India, earlier an importer of economic structure from being exclu- producer organizations; provisions to ac- classify MSMEs; as of October 1, it had PPE kits, had become the world’s sec- sionary to much more people-centric and cess new types of private investment and about 700,000 registrations – just over 1% ond largest manufacturer, producing over boosting resilient economic activities to markets, and scaling up of processed food of the enterprises.15 Despite the slow start, 500,000 kits daily,6 and thousands of rail maximise output. and ancillary product value chains. Udyam is in line with CEEW’s recommen- coaches were turned into fully equipped CEEW’s report, Jobs, Growth and Sus- Efforts are also on to grow sustainable dation to build a centralised, digital data- COVID-19 isolation wards to serve rural tainability: A New Social Contract for India’s farming practices through scientific moni- base of MSMEs by linking Aadhaar identity areas.7 Factories and workplaces adopted Recovery, released in June 2020, illus- toring and evaluation of two levels of in- profiles with tax databases and the bank- strict sanitation protocols and upskilled trates many pragmatic pathways for India teractions: between the economic and the ing network. Access to real-time, credible employees to work remotely, while service to shift sustainability – across sectors – to ecological, and the agricultural and the so- information will bring the MSMEs into the providers rallied to meet the steep rise in the economic mainstream. Here, we will cial.12 These include annual yields; impact formal ecosystem; ensure efficient deliv- demand for e-payments, e-learning, e- touch upon four areas: reforming agri- of crop diversification on prices; availabil- ery of incentives and aid, and help track commerce and e-governance services. culture, rejuvenating small businesses, ity and affordability of natural fertilisers; compliances such as goods and services To sustain, and build upon, these green using the energy transition to power an crop resilience to extreme weather, build- quality and environmental metrics. shoots of recovery, India needs a new so- economic transition, and managing tail- ing circular economies such as natural The MSME sector is often seen as ho- cial contract between the state, the citizen end risks. farming powered by distributed renewable mogenous, while in fact the enterprises

168 169 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL differ widely in exposure to risk, profit- 2˚C-compatible Paris Agreement commit- CEEW estimates a USD 50 billion mar- At the 2019 UN Climate Action Summit, ability and resilience. CEEW has created ment of a 40% non-fossil fuel power ca- ket for clean energy products such as solar India launched the Coalition for Disaster a vulnerability assessment framework of pacity by 2030. looms, cold storages and food processors. Resilient Infrastructure (CDRI) with sev- MSME sectors based on criteria such as fi- In recent years, India has transformed The government has recently proposed a eral countries, UN agencies, multilateral nancial health, markets, demand trajecto- the way it generates, distributes and con- market-oriented framework for private banks, the private sector and academia, ries and workforce, to help prioritise them sumes power. Since 2000, about 800 mil- players to develop and deploy DRE liveli- covering ecological, social and economic as per their economic importance and sec- lion people have gained access; hood appliances in rural areas. This can systems.27 This June, India published its toral vulnerability. CEEW’s Indian Residential Energy Survey transform energy access from a consump- first Assessment of Climate Change over Operational sustainability is also vital. 2020 found that 97% of households are tion paradigm to an economic driver, more the Indian Region,28 covering global and MSMEs consume 30% of the energy de- grid-connected and on average receive so when combined with the agriculture national climate patterns such as temper- livered to formal industry and improving 20.6 hours of power daily.20 India’s energy and MSME reforms. atures, monsoons, cyclones, droughts and their energy efficiency (EE) will stream- transition augurs well for its economic In parallel, India must invest in resilient sea levels. line their consumption, reduce expenses, transition, through rapid electrification of physical and digital infrastructure, strong increase productivity and enhance com- power-starved MSMEs; adoption of clean- governance frameworks, and community petitiveness, especially in global markets. er, energy efficient appliances; increase in preparedness to respond effectively to low- »India’s energy A 2018 CEEW study noted that accurately distributed electricity and enhanced resil- probability, high-impact tail-end risks. measuring energy use raises the odds of ience of grid-based systems. Pandemics are just one of many transition investment in EE nearly six-fold, and MS- After the lockdown, aggregate na- threats; others include food and water MEs competing with larger companies are tional power generation slumped, espe- shocks, infrastructure collapse, and ex- augurs well for 3x more likely to do EE audits and 3.5x cially in coal plants, but renewables were treme climate events. India weathered more likely to invest in EE technologies.16 less impacted due to their low operational several climate crises this year: super- its economic Barriers include weak regulations, and complexity and must-run status. CEEW cyclone Amphan battered the east coast, lack of awareness, technical knowledge estimates that even if half the generated causing an estimated USD 13.2 billion in transition.« and capital, which could be addressed by RE power replaces imported coal, India damage,22 locusts destroyed 50,000 ha of Udyam. could save forex worth USD 89 billion in cropland,23 and floods in Assam impacted India’s economic growth and drive for 2021 – 2030. India also needs solar mod- 3.5 million people in 3,000 villages, swept In this context, we recommend a na- safe and affordable energy access, jus- ules worth USD 2 billion annually to meet over 128,000 ha of cropland and displaced tional Environment and Health De-Risk- tice and security could double its energy the 10 GW/year domestic demand; locally over 3 million animals.24 ing Mission, comprising a Climate Risk demand by 2040, with electricity demand producing even half of this can avoid forex The UN Office for Disaster Risk Re- Atlas covering critical vulnerabilities, likely to triple due to rise in appliance own- outflow of USD 1 billion. duction estimates that between 1990 and national and state-level de-risking strat- ership and cooling needs.17 Utility-scale renewables already em- 2019, India lost USD 79.5 billion and USD egies, and a centralised, real-time Inte- India imports almost 84% of its oil de- ploy 99,000 people, and current targets 100 billion, respectively,25 due to extreme grated Emergency Surveillance System spite efforts to lower import dependence to of 100 GW solar and 60 GW wind capacity climate events and vector-borne diseases. for methodical and sustained response to 67% by 2022. To alleviate geopolitical shifts could generate 1.3 million direct jobs on Extrapolating the UN-IASC’s ratio that emergencies. that often cause supply and price distor- a Full-Time Equivalent (FTE) basis,21 i.e. every USD 1 invested in preparedness Globally, the axioms of free move- tions for industry and transportation and to a 330,000-strong workforce. DRE is also saves USD 2 in response,26 India could ment of capital, energy and free trade are increase the clean energy share, India has a huge prospect, with only 4 GW of the have saved almost USD 90 billion with at risk as countries reduce over-reliance targeted a 450 GW renewable energy (RE) planned 40 GW installed so far. Rooftop so- proper systems. Resilient infrastructure, on single sources or markets and move capacity (currently 89.3 GW,18 135 GW with lar installations could create 50,000 skilled however, is up to 30% more expensive and towards localised value and job creation. 45.7 GW large hydro19) and a 15% share and unskilled jobs per 4 GW, while each will need solutions like resilience bonds, International cooperation amid this de of natural gas in the energy mix (6% now) 20 GW micro-grid could employ 110,000 low insurance premiums, and public-pri- minimis multilateralism must move from by 2030, and is on track to overachieve its workers by 2025. vate partnerships. the dilemmas of common interests such as

170 171 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL trade, finance and technology, to common growth, especially in smaller towns and aversions such as chronic health, environ- rural areas; and greenfield opportunities 5 Ministry of Health and Family Welfare, Government of India. 2020. https://www.mohfw.gov.in/ mental, or financial risks. to build resilient agriculture, industry, en- 6 Nangia, Pritisha. 2020. “India becomes second largest producer of PPE Kits; daily production capacity A Global Risk Pooling Reserve Fund29 ergy and infrastructure activities. surpasses 5 lakh.” September 18, 2020. Financial Express. https://bit.ly/32o4Vlk could provide an insurance cushion to low- 7 Ministry of Railways, Government of India. 2020. “Indian Railways getting ready to provide medical support to national efforts in fighting COVID-19 in a big way”. March 30, 2020. Press Information Bureau. er the cost of financial recovery through https://bit.ly/2JRiEuH a risk-resilience framework. Similarly, a »India must 8 Statista. 2020. “India: Distribution of the workforce across economic sectors from 2010 to 2020”. Common Risk Mitigation Mechanism could https://bit.ly/3l2RFtI 9 aggregate the financing needs of develop- PRS Legislative Research. 2020. “Economic Survey 2019-20: Report Summary.” https://bit.ly/3p8l4oM build resilient 10 Bloomberg. 2020. “COVID-19 pandemic forces revamp of world’s biggest food stamps program.” Livemint. ing nations and create a global market for July 28, 2020. https://bit.ly/3mWiMXO clean energy investment. infrastructure, 11 Ministry of Agriculture & Farmers Welfare, Government of India. 2020. “Parliament passes The Farmers' India is weathering the pandemic rela- Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020.” Press Information Bureau. tively well due to its vast size, political sta- systems and September 20, 2020. https://bit.ly/3keB0Ch bility, and low exposure to external crises, 12 Ghosh, Arunabha. 2019. “Systemic transformation in agriculture must put the farmer at the centre.” and is set to reclaim its place as one of Hindustan Times. April 2, 2019. https://bit.ly/2GI71Fe communities 13 Government of India, National Sample Survey 73rd Round, 2015-2016 the world’s fastest-growing economies in 14 Ghosh, Arunabha, Shuva Raha, et al. 2020. Jobs, Growth and Sustainability: A New Social Contract for India’s 2023, when it will host the G20. to manage Recovery. CEEW and NIPFP Report. New Delhi: Council on Energy, Environment and Water. India has demonstrated global lead- https://bit.ly/3lgDLnQ 15 ership by co-founding sustainable devel- Pandey, Radhika and Amrita Pillai. 2020. “Registering MSMEs could help them access formal credit channels”. low-probability, The Indian Express. November 7, 2020. https://bit.ly/3n3qPT2 opment-oriented international platforms 16 Biswas, Tirtha, Sachin Sharma, and Karthik Ganesan. 2018. Factors Influencing the Uptake of Energy such as Mission Innovation, the Interna- high-impact Efficiency Initiatives by Indian MSMEs. New Delhi: Council on Energy, Environment and Water. tional Solar Alliance and CDRI, and lead- https://bit.ly/35dvn33 17 International Energy Agency. 2020. “India 2020: Energy policy review.” January 2020. https://bit.ly/3kbQ7MR ing the Leadership Group on Industrial tail-end risks.« 18 Ministry of New and Renewable Energy, Government of India. 2020. “Programme/Scheme wise Physical Decarbonisation with Sweden. Nationally, Progress in 2020-21 & Cumulative upto Sept 2020”. https://bit.ly/3n1dJW4 it is shaping its economic recovery through 19 Central Electricity Authority, Government of India. 2020. “Executive Summary of Power Sector, informed decisions despite scarce tradi- In this Decade of Action, India remains September 2020”. https://bit.ly/35aDuNz 20 Agrawal, Shalu, Sunil Mani, Abhishek Jain, and Karthik Ganesan. 2020. State of Electricity Access in India: tional data sources; new drivers of invest- steadfastly committed to squaring the trin- Insights from the India Residential Energy consumption Survey (IRES) 2020. New Delhi: Council on Energy, ment, socioeconomic equity and inclusive ity of jobs, growth and sustainability. Environment and Water. https://bit.ly/38m6ap7 21 Ghosh, A. et al., 2015. Clean Energy Powers Local Job Growth in India. New Delhi: CEEW-NRDC. 22 Soumya Bhowmik. 2020. "Cyclone Amphan: Storming Bengal’s economy". Observer Research Foundation. 28 May 2020. https://bit.ly/3l4cR2x 23 Locust Warning Organisation, Government of India. 2020. “How govt is deploying drones to pursue locusts as swarms destroy swathes of crop.” Live Mint. Agence France Presse (AFP). Accessed 31 July 2020. https://bit.ly/39L8xk4 24 Assam Disaster Management Authority. 2020. Flood Report 17 July 2020. Notification. Government of Assam. https://bit.ly/358oRKL 25 UNDRR. 2019. Global Assessment Report on Disaster Risk Reduction. Geneva: United Nations Office for Disaster Risk Reduction (UNDRR). https://bit.ly/36fuZQF 1 Ministry of Railways, Government of India. 2020. “Shramik and Special Train Services.” September 16, 2020. 26 UN-IASC. 2017. Return on investment in emergency preparedness. Geneva: United Nations Inter-Agency Press Information Bureau. https://bit.ly/3lbfT5h Standing Committee (UN_IASC). https://bit.ly/358oVtZ 2 Special Service and Features. 2020. “Vande Bharat Mission seventh phase to begin from October 29.” 27 Ministry of Finance, Government of India. 2020. “India on track to meet NDC goals under Paris Agreement: October 26, 2020. Press Information Bureau. https://bit.ly/3kaq8oU Survey.” The Economic Times. 31 Jan. Accessed 3 Aug 2020. https://bit.ly/30mvI11 3 Ministry of Finance, Government of India. 2020. “Fiscal and monetary policies to deal with slowdown due to 28 Krishnan R, J Sanjay, et al. 2020. Assessment of climate change over the Indian region. Report. New Delhi. COVID-19.” September 20, 2020. Press Information Bureau. https://bit.ly/3eChrTl Ministry of Earth Sciences (MoES), Government of India. June. https://bit.ly/2PeL0yp 4 ANI. 2020. “India’s GDP growth will be negative or near zero this fiscal year: FM .” 29 Ghosh, Arunabha. 2020. “Multilateralism for Chronic Risks.” UN75 Global Governance Innovation Perspectives. October 27, 2020. The Economic Times. https://bit.ly/36khHCq Washington, D.C.: Stimson Center, Doha Forum, and Council on Energy, Environment and Water.

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to the table and help to ensure that com- the opposite: from the DBU’s perspective, The role of foundations munication can take place between soci- both aspects must be taken into consid- etal groups with opposite stances. And they eration equally – and with a view to seeing ­allow the “best-practice” examples that socio-ecological transformation as an op- during a pandemic they fund to be disseminated and imitated. portunity to demonstrate the ways in which As such, they play a decisive role in the we can reach a new normal. search for solutions to societal challenges.1 The German Federal Environmental Foundation’s MOBILIZATION AND NETWORKING Thanks to its extensive history of funding funding measures at the nexus of COVID-19 and »Foundations innovative, exemplary projects in the areas sustainability of environmental and natural conserva- complement tion, the DBU boasts an extensive network of relevant stakeholders. This network al- the actions lowed the DBU to quickly bring together Author: The COVID-19 pandemic has had a massive representatives from key institutions and impact on our world and has radically al- advisory councils to participate in a digital Cornelia Soetbeer of the state. tered the lives of everyone in it. Soon after discussion platform shortly after the lock- Head of the Environmental the initial outbreak, it became clear that down went into effect. Communication and They cannot the social and economic consequences­ The platform provided the relevant Protection of Cultural Heritage Department, would be enormous. Drastic measures and do not stakeholders with a safe space to take German Federal were introduced in an attempt to cushion stock of the current situation and identify Environmental Foundation the blow. In western European countries want to replace key areas of action. During this initial eval- (DBU) in particular, the state as crisis manager uation, a number of areas of action crystal- and regulator became significantly more state actions.« lized, including the following: the need for Institution: visible. a sustainable stimulus package, resilience But what role can foundations play as and alternative economic approaches, civil society actors with regards to manag- In early March 2020, it became clear digitalization, and the unique opportunity ing and coping with the pandemic? that Germany would be going into lock- to research the sociological aspects of the Foundations see themselves as en­ down and that this would result in major current situation. Moreover, against the The Deutsche Bundesstiftung Umwelt (DBU) ablers, trendsetters, instigators or as economic consequences, which the gov- backdrop of a looming “competition” be- funds innovative, exemplary and solution- laboratories for the development of new ernment intended to counteract through tween COVID-19 and the climate crisis, the oriented projects for the protection of the ideas. One of their strengths is their ability economic stimulus. At this time, the Ger- group advised on ways in which the pan- environment, with special consideration of to identify windows of opportunity in which man Federal Environmental Foundation demic could be used to positively shape small and medium-sized enterprises. The they can act quickly and mobilize their (DBU) adopted a formative role and took the path to a more sustainable society. funding activities focus on environmental technology and research, nature conservation, networks and funds. Foundations comple- advantage of its opportunities. As one of As the result of two intensive digi- environmental communication and protection ment the actions of the state. They cannot the largest foundations in Europe with the tal platform conferences with experts, in of cultural heritage. and do not want to replace state actions. aim of promoting exemplary projects in the a matter of weeks, the DBU had already As independent institutions, founda- area of environmental conservation, one of helped launch eight projects that address Keywords: tions can establish trustworthy platforms the main drivers for the DBU to take action various perspectives on the nexus between COVID-19 pandemic & sustainability, for communication and act as mediators was to ensure that the ongoing ecological COVID-19 and sustainability, as well as a ­socio-ecological transformation, resilience, between contrasting viewpoints. They can crisis was not ignored despite the chal- representative forsa survey on the impact role of foundations bring a wide range of different ­stakeholders lenges of the COVID-19 pandemic. Quite of COVID-19.

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PROJECT FUNDING years in terms of ecological sustainability, part in a large “real-world experiment.” At the COVID-19 pandemic, and acceptance of The projects funded by the DBU pursue then analyzed the unique conditions posed the beginning in particular, both fears and restrictive environmental measures even two main targets: they are either short- by the current crisis, and finally formulated positive expectations regarding the nexus increased slightly.”4 For example, multiple term political-consulting projects aimed at concrete recommendations for sustain- between COVID-19 and sustainability were studies show that “acceptance for climate helping to shape and introduce economic able economic stimuli.2 In the meantime, expressed. On the one hand, many peo- protection measures was relatively high stimulus measures in Germany, or longer- the German Environment Agency has com- ple loudly expressed their concerns that at the height” of the first wave of the COV- term projects that empirically study the paratively analyzed a number of studies on the implementation of measures against ID-19 pandemic (April 2020).5 current situation from a sociological per- green economic stimulus programmes – climate change could be hindered by the spective and compare the data with exist- including the study carried out by the Öko- impending recession. On the other hand, ing datasets from the time before the start Institut.3 As a whole, all of the studies agree during this time we observed a never- »One of the main of the pandemic. In both cases, the parties that the economic crisis resulting from the before-seen sense of solidarity – and the involved had to act fast. In order to be able COVID-19 pandemic can only be overcome realization that the COVID-19-related re- drivers for the to exert an influence over the economic with green stimulus packages and struc- strictions also had some positive effects stimulus measures or research societal tural reforms. The central fields of action (such as the reduction in carbon emis- DBU to take developments and individual behaviours identified were renewable energies and the sions). All of this was tied in together with in situ and extrapolate the impact of the renovation of existing buildings, sustain- the hope that we will see a shift towards a action was to current crisis on the “great transforma- able mobility, ecological transformation more sustainable lifestyle in the future. As tion” (WBGU, 2011), the projects had to be of the industry, communal funding pro- we began to enter the “second wave” in au- ensure that conceptualised, approved and implement- grammes, and nature-based solutions. tumn 2020, we once again saw increased ed quickly. Further studies address topics The German Industry Initiative for Energy discussion about questions of solidarity the ongoing such as the resilience of urban areas and Efficiency’s “Green Recoverthon” is focused between the generations. value chains, but also take into account on actively supporting and commenting on In order to evaluate the potential of ecological crisis larger questions of economic strategy and the adopted measures with a thematic focus changes in behavior and attitudes in terms alternative economic approaches as well on energy policy. As part of a collaborative of a socio-ecological transformation, it is was not ignored as concrete digital solutions. and interactive event which included politi- important to research these societal pro- cal decision-makers among the participants, cesses of change as they occur. The first despite the ECONOMIC STIMULUS MEASURES the design of the economic stimulus meas- results of the DBU-funded study “The In the project “Sustainable Economic Stim- ures was constructively reviewed in terms COVID-19 Pandemic as a Game Changer challenges of uli in Response to the Economic Impact of of opportunities for increased sustainability. for the Transformation to Sustainability?” the COVID-19 Pandemic,” the Öko-Institut During three online events, experts from a at the University of (Prof. Dr. E. the COVID-19 Freiburg analyzed sustainable design ele- variety of networks come together to devel- Matthies) have shown, “as expected, a re- ments of the German economic stimulus op targeted recovery measures. The aim is duction in individual mobility for all means pandemic.« package in the context of the pandemic mainly to provide SMEs with a voice in this of transport from April until the end of and introduced the results into the public process. The fact that Federal Minister of June. For the switch from cars to bicycles Answering the question of whether the discourse in a variety of formats. The goal the Environment Svenja Schulze was willing and the shift in future holiday planning pandemic has changed people’s environ- of the study, which was primarily aimed at to take on patronage of the project demon- (air travel), […] external factors have been mental awareness is also one aspect of the political decision-makers, was to push the strates that politicians are interested in this identified that could stabilise this change study “Environmental Awareness and Risk design of this type of stimulus package fur- form of dialogue. in behaviour over the long term. The im- Perception during the COVID-19 Pandem- ther in the direction of sustainability. To this portance of a number of political topics ic” from the University of Bielefeld (Prof. end, the project first looked back at and an- BEHAVIOR AND HEALTH has changed significantly compared to Dr. C. Hornberg). The study is particularly alyzed major international stimulus pack- Since the start of the pandemic, we have 2016 and 2018; perception of the urgency concerned with health perspectives as well ages that had been introduced in recent all found ourselves involuntarily taking of climate protection was not reduced by as the perception of environmental­ risks,

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­taking into account the concept of planetary system, to prioritise prevention and life- potential for sustainability transforma- Two additional projects have chosen to fo- health.6 The primary focus is the question style changes for health and climate pro- tions within these activities and solutions. cus on these questions. of whether the pandemic has changed the tection, to reduce healthcare inequality, The project will empirically study the activ- The aim of the study “The stress-test- relevance of the topic of the environment and to become (more) resilient to the im- ities of alternative economies and SMEs on resilient urban area” at the University of as well as individuals’ personal perception pacts of climate change. location and digitally with a view to public Bremen (Prof. G. Bolte, Prof. S. Baumgart) of environmental risks among the German service goods (or partial aspects of foun- is to identify strategies and measures on population. Topics covered include how RESILIENCE AND ALTERNATIVE dational economies7). the spatial, socio-economical and organi- much participants have been personally ECONOMIC STRATEGIES In a project carried out by Cusanus zational levels that increase the resilience affected by the pandemic; their awareness In many countries around the world, the Hochschule, “New Economics Education of urban areas, such as the maintenance of the links between global environmental pandemic has overwhelmed the healthcare for Designing Complexity in Crisis Times,” and qualification of green and open spaces issues and health risks; their knowledge systems and made us painfully aware of (Prof. Dr. S. Graupe), these kinds of alter- and targeted compensation for pandemic- of and attitude towards environmental the breaking points of our socio-economic native economic approaches are integrat- related disadvantages. However, the main problems and risk perception; their trust structures: while we recognized the fragil- ed into academic teaching and thereby into area of study is the role that urban-plan- in politics, science and the economy; and ity of an extremely differentiated economic economics education on the whole. The ning tools play in conjunction with public their assessment of the political measures system that has been streamlined for max- aim is to motivate students to understand health measures. As part of a stress test, taken during the pandemic. imum efficiency before the pandemic, we the current crisis as an opportunity for re- selected urban areas will be continually had not yet experienced it first hand to this orientation of the economy and society, in analysed in terms of which urban-planning extent. Discussions about widely ramified particular in terms of sustainability. This, strategies and tools help to promote posi- »Foundations and highly specialized value chains are in turn, is intended to strengthen their de- tive trends and reduce the negative im- now once again gaining momentum. This sign skills when dealing with uncertainty pacts of the pandemic. can establish goes hand in hand with debates about glo- and complexity. The project “Public-interest-oriented balization, re-regionalization, and reshor- approaches for pandemic-resilient urban trustworthy ing, as well as issues such as resilience to PANDEMIC RESILIENCE IN areas” at the Wuppertal Institute (Dr. F. extremely risky dependencies, in particu- URBAN AREAS ­Stelzer) is more heavily focused on rapid platforms for lar with a view to “system-relevant” goods. The often repeated slogan of the so-called implementation of concrete measures. The This tension between efficiency and “first wave” of the pandemic in spring project idea seizes on the examples of soli- communication.« resilience is the starting point for the re- 2020, which was permanently broadcast darity that arose during the COVID-19 pan- search project “Looking For a New Bal- by nearly all German television stations, demic in urban areas8 in order to reinforce ance Between the Market/State and Civil was “Wir bleiben zuhause” – “We’re stay- them with additional offers through an app This project addresses the central nex- Society for a Resilient Society” by the In- ing home.” For people with enough space that has already been established in a pilot us between the environment and health stitute for Ecological Economy Research and a comfortable, pleasant living envi- neighborhood (e.g. lunch offers from local both during and outside of the pandemic. (U. Petschow). It pursues two aims: to ronment, this wasn’t much of a problem. restaurants, help and swap offers, etc.). The climate crisis is the greatest threat systematically record and analyse the cur- But what about people living in cramped New digital forms of participation, com- to human health in this century. However, rent discussion on resilience, a recalibra- quarters and those whose neighborhoods munication and interaction are currently in until now, the topic of climate change was tion of value chains and the market/state are less pleasant and inviting? And what development. The aim is to generate posi- only considered to be of marginal impor- and civil society, and alternative economic does that look like for vulnerable sections tive perception of the situation through the tance in the health sector. This is slowly approaches, while at the same time docu- of the population, such as seniors, people help and solidarity offers in the app and changing thanks to the Fridays for Future menting current activities with a view to living alone, refugees, immigrants who to strengthen the self-efficacy of the resi- and Health for Future movements, which the question of resilience/sustainability do not speak German, or the homeless? dents of the neighborhood in question. The emerged in summer 2019. The challenge and the solutions that are actually being What does a pandemic-resilient urban digital platform is a unique opportunity to remains, however, to develop a climate- implemented at the moment in response area need and what can be done (also in take up ongoing transformation processes neutral and resource-efficient healthcare to our current challenges, and identifying the short term) to increase this resilience? in an urban area and to expand upon these

178 179 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL processes after the crisis in order to ad- climate goals, and possible solutions. The dress the resulting issues of sustainability. projects were launched in April 2020 with Building resilience These platforms are to be offered in multi- durations ranging from 3 to 13 months. ple languages in order to reach the widest The (intermediate) results will be commu- possible target group in the neighborhood. nicated as quickly as possible. With these against future crises efforts, the DBU can make a contribution SUMMARY AND OUTLOOK to the validation and understanding of the As the result of the COVID-19 pandemic, human behavioral response to the pan- The role of Multilateral Development Banks we have experienced massive restric- demic and the psychological effects that tions in terms of our everyday lives, which have been caused as a result of these radi- in providing a crucial global public good has correspondingly impacted the cur- cal changes. Moreover, the results of these rent climate and environment goals. As projects may provide us with answers as a civil-society actor, the German Federal to how we can strengthen the resilience Authors: Institution: Environmental Foundation therefore acted of our society in the face of future socio- Ursula Stiegler quickly and initiated a number of projects ecological crisis and how the pandemic it- that address the impact of the pandemic, self can help to usher in a socio-ecological Advisor, Multilateral Development Banks its consequences for environmental and transformation. As a federal enterprise, GIZ has over 50 years for Global Public Goods, of experience in a wide variety of areas, includ- GIZ ing economic development and employment promotion, energy and the environment, as well Madita Weise as peace and security. GIZ works in demand Advisor, Multilateral around the globe – from the German govern- Development Banks ment to European Union institutions, the United for Global Public Goods, Nations, the private sector and governments of GIZ other countries. The main commissioning party is the German Federal Ministry for Economic Cooperation and Development.

1 cf. Große-Ophoff, M., Soetbeer, C., “Corona und nachhaltige Entwicklung: Zwischen Restauration und Keywords: Transformation?” (working title), in an upcoming special edition of politische ökologie 163. global public goods, multilateral development 2 Schemmel, J.P., Schumacher, K., Zukunftsfähige Konjunkturimpulse zur Bewältigung der wirtschaftlichen banks, resilience Folgen der Corona-Krise, Öko-Institut, 30 June 2020. cf. https://www.dbu.de/2985ibook82913_38647_.html. 3 Burger, A., Kristof, K., Matthey, A., German Environment Agency, Background Paper The Green New Consensus, September 2020. 4 Matthies, E., Sieverding, T., Schmidt, K., & Wallis, H. (2020), Stärken die Coronamaßnahmen den dringend notwendigen Wandel zu einer nachhaltigen Mobilität und einer stärker regulierenden Klimaschutzpolitik? Eine parallele Querschnittserhebung zu Mobilitätsverhalten und Politikunterstützung drei Monate nach Beginn der Krise. Otto-von-Guericke University, Magdeburg, p. 5. Translation of the original German quotation into English. 5 ibid. 6 cf. Horton, R., Lo, S., “Planetary health: a new science for exceptional action”, in: The Lancet 386, 2015, p. 1921f and Müller, O., Jahn, A., Gabrysch, S.: “Planetary Health: Ein umfassendes Gesundheitskonzept”. In: Deutsches Ärzteblatt 2018; 115 (40): A 1751–2. 7 cf. Arcidiacono, D. et al., Foundational Economy, Manchester University Press, 2018, and Foundational Economy Collective: Die Ökonomie des Alltagslebens. Für eine neue Infrastrukturpolitik, Berlin, Suhrkamp, 2019. 8 cf. the third ad-hoc statement from the Leopoldina “Coronavirus-Pandemie – Die Krise nachhaltig überwinden”, 13 April 2020, p. 8.

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RESILIENCE TO FUTURE CRISES: address systemic instability in the global et al. 1999). Public goods imply externali- ally due to the implicit spillovers and posi- A CRUCIAL GLOBAL PUBLIC GOOD economy. Consequently, global resilience ties – i.e. benefits (or costs in the case of tive externalities and the related option to Multilateral Development Banks (MDBs) should be considered a global public good negative externalities) that are not limited free-ride on the efforts of other countries. play a key role in adapting and improving (GPG). Viewing resilience as a GPG allows to the provider of the good but a larger This conundrum leads to the question of our economies and societies to support for a comprehensive approach to incorpo- community. This implies the problem of what adequate institutional designs for the global transition toward greater re- rate economic, financial, health, environ- free-riders, as in theory they could benefit optimal provision and protection of GPGs silience. Transnational challenges, from mental and conflict-related parameters from a public good without contributing to could look like (Estevadeordal/Goodman climate change to humanitarian and eco- for countries’ preparedness for future cri- it, as long as there is one or several provid- 2017). It has often been pointed out that the nomic crises, increasingly threaten de- ses. Underproviding GPGs such as global ers caring for its production. Resilience to provision of GPGs lacks an international velopment prospects, placing mounting resilience will most certainly exacerbate crises or shocks shows such public good governance structure (Kindleberger 1986). pressure on MDBs to address these risks the impact of global crises. At the same characteristics, as the benefits of its provi- Precisely this is where MDBs as global or effectively. Moreover, regional and global time, building resilience on the global level sion clearly extend to the individual coun- regional institutions with a broad mem- interconnectedness means that shocks is dependent on the collective action of the try or region, and its under-provision, in bership and multiple interlinked functions like pandemics, financial, economic and international community. the worst case, could undermine the sta- come into play. food crises spread further and faster. The The international agreements on glob- bility of the whole planet. outbreak of the COVID-19 pandemic and al agendas such as the 2030 Agenda, the MDBS’ COMPARATIVE ADVANTAGES the ensuing is the most Paris Climate Agreement, the Addis Ababa AND ROLES FOR PROVIDING recent and unprecedented example of pro- Action Agenda, and the Sendai Framework »Not only a RESILIENCE AS GPGS found multiple crises. If unmitigated, such for Disaster Risk Reduction have put the MDBs such as the World Bank Group crises thus pose a significant risk to past global challenges of our time at the fore- country or (WBG) and the regional development banks achievements in poverty reduction and de- front of today’s policymaking. Rebuilding (RDBs), for example the African, Asian velopment. after the damage of the COVID-19 pan- region that has and Inter-American Development Banks These challenges underscore the demic will be a litmus test for these in- (AfDB, ADB and IDB), are uniquely posi- importance of preparedness and trans- ternational commitments. Now more than been affected tioned to become important multipliers to formative changes at the country level — ever, the question is whether the interna- facilitate GPG provision. Even if RDBs do including sustainable and inclusive infra- tional community can join together to build benefits from not operate on the global level, they con- structure, human development and social forward better with limited national budg- tribute to the provision of regional public protection — and the ability to coordinate ets in the face of one of the most synchro- a greater goods (RPGs) that often constitute critical and cooperate effectively at regional and nized crises ever. We argue that MDBs are intermediate public goods of GPGs. Resil- global level. For the purpose of our argu- uniquely positioned to shape this endeavor. ability to ience, provided at country or regional level, ment, we consider resilience as the ability In the following sections, we identify MDBs’ contributes to global resilience. Yet, global to absorb shocks and adapt, recover quick- roles that are crucial to strengthening the handle a shock, resilience is arguably more than the sum ly and positively transform after a crisis provision of resilience as a GPG. We end of its parts. Due to its multifaceted nature (see e.g. Béné et al. 2012, BMZ 2013, IPCC with recommendations on how these can but also the and systemic interdependencies, build- 2012 and UNU-EHS 2013). The unfolding be further developed to build longer-term ing resilience in multiple areas preempts health crisis has proven that resilience has resilience for future multifaceted crises. larger global domino effects from weakest link public significant positive spillovers. Not only a goods. Vis-á-vis other actors in the inter- country or region that has been affected CHARACTERISTICS OF GPGS community.« national development system, MDBs have benefits from a greater ability to handle a GPGs are commonly referred to in the several comparative advantages, as they shock, but also the larger global commu- literature as international public goods The provision and protection of GPGs combine different focus areas and roles nity, predominantly through the prevention characterized by non-rivalry in consump- thus presents a collective action problem, (see e.g. World Bank, IFC, and MIGA 2016): of a global transmission and the ability to tion and non-excludability (see e.g. Kaul as actors might not provide them individu- They have both a country and a global or

182 183 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL regional presence, they channel both pub- as honest brokers and (4) standard-setting edly called for (see e.g. CGD 2016; Kanbur learning formats, such as the World Bank’s lic and private finance, they work in single (see e.g. Estevadeordal et al. 2004; Ferroni 2002; Kaul 2017; Reisen/Garroway 2014; Open Learning Campus, provide the op- sectors and with multi-sector approaches, 2002, 2004; Rufín 2004; Schmaljohann et Schmaljohann et al. 2015) and was finally portunity to disseminate development and they are characterized by a unique al. 2015; Tres/Barbieri 2017). approved with the recent capital increase.1 knowledge more broadly than ever before.5 combination of different roles. The RDBs already have specialized or ear- This year’s digital African Economic Con- Financing marked funds for regional operations that, ference, jointly organized by the AfDB, the MDBs’ premier role is to provide loans and in some cases, are explicitly labelled as Economic Commission for Africa (ECA) »Multilateral grants to developing countries (for discus- RPG windows or initiatives.2 and the United Nations Development Pro- sion see Schmaljohann et al. 2015; Ferro- gramme (UNDP) focuses on “Africa beyond development ni, 2002, 2004). This occurs through lever- Knowledge COVID-19: Accelerating towards inclusive aging their capital on international capital Creating, consolidating, and disseminat- sustainable development”.6 Initiatives such banks such as markets and providing support to countries ing knowledge and analytics is a second as the WBG’s Global Crisis Risk Platform, in different forms of non-concessional and fundamental role of MDBs for the provi- which “aims to strengthen complementa- the World Bank concessional finance, as well as with dif- sion and protection of GPGs and RPGs. The rities across the units working on risk miti- ferent instruments like investment loans, arguments for producing knowledge on a gation and crisis management” and “seeks and regional development policy loans and, more re- regional and global level, rather than at to fill gaps in the Bank’s institutional ar- cently, results-based financing. the national level, is based on scale and chitecture on crisis management,”7 pro- development Due to the positive externalities it positive spillovers through the connection vide first examples of an MDB approach to might not always be in the interest of a of a critical mass of knowledge producers, strengthen resilience as a GPG. banks are country to borrow MDB money for a project consumers and users (Estevadeordal et al whose benefits will also accrue to neigh- 2004). The World Bank, for instance, has Convening power uniquely boring countries (Ferroni 2002). Therefore, recently published several flagship reports Due to their multi-country membership, an important instrument to finance GPGs on fostering resilience in a variety of areas, MDBs are ideally placed to convene and positioned and RPGs are grants, channeled through such as the “Lifelines” (Hallegatte et al. coordinate stakeholders to build con- regionally and/or thematically specialized 2019) and the “Unbreakable” (Hallegatte et sensus on priorities, incentivize country to become trust funds. The Global Facility for Disas- al. 2017) reports. The IDB has recently de- commitments and facilitate agreements ter Reduction and Recovery (GFDRR) at the veloped a guidance on how nature-based on cross-border policies and standards ­important World Bank, for instance, is a global part- solutions can be fostered to increase cli- (Estevadeordal et al. 2004). They are es- nership that helps developing countries mate change resilience and ensure the pecially well-equipped to bring together multipliers better understand and reduce their vul- delivery of sustainable infrastructure government officials and specialists from to facilitate a nerability to natural hazards and climate services.3 Regional and global efforts on several countries (Rufín 2004). In addition, change. Targeted non-concessional fund- joint analytics, moreover, offset significant their relationships with government coun- global public ing for client countries have also proven costs connected with the regular genera- terparts allows them to support national- to be an important instrument to incen- tion and production of reliable data. This level convening of stakeholders, includ- good provision.« tivize client countries to strengthen pub- role includes also the public provision of ing citizens, NGOs and the private sector. lic goods. For example, the World Bank’s data – such as the World Development In- For example, the biannual Fragility Forum Global Concessional Financing Facility dicators compiled by the World Bank.4 convened over 1000 participants from vari- We distinguish four general roles for provides development support on conces- A crucial aspect to contributing to the ous sectors at their last in-person event MDBs, which are also relevant to their sional terms to middle-income countries provision of GPGs/RPGs through knowl- in 2018 on “managing risks for peace and engagement regarding GPGs and RPGs: impacted by refugee crises. edge is dissemination through open ac- stability.” (1) financing, (2) knowledge provision and A special window for GPGs for the WBG cess policies and regional conferences and In order to avoid duplication of efforts, dissemination, (3) convening power/ acting is an innovation that has been repeat- workshops. With digitalization, web-based MDBs can exercise donor coordination in a

184 185 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL particular region. Activities comprise sim- Standard -setting only be reached through creating more and bilateral partners, facilitate through ple information sharing and brainstorm- A fourth MDB role, which is often not as efficient synergies among the financing targeted and collaborated joint capacity- ing, co-financing a particular project, and explicitly spelled out as the previous three, institutions, mainstream their role as im- building approaches joint strategic programming in a country is their contribution to regional and global portant GPG providers and pushing for an • Consider systematic linkages with the or region. For example, the ADB assists standard setting. Tres and Barbieri (2017) inclusive, equitable and sustainable recov- sustainable development goals and align the Greater Mekong Subregion Program, argue that, contrary to the idea that re- ery. But how can this potential be realized? RPG and GPG provision with SDG targets which includes six countries on their gional cooperation is mostly based on In order to fully utilize the MDB’s compara- • Coordinate on cooperation with client sub-regional collaboration on sectors weakest-link provision of RPGs, coop- tive advantage vis-à-vis other international countries to construct inclusive, equitable, spanning from environment, transport to eration projects often produce regional organizations to enhance global resilience, and sustainable preparedness and preven- health. standards that are even above the national the institutions must work as a system tion plans norms. Analyzing the example of the Cen- (also see e.g. Bhattacharya et al. 2018). • Convene, raise standards and opera- tral American pharmaceutical procure- They should: tionalize on prioritizing key aspects sup- »In order to ment mechanism, the authors conclude, • Coordinate and collaborate on analy- porting countries’ resilience such as sys- however, that this might be realized only in sis of global crisis risk factors through tematically addressing drivers of fragility. fully utilize the limited circumstances – in that case, the sharing of data and a joint analytics agen- Finally, the full potential to optimize specific supranational and intergovern- da (off-sets costs on generating data in- the provision of GPGs/RPGs can only be comparative mental institutions characterizing the Cen- puts on a regular basis) achieved if the challenges are seen as tral American regional integration. Efforts • Develop and scale-up financial tools parts to a sum of MDBs. Synergies can advantage of to that effect are central to strengthening and pooled funding to finance RPGs and at the best realized if the MDBs develop resilience as a GPG. They will constitute GPGs, respectively, e.g. developing multi- a comprehensive and consolidated action multilateral central elements to successfully building country loans, differentiated pricing, con- plan for their approach to providing GPGs forward better for a post-COVID-19 world. cessional and grant-financing through and RPGs. In such an action plan, MDBs development Initiatives would include regional or global RPG/GPG funds should go about utilizing their toolkit in fi- standards on preparedness and prevention • Jointly and in coordination with each nancing, knowledge, convening power and banks vis-à- of risks factors such as on climate adapta- other, strengthen the cooperation with standard-setting to sequence, focus and tion and mitigation. international actors such as the United prioritize the provision of GPGs such as vis other Nations agencies, regional organizations global resilience. CONCLUSION international MDBs are uniquely positioned to harness their comparative advantages to optimize organizations to 1 See Nance Birdsall “On Global Public Goods: It’s Not Big Money but It’s a Big Breakthrough.” GPG and RPG provision and to significantly https://www.cgdev.org/blog/global-public-goods-not-big-money-but-breakthrough. contribute to a more crisis-prepared post- 2 At the ADB, 10% of the Asian Development Fund (ADF) is earmarked for regional and subregional projects. enhance global COVID-19 world. The increase in debt, The AfDB’s African Development Fund (ADF) has a specifically called “Regional Public Goods Window.” The IDB has a Regional Public Goods Initiative, which annually provides grants for proposals that have been tightening of donor budgets and starkly selected as a result of a call for proposals. The WBG’s International Development Association (IDA) has a resilience, the limited resources of international donors Regional Sub-Window, for the implementation of regional transformational projects that have significant spillover benefits at the regional or continental level. In part, such funds also allow for co-financing (or buy- institutions urgently calls for doing more with less. downs) of loans, i.e. mixed forms with grant funding combined with concessional or non-concessional loans. The financing-strapped context is coupled 3 IDB/Acclimatise. 2020. Increasing infrastructure resilience with Nature-based Solutions (NbS). A 12-Step with the pressing need to build forward Technical Guidance Document for Project Developers. must work as a 4 better after the crisis. The future sustain- See for a complete overview of the WBG’s datasets: https://datacatalog.worldbank.org/. 5 See https://olc.worldbank.org/. ability of economies will in hinge in large system.« 6 See https://aec.afdb.org/en. part on how resiliently the countries can 7 http://documents1.worldbank.org/curated/en/660951532987362050/pdf/GCRP-Board-Paper-26-June- rebuild. Such an ambitious agenda can FINAL-06272018.pdf.

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Béné, Christophe/Godfrey Wood, Rachel/Newsham, Andrew/Davies, Mark (2012): Resilience: New Utopia or New Tyranny? Reflection about the Potentials and Limits of the Concept of Resilience in Relation to Vulnerability multilateralism Reduction Programmes. Bhattacharya, Amar, Homi Kharas, Mark Plant, and Annalisa Prizzon 2018: The New Global Agenda and the Future of the Multilateral Development Bank System. Overseas Development Institute (ODI), the Center for Global Development (CGD), and the Global Economy and Development Program at the Brookings Institution. Bundesministerium für wirtschaftliche Entwicklung und Zusammenarbeit (BMZ) (2013): Strategie der entwicklungsfördernden und strukturbildenden Übergangshilfe (ESÜH). Resilienz stärken – Übergänge schaffen. BMZ-Strategiepapier 6/2013. CGD (Center for Global Development) 2016: Multilateral Development Banking for This Century’s Development Challenges. Five Recommendations to Shareholders of the Old and New Multilateral Development Banks, Authors: As countries around the world strive to Washington. contain the coronavirus pandemic and its Estevadeordal, Antoni, Brian Frantz and Tam Robert Nguyen (editors) 2004: Regional public goods: from theory Richard Wike to practice, Inter-American Development Bank, Washington DC. economic fallout, they must also contend Director of Global Estevadeordal, Antoni and Louis W. Goodman 2017: 21st-century cooperation, regional public goods, and with challenges such as climate change, st Attitudes Research, sustainable development, in: ibid. (eds.), 21 Century Cooperation. Regional Public Goods, Global Governance cybersecurity, and a shifting geopolitical and Sustainable Development, Routledge, 3-13. Pew Research Center environment. Against this backdrop, some Ferroni, Marco 2002. Regional Public Goods: The Comparative Edge of Regional Development Banks. Peterson Institute for International Economics politicians have called for their countries Ferroni, Marco 2004: Regional Public Goods and the Regional Development Banks, in: the Courier ACP-EU to turn inward, away from international Nr. 202, January-March 2004, 35-36. Jacob Poushter obligations and entanglements, in order Hallegatte, Stephane, Jun Rentschler and Julie Rozenberg 2019: Lifelines: The Resilient Infrastructure Associate Director of Opportunity. Sustainable Infrastructure. Washington, DC: World Bank. to put national interests first. Others say Global Attitudes Research, Hallegatte, Stephane, Adrien Vogt-Schilb, Adrien, Mook Bangalore and Julie Rozenberg 2017: Unbreakable: international cooperation is the only way Pew Research Center Building the Resilience of the Poor in the Face of Natural Disasters. Climate Change and Development. to address problems that do not respect Washington, DC: World Bank. International Panel on Climate Change (IPCC) (2012): Managing the risks of extreme events and disasters national borders, and that global engage- to advance climate change adaptation. ment can in fact serve the national inter- Kanbur, Ravi 2002: IFI’s and IPG’s: Operational Implications for the World Bank. Ithaca: Cornell University. est. Recent international public opinion Kaul, Inge, Isabelle Grunberg and Marc A. Stern 1999: Defining Global Public Goods in (ibid.): Global Public surveys reveal that ordinary citizens tend Goods. International Cooperation in the 21st century. Published for the United Nations Development Programme (UNDP). to subscribe to the latter, multilateralist Kaul, Inge 2017: Providing global public goods. What role for the multilateral development banks? Overseas Institution: view. Development Institute. People want to see their countries Kindleberger, Charles P. 1986: The World in Depression, 1929-1939, University of California Press. working with other states to solve global Reisen, Helmut and Christopher Garroway 2014: The Future of Multilateral Concessional Finance. Published by Deutsche Gesellschaft für Internationale Zusammenarbeit/Bundesministerium für Entwicklung und challenges, and they believe in the values Zusammenarbeit. Pew Research Center is a nonpartisan fact tank and objectives that guide multilateralism Rufín, Carlos 2014: Regional Public Goods and Infrastructure, in: Estevadeordal, Antoni, Frantz Brian, Tam that informs the public and policymakers about and multilateral institutions. However, Robert Nguyen (eds.), Regional Public Goods. From Theory to Practice. Inter-American Development Bank/Asian the issues, attitudes and trends shaping the Development Bank, 182-221. many feel distant from multilateral organ- world. It conducts public opinion polling, demo- Schmaljohann, Maya, Annalisa Prizzon and Andrew Rogerson 2015: The role of the World Bank Group in the izations and uncertain that international graphic research, content analysis and other post-2015 agenda. A policy note. Deutsche Gesellschaft für Internationale Zusammenarbeit. cooperation delivers on its promises. If Tres, Joaquim and Paulo Barbieri 2017: Can regional standards be above the national norm? Impact evaluation data-driven social science research. issues for regional public goods, in Estevadeordal, Antoni and Louis W. Goodman (eds.), 21st Century leaders and institutions are going to suc- Cooperation. Regional Public Goods, Global Governance and Sustainable Development, Routledge, 74-116. cessfully mobilize public opinion to back UNU-EHS (2014): Monitoring & Evaluation of Climate Change Adaptation. Using (inter-)national development multilateral approaches, they will need to statistics for measuring and monitoring climate resilience on an aggregated level (First Draft). Keywords: show that these efforts can have a real im- World Bank, IFC, and MIGA. 2016. World Bank Group Climate Change Action Plan 2016–2020. World Bank, Washington DC. multilateralism, public, UN, U.S., China pact on everyday lives.

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MOST EMBRACE INTERNATIONAL would have reduced the number of infec- MULTILATERAL INSTITUTIONS GET However, while people support the COOPERATION tions in their own country, while only 36% MOSTLY POSITIVE REVIEWS, principles and primary international bod- Numerous Pew Research Center surveys say that no amount of cooperation would BUT SOME SAY THEY ARE INEFFECTIVE, ies that enact these ideals, they often over the years have shown that publics have reduced infections. OUT OF TOUCH question whether those same organiza- support the fundamental principles of When asked whether nations should In addition to the principles of multilateral- tions really listen to their needs or are multilateralism and international coop- act as members of a global community, ism, multilateral institutions are also gen- effective in their actions. In the 2020 sur- eration. A survey in 2020 among 14 of the rather than as independent nations pursu- erally seen in a positive light. For instance, vey, majorities in every country2 praised top 20 donor countries to the United Na- ing their own interests in a global compe- across the 14 countries surveyed in 2020, a the UN’s promotion of human rights and tions shows most people believe nations tition, majorities around the world prefer median of 63% expressed a favorable opin- peace. But far fewer, and in some cases should take other countries’ interests into cooperation. Across 34 nations surveyed ion of the UN. Majorities in every nation ex- only minorities, say the UN cares about the account when making foreign policy, even in 2019, a median of 65% said nations cept Japan rated the organization favorably, needs of ordinary people or deals effec- if that means making compromises, rather should act as part of the global community and in Denmark, Sweden, the UK, South tively with international problems. than acting purely in their own national to solve problems. Majorities or plurali- Korea and Canada, roughly seven-in-ten or And as previous Pew Research Center interest.1 Across the 14 nations, a median ties held this view in nearly every country more gave the UN a positive review. studies have shown, attitudes toward the of 58% hold this view. Most also believe surveyed across sub-Saharan Africa, the more international cooperation would have Asia-­Pacific region, Europe, Latin Amer- helped their country deal more effectively ica, and the Middle East, as well as the with the biggest challenge of 2020, the United States and Canada. The value of Figure 2 coronavirus pandemic. A median of 59% multilateralism is deeply ingrained in the believe cooperation with other countries minds of people worldwide.

Figure 1

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European Union follow a similar pattern: more than 1,000 dialogues – informal or GENERATIONAL AND IDEOLOGICAL In the US, public opinion on these is- Europeans tend to believe in the ide- moderated conversations with members of DIVIDES REGARDING MULTILATERALISM sues is sharply divided along partisan als of the EU, but they have complaints the general public – in 82 nations, explor- While overall attitudes toward multilat- lines. While 78% of Democrats and Dem- about how it functions.3 Most think the EU ing perceptions of the UN and attitudes eral organizations and the principles of ocratic-leaning independents believe the stands for peace, democracy and pros- toward major international priorities.4 A international cooperation are generally US should take into account the interests perity, but half or more also believe it is key finding from the dialogues is that peo- positive, there are important demographic of other nations even if it means making intrusive and inefficient and that Brussels ple around the world want to the UN to be and ideological differences within nations. compromises with them, just 31% of Re- does not understand the needs of average more inclusive, listening more intently to Young people, those on the ideological left, publicans and Republican-leaning inde- Europeans. the voices of women, youth, local leaders, and more highly educated people are more pendents agree. Democrats are also sig- Recent qualitative research by the UN and civil society organizations. And they likely to endorse multilateral organizations nificantly more likely to have positive views highlights the extent to which ordinary want the UN to communicate more regu- and international cooperation, as are peo- of the UN, believe the WHO has handled citizens want multilateral organizations larly and effectively with publics across the ple with higher levels of social trust. Across the coronavirus pandemic well, and be- to be more inclusive and more engaged at globe about UN programs and initiatives, the 14 countries surveyed in 2020, people lieve countries around the world should the grassroots level. To help mark its 75th while also seeking feedback from average ages 18-29 are far more likely to have a fa- act as part of a global community that anniversary, the UN conducted a series of citizens. vorable view of the UN than those 50 and works together to solve problems. older. Young people are also more positive towards the World Health Organization’s coronavirus response and believe that co- »People around Figure 3 operation with other countries would have resulted in fewer COVID-19 diagnoses. the world More educated people are also more likely to have a positive opinion of the UN want to the UN and are more likely to say the institution supports peace and human rights than to be more those with less education. Similarly, peo- ple who express high levels of social trust inclusive.« are more favorable towards the UN and tend to be more willing to support compro- mise in international relations than those More than eight in ten Democrats (83%) who are less trusting. think the US would have had fewer corona- Ideology also plays a major role in virus cases if it had worked more closely views of internationalism and its princi- with other nations on this problem; only ples. People who place themselves on the 27% of Republicans hold this view. A recent left of a self-reported ideological scale Chicago Council on Global Affairs survey are much more likely to say that nations also illustrates the huge partisan divide should act as part of a global commu- over the pandemic: when asked whether nity than those on the ideological right. the outbreak makes it clear that it is more Furthermore, those in Europe who sup- important for the US to “coordinate and port right-wing populist parties, such as collaborate with other countries to solve the AfD in Germany or National Rally in global issues,” or that it is more impor- France, are much less supportive of mul- tant to “be self-sufficient as a nation so we tilateral approaches. don’t need to depend on others,” 80% of

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Democrats choose the former, while 58% (20%), the UK (19%), and France (11%) had However, the US is not the only su- in Chancellor Merkel, while 64% say the of Republicans choose the latter.5 confidence in Trump, the share of the pub- perpower to receive poor reviews from same about President Macron. So while multilateralism is a broadly lic expressing this view about Obama never international publics. Favorable ratings of As this is being written, Joe Biden, popular concept, many do have reserva- fell below 70% in these three nations dur- China are also at an all-time low in many who has promised to take a much more tions about it, and these reservations are ing his two terms in office. of the nations polled in 2020, including multilateral approach to foreign affairs often linked to fears about being “left be- the US: 73% of Americans have a nega- than his predecessor, has just become US hind” by the immense changes associated tive opinion of China, by far the highest president-elect. The Biden administration with globalization. A five-nation 2018 Ber- »Citizens percentage registered since the Pew Re- will no doubt hope to restore America’s telsmann study of attitudes toward the G20 search Center started asking this question battered international image. Doing so will found that people who believe they have not around the in 2002.11 During a period characterized by require convincing international publics benefited from globalization are less likely numerous major international challeng- that the US is committed to working with to embrace international organizations globe believe es – including public health, economic, others to solve global problems. and cooperation.6 A recent Pew Research and climate crises – citizens around the Center focus group study in the US and multilateral world expressed little confidence that the PRIORITIES THAT CALL FOR UK highlighted how skeptics of globaliza- world’s two major superpowers are capa- MULTILATERAL ACTION tion often see international organizations approaches can ble of successfully addressing those chal- Writing about the future of multilateral- as too powerful and as a threat to national lenges. ism, Homi Kharas, Dennis Snower, and sovereignty. In these two nations, skeptics have an impact The leaders who received the most Sebastian Strauss call for multilateral believe their own country’s standing in the positive reviews in the 2020 survey are the agreements that are “formulated clear- world can be weakened through collabora- on their well- two often associated with international ly in terms of public interest,” and that tion with other nations.7 Even though the cooperation and multilateral approaches “enhance the well-being of people living principles of multilateralism are broadly being.« to global challenges: Germany’s Angela under diverse national circumstances.”12 popular, it’s worth remembering that, in Merkel and France’s Emmanuel Macron. It is clear that ordinary citizens around the minds of some, what international co- Across 13 nations, 76% voiced confidence the globe believe multilateral approaches operation really means is allowing other Many factors have driven this decline in countries to take advantage of you. America’s reputation, but a big part of the story is opposition to Trump’s policies, in DOUBTS ABOUT UNITED STATES, CHINA particular his disdain for international en- Figure 4 AS WORLD ACTORS gagement and multilateralism. The Trump In addition to the concerns some have administration’s withdrawal from the Paris about multilateral institutions, many also Agreement on Climate Change and the Iran question the role and influence of major nuclear deal9 were unpopular among inter- powers, such as the US and China. In the national publics10. His policies on immigra- case of the former, Donald Trump’s presi- tion – such as building a wall on the border dency led to a sharp downturn in America’s with Mexico and making it more difficult international image. In the 2020 survey, a for immigrants to enter the US – also met median of just 16% across 13 nations said with widespread opposition. When the US they have confidence in Trump to do the pulls out of international commitments and right thing in world affairs and just 34% when it puts up barriers between itself and had a positive view of the US overall.8 The the rest of the world, foreign publics react contrast with his predecessor is strik- negatively, and that has had a deleterious ing. While one-in-five or fewer in Canada impact on the country’s overall reputation.

194 195 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL can have an impact on their well-being, China is low, and even though institutions and when asked about the top chal- like the UN and EU are generally well- lenges facing their country, people con- liked, they are often seen as out of touch. sistently name issues that can only be To deal effectively with global challenges, solved through international cooperation. leaders will need to demonstrate how the Respondents in the 14 nations we polled lofty principles of international coopera- in 2020 identify climate change and the tion can translate into actions that have a spread of infectious diseases as the top real impact on everyday lives. international threats to their countries, When tackling today’s most pressing issues that require multilateral action.13 problems, leaders and experts would do Climate change has consistently been well to consider the voice of the people. cited as the top threat across the world14 Understanding people’s priorities, how over the past several years and worries they perceive the advantages and disad- are growing.15 vantages of international cooperation, and However, many citizens have strong their willingness to trust multilateral insti- 1 Bell, James, Jacob Poushter, Moira Fagan, Nicholas Kent, and J.J. Moncus. 2020. “International Cooperation doubts about how effectively key actors in tutions can help leaders identify paths to Welcomed Across 14 Advanced Economies,” Pew Research Center. https://www.pewresearch.org/ the international system can deal with cur- enduring, inclusive solutions – at the na- global/2020/09/21/international-cooperation-welcomed-across-14-advanced-economies/ 2 https://www.pewresearch.org/global/2020/09/21/international-cooperation-welcomed-across-14-advanced- rent challenges. Confidence in the US and tional and global scale. economies/pg_2020-09-21_un-multilateralism_0-03/ 3 Wike, Richard, Janell Fetterolf, and Moira Fagan. 2019. “Europeans Credit EU with Promoting Peace and Prosperity, but Say Brussels Is Out of Touch With Its Citizens,” Pew Research Center. https://www.pewresearch. org/global/2019/03/19/europeans-credit-eu-with-promoting-peace-and-prosperity-but-say-brussels-is-out- of-touch-with-its-citizens/ 4 United Nations. 2020. “The Future We Want, The United Nations We Need.” 5 Smeltz, Dina, Ivo Daadler, Karl Friedhoff, Craig Kafura, and Brendan Helm. 2020. “Divided We Stand: Republicans Diverge on US Foreign Policy,” Chicago Council on Global Affairs. https://www.thechicagocouncil. org/publication/lcc/divided-we-stand 6 Tillmann, Christina. 2018. “The G20 is turning 20. Time to take stock of multilateralism,” Bertelsmann Stiftung. https://www.bertelsmann-stiftung.de/fileadmin/files/BSt/Publikationen/GrauePublikationen/ ZD_EINWURF_06_2018_The_G20_is_turning_20.pdf 7 Silver, Laura, Shannon Schumacher, and Mara Mordecai. 2020. “In U.S. and UK, Globalization Leaves Some Feeling ‘Left Behind’ or ‘Swept Up,” Pew Research Center. https://www.pewresearch.org/2020/10/05/ in-u-s-and-uk-globalization-leaves-some-feeling-left-behind-or-swept-up/ 8 Wike, Richard, Janell Fetterolf, and Mara Mordecai. 2020. “U.S. Image Plummets Internationally as Most Say Country Has Handled Coronavirus Badly,” Pew Research Center. https://www.pewresearch.org/ global/2020/09/15/us-image-plummets-internationally-as-most-say-country-has-handled-coronavirus-badly/ 9 https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-ending-united-states- participation-unacceptable-iran-deal/ 10 https://www.pewresearch.org/global/2020/01/08/little-support-for-trumps-international-policies/ 11 Silver, Laura, Kat Devlin, and Christine Huang. 2020. “Unfavorable Views of China Reach Historic Highs in Many Countries,” Pew Research Center. https://www.pewresearch.org/global/2020/10/06/unfavorable- views-of-china-reach-historic-highs-in-many-countries/ 12 https://www.global-solutions-initiative.org/press-news/the-future-of-multilateralism/ 13 Poushter, Jacob, and Christine Huang. 2020. “Despite Pandemic, Many Europeans Still See Climate Change as Greatest Threat to Their Countries,” Pew Research Center. https://www.pewresearch.org/global/2020/09/09/ despite-pandemic-many-europeans-still-see-climate-change-as-greatest-threat-to-their-countries/ 14 https://www.pewresearch.org/global/2019/02/10/climate-change-still-seen-as-the-top-global-threat-but- cyberattacks-a-rising-concern/ 15 https://www.pewresearch.org/fact-tank/2020/10/16/many-globally-are-as-concerned-about-climate-change- as-about-the-spread-of-infectious-diseases/

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After COVID-19 hit countries around the the Domar condition. The Domar condi- Revisiting the public world, many introduced massive fiscal tion determines fiscal sustainability by support programs, together with a strong comparing the interest rate of government easing of monetary policy. Budget deficits bonds and the growth rate of the econo- debt stability condition began rising in many places, and mon- my. Recently, Paul Krugman (2020) used etary authorities started purchasing huge the Domar condition, claiming that fiscal amounts of government bonds on the mar- explosion could be avoided since many Rethinking the Domar condition after COVID-19 ket. Fiscal deficits are being covered by easy countries face very low interest rates and monetary policy for the moment. However, negative interest rates that are lower than the accumulation of budget deficits means growth rate of the economy. that reducing these deficits will become big Authors: issues for many countries. Stability of gov- ernment budgets will be very important. Naoyuki Yoshino »Public debt The Domar condition is used to check Professor Emeritus of Keio the stability of the budget deficits by com- University, former Dean sustainability paring interest rates and the growth rate of of the Asian Development Bank Institute the economy. This paper will discuss that depends on Tokyo Metropolitan University is the only com- the Domar condition is derived from the prehensive public university of the Tokyo Metro- supply side of government bonds (i.e. the Hiroaki Miyamoto the interest politan Government, and is one of the top public government budget deficits) without taking Professor at Tokyo universities in Japan. With a top-level educa- into account the demand for government Metropolitan University, tion and research environment, it provides an rate sensitivity bonds. By considering the demand for gov- former economist educational opportunity for strongly motivated at the IMF students, and aims to become a university ernment bonds together with their supply, to changes representing Tokyo to lead and contribute to this paper finds that public debt sustain- the world. ability depends on the sensitivity of inter- in the supply est rates to changes in government bond Institutions: supply and demand. Data shows that the and demand Keywords: prediction of our model is consistent with domar condition, fiscal sustainability, the case of Greece and Japan on public of government demand for government bonds debt sustainability. bonds.« INTRODUCTION Fiscal sustainability has been a central Keio University is a leading private research consideration in fiscal policy analysis. The university committed to excellence and in- recent coronavirus pandemic pushed many This paper revisits the Domar condition novation in education, research and medicine. countries to provide government emer- by considering the demand for government Located in central Tokyo, it is the oldest insti- gency spending to those affected by busi- bonds. As the Domar condition is obtained tute of modern higher education in Japan. The ness shutdowns. Huge spending means from the government budget constraint, it university is one of the members of Top Global University Project, funded by the Japanese gov- huge increases in government debt, which focuses only on the supply of government ernment, and it is one of two Japanese univer- brings the danger of debt explosion. bonds and does not take into account the sities to be a member of the World Economic To examine whether public debt is sus- demand for government bonds. Since the Forum's Global University Leaders Forum. tainable or not, the literature often uses US uses a key international currency and

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the demand for government bonds comes that, while Greece nearly went bankrupt, and ΔBt is the issue of government bonds. COVID-19, the highest among Organisation from all over the world, using the Domar Japan’s fiscal situation is still sustainable, By dividing (1) by GDP Yt, we can obtain for Economic Cooperation and Develop- condition to examine the fiscal sustainabil- even though its debt-to-GDP ratio is higher ment (OECD) countries. The interesting ity in the US could be justified. Especially than Greece’s. This result is explained by point is that Japan’s debt is still sustain- faced with economic crisis, many investors the fact that the difference between the able, while the southern European coun- are attracted to US government bonds as two countries lies in the demand side of tries Greece and Cyprus all but went bank- a safe haven. However, many countries do their government bonds. where bt Bt/Yt, gt Gt/Yt, tt Tt/Yt, and rupt due to their high government deficits, not issue USD-denominated government ηt ΔYt/Yt. although their debt-to-GDP ratios were bonds, and local currency bonds face lim- lower than Japan’s. ited demand. Thus, it may not be appropri- »The differences Under the condition where the primary Despite its huge budget deficit, the ate to use the Domar condition in those balance is in equilibrium, if the interest Japanese economy can sustain the stabil- countries. rate exceeds growth (r >η ), the budget def- ity of the bond market. Many Europeans between Japan t t This paper shows that the stability icit will increase. In contrast, if the interest ask why Japan is still stable while Greece condition for government budgets will be rate is lower than the growth rate (r <η ), and other European countries are in se- and Greece lie t t different from the Domar condition once the budget deficit will converge in a sta- rious trouble. The differences between demand for government bonds is taken in the demand ble manner. However, as the government Japan and Greece lie in the demand for into account. We find that public debt sta- budget constraint focuses only on the sup- government debt, rather than the supply bility depends on the sensitivity of interest for government ply of government bonds, the Domar con- of government debt. More than 90% of the rates to changes in the supply and demand dition does not consider the demand of Government of Japan’s debt is held by do- of government bonds. If an increase in the debt, rather government bonds. mestic investors in banks, life insurance, interest rate to the supply of one more unit Japan’s debt-to-gross domestic prod- and pension funds. The Japanese govern- of government bonds is higher than that of than the supply uct (GDP) ratio will be close to 300% after ment issues various kinds of bonds based demand, the interest burden of the bond supply becomes larger than the demand of government side. Thus, the government has to pay a higher interest rate, which leads to an ex- debt.« Figure 1: Government Bond Markets of Japan and Greece plosion of budget deficits. In contrast, if an increase in the interest rate from the de- mand side is higher than that of the supply DOMAR CONDITION SHOWS side, buyers pay more to purchase one unit SUSTAINABILITY OF GOVERNMENT of the government bonds than suppliers, BUDGET DEFICITS and the interest burden for the govern- The Domar condition is well-known meth- ment declines. Thus, the stability of budget od by which to judge whether the budget will be achieved. deficit is sustainable. The Domar condition We also examine whether the predic- is obtained from the government budget tion of our model is empirically plausible constraint: by looking at the case of Greece and Japan. We choose these two economies because they both have high debt-to-GDP ratios but differ in their fiscal sustainability. We find where Gt is government spending, Bt-1 is that the prediction of our fiscal sustain- the stock of public debt, Tt is total tax rev- Source: N. Yoshino, F. Taghizadeh-Hesary and T.Mizoguchi (2019). ability condition is consistent with the fact enues, rtB is the interest rate for public debt

200 201 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL on demand from differing sectors, and the Both Japan and Greece have increased est rate on Greek bonds. The Greek inter- budget deficit is the high payments from government bond market has been quite their sales of government bonds, mean- est rate increased to more than 20%, while the central government to local govern- stable in Japan. Japanese investors have ing that the supply curve of government the Japanese interest rate has remained at ments. Around 15.8% of total government continued to hold government bonds since bonds has shifted to the right in the pri- about 1% or less. Since only 5% of the to- spending is allocated for transfer from the the Basel capital requirements set the risk mary market. The demand for Japanese tal bonds issued by the Japanese govern- central government to local governments of government bonds at zero. Recently, the government bonds from banks, insurance ment are held by overseas investors, there and this is the second largest government BOJ purchased a huge number of govern- companies, and pension funds has been is much less likelihood of , expense after social security. Many local ment bonds. In contrast, more than 70% increasing as the sluggish economy has since domestic holders tend to retain their governments rely on central government of investors in Greece’s bond market were reduced demand for corporate loans. Mon- investments (Yoshino, Taghizadeh-Hesary transfers without making efforts them- foreign, and they had been quick to move etary easing has increased bank deposits and Mizoguchi 2019). selves to revitalize their regional econo- out of the market at times of risk. and these funds have often been invested Japan has achieved the highest life mies (Yoshino, Taghizadeh-Hesary and Figure 1 depicts the supply of govern- in government bonds. Japanese interest expectancy in the world and the Japanese Mizoguchi 2019). ment bonds and the demand for govern- rates, therefore, remain low. economy is facing an aging population. As The Greek government bond interest ment debt in Japan and Greece. The ver- The behavior of holders of Japanese a result, social welfare costs have started rate increased suddenly when the coun- tical line shows the supply of government and Greek debt is distinctive (Table 1). to increase and currently one-third of gov- try’s budget deficit was in a serious state bonds in the primary market; no matter Overseas investors who hold 70% of gov- ernment spending is allocated to social and could not be redeemed by taxpayers’ what the rate of interest, the government ernment bonds in Greece are quick to sell welfare, while the government budget money. Foreign investors asked for a risk has to finance its budget deficit. The de- them if they feel that risk is increasing. As deficit is rising every year. In the general premium for Greek government bonds and mand for government bonds increases demand for Greek bonds has diminished, account budget for 2020, social security started to sell, which increased the inter- when the interest rate rises. Thus the de- the demand curve of the bonds has shifted accounted for 33.6 % of the total. This is est rate even further. In contrast, the bot- mand curve for government bonds is up- to the left (see Figure 1, right-hand graph), the major reason for the increase in the tom line in the figure shows the Japanese ward sloping in the figure. which has progressively raised the inter- amount of outstanding government bonds. government bond interest rate, which The second reason for this continuous is the lowest among the selected OECD

Table 1: Holders of Japanese and Greek Government bonds Figure 2: Diagram of fiscal sustainability

Source: the authors

202 203 GLOBAL SOLUTIONS JOURNAL ∙ ISSUE 6 THE NEW NORMAL countries for the reasons explained in re- REVISED DOMAR CONDITION FOR By taking into account of both demand EMPIRICAL ANALYSIS OF REVISED lation to Figure 1. FISCAL SUSTAINABLITY for government bonds and supply of gov- DOMAR CONDITION APPLIED TO Japan’s demand for government bonds The supply of government bonds is de- ernment bonds, the stability condition GREECE AND JAPAN is increasing and the demand curve for scribed by the government budget con- is the comparison between the existing This section empirically examines the va- government bonds is shifting to the right straint and the demand for government amount of government bonds (Bt-1) and the lidity of our fiscal sustainability condition as is shown in Figure 1, mainly on the part bonds coming from private investors and interest sensitivity of demand (b1) for gov- by looking at the case of Greece and Japan. of the BOJ and also because banks, insur- the central bank. A detailed mathematical ernment bonds as follows. We choose these two economies because ance companies, and pension funds have derivation can be seen in Yoshino, Taghi- they both have high debt-to-GDP ratios but not found other alternatives for invest- zadeh-Hesary and Mizoguchi (2019) and differ in their fiscal sustainability. While ment. Banks have continued to receive de- Yoshino and Miyamoto (2020). Greece nearly went bankrupt, Japan’s posits and are looking to invest in govern- Figure 2 shows a comparison of fiscal fiscal situation is still sustainable, even ment bonds. Insurance and public pension divergence and fiscal convergence. The though Japan’s debt-to-GDP ratio is high- funds in Japan are inclined to investment diagram shows the divergent situation of er than Greece. We compare the value of b1 in government bonds as these are regard- fiscal deficits where government bonds This result is interpreted as follows. and Bt-1 for these two economies. ed as safe assets. Therefore, the demand (ΔB) becomes larger and larger. On the The left-hand side shows the stability situ- Figures 3 shows that over the sample for government bonds has been increas- other hand, the dotted declining line de- ation of fiscal sustainability, which can be period, the estimated b1 is less than the ing, illustrated in the demand curve, and notes the convergence of budget deficits compared by Bt-1 (existing stock of govern- lagging outstanding government debt in this has kept the Japanese interest rate where government bonds become smaller ment bond) and b1 (interest rate sensitivity Japan. On the other hand, Figure 4 shows low. and smaller. of demand for government bond). that the estimated b1 was higher than the

Figure 3: Application of the revised Domar condition to Japan Figure 4: Application of the revised Domar condition to Greece

Source: the authorsʼ computation Source: the authorsʼ computation

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­outstanding government debt in Greece in CONCLUSION 2009–2010. This result is consistent with This paper revisits Domar’s fiscal sus- the fact that Japan’s fiscal situation is still tainability condition by considering the sustained while Greece all but went bank- demand for government bonds. Once the rupt. demand for government bonds is taken The key difference between Greece into account, the stability condition for and Japan is the demand for government the government budget will be different bonds. While more than 90% of Japan’s from the Domar condition. Public debt government bonds are held by domestic sustainability depends on the interest investors, more than 70% of investors in rate sensitivity to changes in the govern- Greece’s bond market were foreigners. ment bond supply and demand. Our em- This high ratio of overseas investors was pirical analysis finds that the prediction the cause of the increase in the interest of our model is consistent with the case rate of government bonds in Greece, which of Greece and Japan on public debt sus- led to the Greek government debt crisis. tainability.

Domar, E.D. (1944), “The Burden of Debt and the National Income”, American Economic Review, 34(4), pp. 798–827. Krugman, P. (2020), “The case for permanent stimulus”, Mitigating the COVID Economic Crisis: Act Fast and Do Whatever It Takes, Edited by Richard Baldwin and Beatrice Weder di Mauro, A CEPR Press VoxEU.org eBook. Yoshino, N., Mizoguchi T. and Taghizadeh-Hesary F., (2019). “Optimal fiscal rule for achieving fiscal sustainability: the Japanese case”, Global Business and Economic Review, Vol. 21, No.2, pp.156–173. Yoshino, N. and H. Miyamoto, (2020). “Revisiting the public debt stability condition: Rethinking the Domar condition”, Asian Development Bank Institute, working paper, No.1141, May 2020.

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