Working Papers

The pandemic-induced global economic crisis has contributed to the re-emergence of sovereign default risk, especially for emerging and developing economies, and has directed attention to the impact of the institutions that are tasked with attempting to predict defaults: the international credit rating agencies. This paper describes four main challenges posed by credit rating agencies, especially from a developing and emerging economies perspective: potential bias in ratings, pro-cyclicality of ratings, governance issues and conflicts of interest, and incorporation of climate risk. It concludes with potential policy solutions addressed at ratings agencies, regulators, and policy makers.…

The COVID-19 pandemic has caused the most universal health and socio-economic crisis in recent history. However, the magnitude of the economic damage has differed widely; some countries were hit particularly hard, while others have managed to weather the storm much better. In this paper, we use cross-country regression analysis to identify factors that help explain the differences in the growth impact of the COVID-19 shock. Our findings underscore the critical role of balancing health and economic concerns in managing the pandemic as both a country’s exposure to the coronavirus and the stringency of containment measures are strongly correlated with its growth performance. In addition,…

In Article 25 (1) of the Universal Declaration of Human Rights, the United Nations recognized in 1948 the basic human right to “security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond ... control.” This paper examines how economic insecurity is related to, yet different from, poverty and inequality, why it matters for human well-being and how it has been changing in different countries around the world in recent years. The paper concludes with discussion of how economic insecurity has been and will be affected by the Covid-19 pandemic/recession.

This paper offers a unifying conceptual framework for understanding the relationship between climate change and “within-country inequalities,” referred here collectively as “social inequality.” Available evidence indicates that this relationship is characterized by a vicious cycle, whereby initial inequality causes the disadvantaged groups to suffer disproportionately from the adverse effects of climate change, resulting in greater subsequent inequality. The paper identifies three main channels through which the inequality-aggravating effect of climate change materializes, namely (a) increase in the exposure of the disadvantaged groups to the adverse effects of climate change; (b)…

Economic development is associated with structural transformation and the increase of complexity of production and exports. This paper examines whether strategic diversification is required to increase economic complexity or whether market incentives would be sufficient to drive this process of catching-up. The paper applies empirical methods of the strand of the literature on economic complexity to examine how path dependency and the demand for potential new products affect economic diversification. It argues that strategic diversification is required in cases when demand factors are very likely to create incentives for diversification towards less complex products, which hinders the…

Economic diversification is very relevant for poorer developing countries to create jobs and foster economic development. That need has been recognized in key internationally agreed development goals. The empirical economic literature has identified several stylized facts about the pattern of diversification of economies, but the development of explanations for those patterns in general has been only loosely associated with economic theory on growth, trade, technology change and structural transformation. Making that connection is relevant because it could inform policymakers in developing countries in designing and implementing policies for promoting diversification. This paper presents…

This paper maps interrelationships among targets of the Sustainable Development Goal dedicated to oceans (SDG 14), as well as interrelationships between those targets and other SDGs. This is done using a large number of UN reports as well as scientific publications. The literature identifies many linkages among the targets of SDG 14; most of these targets are potentially synergistic with one another. Many linkages also exist between SDG 14 targets and other SDGs. Different targets under SDG 14 link to different SDGs. This has implications for policy discussions on how to achieve progress on SDG 14. The interrelationships that we highlight can be used as a tool for dialogue between policy…

This paper explores the scope for Innovative Development Finance (IDF) to compensate for declining Official Development Assistance (ODA) and/or to enhance the efficiency of ODA. It shows that IDF has not helped much to increase the volume of aid. With regard to efficiency, the role of IDF-related mechanisms remains controversial. In view of the above, it may be more productive to focus on other resources available to Asia. The paper points to two such resources, namely the surpluses accumulated in the form of reserves, Sovereign Wealth Funds (SWFs), etc. and the migrant remittances. Efficient utilization of these two sources can vastly change the development finance landscape in Asia.…

The paper discusses the progress of Indian economy and its policies since the broad-based structural reforms initiated in 1991 with a special focus on the recent downturn following the global financial crisis. The paper is structured into two parts: first part discusses the major economic and social achievements of India since 1991, it identifies the causes of the recent downturn, and the policy responses to revive the economy. In the second part, the paper outlines the major challenges India is facing and the policies and reforms that need to be implement to achieve sustainable development.

Implementation of the Agenda 21 bifurcated into two tracks. While the economic and social development agenda gelled into the Millennium Development Goals (MDGs), the environmental protection agenda moved along a different track, represented by the United Nations Framework Convention on Climate Change (UNFCCC), Convention on Biodiversity (CBD), etc. This bifurcation also led to very different “domain configurations.” While there were some advantages of this bifurcation, it led to a conflict between the human development and the environmental goals. This paper presents a framework for bringing environment and development together in the UN post-2015 agenda.

The new role that middle-income countries (MICs) play in the global landscape obliges international community to review the configuration of the development cooperation system. On the one hand, MICs still face considerable structural deficits that affect their process of development; on the other, international community needs MICs to participate more intensively in the international agenda. Development cooperation can support both purposes, although for that to happen, substantial changes are required in traditional approaches and procedures of current international aid. This paper analyses these subjects with the objective of helping decision-makers come to good decisions

The paper reviews the sluggish growth and inclusive developments of the Brazilian economy in the last decade. The first section analyzes the macroeconomic performance pointing export growth as the engine of growth. The second evaluates social policies and their relationship with the improvements in the labor market. The third examines Brazilian policy reactions to the global crisis that managed to recover consumption but failed to sustain investment and growth. The discussion of challenges for a sustainable development concludes the paper. Investment in education and infrastructure are consensual policy advices but there are plenty of disagreements and controversies with regards to…