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“Operating System Upgrade” Needed to Renew Globalization, Avoid Future Crises

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The World Economic Forum today calls for a global public-private campaign to strengthen and modernize international cooperation and two key areas of domestic governance.

The call for engagement comes two months after the World Economic Forum Annual Meeting and 10 years to the day since the London G20 Leaders Summit, when concerted global action was credited with helping avert a deeper and more protracted global economic crisis.

In a new white paper, Globalization 4.0: Shaping a New Global Architecture in the Age of the Fourth Industrial Revolution, the Forum argues that major shifts underway in technology, geopolitics, environment and society are combining to give birth to a new phase of globalization – Globalization 4.0 – whose trajectory will depend in large part on how well governance at multiple levels – governmental, corporate and international – adapts to these changes.

The emergence of these four transformations as driving forces of Globalization 4.0, the paper argues, calls for a new approach by governments, companies, civil society institutions and citizens to strengthen and modernize international cooperation and domestic governance. The paper also urges leaders to heed the lessons of 2009 and work together now rather than become complacent about the gaps in national and global governance that accumulated as a result of changes in technology, markets and macroeconomic conditions, which ultimately led to the global financial crisis of 2008-2009.

A new era for global governance

In the run-up to the 75th anniversary of the United Nations and Bretton Woods institutions in 2020, the Forum seeks to inspire engagement by facilitating a year-long process of dialogue in cooperation with other institutions. The white paper is intended to help concretize these discussions and place them in systemic context. Drawing on discussions and consultations undertaken on its platform before, during and after the World Economic Forum Annual Meeting in Davos in January, it presents:

– 8 general design specifications of effective international cooperative architecture and domestic governance in this new era

– 100 architectural innovations – existing initiatives and proposals embodying these specifications that would go a long way towards modernizing and strengthening the effectiveness of institutions and arrangements in such areas as trade, finance, environment, technology and cybersecurity, as well as domestic corporate governance and labour policies

These are presented to raise the level of ambition and appreciation of the impressive array of practical opportunities for progress that are available and mainly awaiting wider support. Nearly 60 multilateral and intergovernmental governance initiatives are highlighted, including more than 20 led by the UN and 15 by the Bretton Woods institutions, OECD and WTO. In addition, 45 multistakeholder initiatives to strengthen global governance and cooperation are spotlighted, including 25 that are facilitated by or linked to the World Economic Forum’s platform.

The white paper argues that implementation of a substantial portion of these would amount to an “operating system upgrade” for international cooperation and its indispensable core of multilateral institutions. Much of the remarkable progress humanity has experienced since the Second World War has been constructed on the foundation of norms and shared policy and action agendas organized through the United Nations system and Bretton Woods institutions. The white paper includes a summary of these achievements and argues for strengthening this precious institutional infrastructure, while anchoring it in a wider, multidimensional geometry of cooperative arrangements – a more robust underlying operating system – that advances common objectives even further.

“Crisis need not and should not be relied upon again to be the mother of invention for improvements in governance required by our rapidly changing world. This report illustrates that there is no lack of opportunities to strengthen international cooperation and domestic governance now, so we do not have to resort to an emergency response later like the London G20 Summit a decade ago. The best way we can mark the 75th anniversary of the United Nations and Bretton Woods institutions next year is for all stakeholders to begin engaging this year in a sustained effort to strengthen and supplement the multilateral system,” said Richard Samans, Managing Director and Member of the Managing Board, World Economic Forum.

Other key messages in the white paper include:

– “There has been a systematic underappreciation of the human impact of rapid economic change, whether due to technology or policy liberalization, in the priorities of national economic policy and the corresponding international institutional architecture.”

– “There are three practical steps countries can take to improve social justice and economic growth simultaneously. They each involve raising the level of investment in people across the public and private sectors.” This is the crux of what it means for a country to strengthen its social contract in the world economy of the 21st century. It also represents the basis of a new, human-centred growth and development model that may be the best hope for sustaining the world economy’s momentum as the two growth engines on which many countries have been relying – extraordinary macroeconomic stimulus and export-led production – continue to lose steam.

– “Implementing the Paris accord will therefore require us to think beyond, and build upon, it.” The white paper outlines four “new dimensions of climate change cooperative architecture – industry sector, value chain, plurilateral intergovernmental and bottom-up societal – that would facilitate the implementation of the NDCs registered by governments, likely strengthening the political confidence necessary to raise the ambition of such commitments in future years as foreseen by the Paris agreement.”

– “The Fourth Industrial Revolution and Globalization 4.0 are accentuating several risks that henceforth will require more explicit and proactive attention by boards. Loss of trust stemming from problems in any of them can reverse years of advances in market value and threaten a firm’s very existence. These relate to the use of personal and other sensitive data; the deployment of algorithms in internal processes and external products and services; the implications of climate change; corruption and financial crime; and labour practices.”

– “Companies have not only a legal obligation to pay taxes, but also a broader fiduciary responsibility stemming from their long-term value-creation mandate to ensure that they pay their fair share, which may not always be the same amount as that resulting from aggressive, multijurisdictional tax planning. Boards have a responsibility to ensure that their firms are acting not only legally, but also in keeping with the trust society has placed in them to contribute fairly and responsibly to the long-term viability of the economy in which they operate.”

– In the absence of an international organization dedicated to governance of advanced technologies, “the Forum itself launched the Centre for the Fourth Industrial Revolution Network in 2017 to serve as a public-private platform for the collaborative development and refinement of governance frameworks and protocols that more fully anticipate the risks and accelerate the benefits for societies of advanced technologies. It brings together governments, business organizations, dynamic start-ups, civil society, academia and international organizations to co-design human-centred governance protocols and policy frameworks, and pilot them with government and industry partners. It is establishing leader-level global councils composed of ministers and heads of regulatory agencies, chief executive officers, and leading technical and civil society experts to help shape the global technology policy and corporate governance agenda by providing a unique place in the international system where policy dialogue, practical learning and international agenda setting can take place across stakeholders and regions on an ongoing basis.”

– We do not face a stark choice between free trade and protectionism, technology and jobs, immigration and national identity or economic growth and social equity. These are false dichotomies. However, the prominence of these polemics in contemporary political discourse illustrates how underprepared we are for Globalization 4.0.

– “The paper should not be read as a general treatise or comprehensive overview of global governance but rather as a set of architectural blueprints for helping public and private institutions remain ‘up to code’ in Globalization 4.0, as well as a practical “users guide” of opportunities for immediate engagement by all stakeholders.”

The paper does not seek to be exhaustive or prescriptive but rather illustrative and suggestive. Nor does it represent a formal position of the World Economic Forum or its members, partners, communities or constituents.

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Development

Financing to Support Reforms for Inclusive Growth and Development

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The World Bank approved the second in a series of three single-tranche Inclusive Growth Development Policy Operations (IGDPO) to support key reforms for enabling inclusive growth in Liberia.  The financing, amounting to $40 million, comes in the form of an International Development Association (IDA) concessional credit of $20 million and an IDA grant of $20 million to be disbursed as budget support. The underlying reforms being supported seek to remove distortions in selected sectors, strengthen public sector transparency, and promote economic and social inclusion.

“The continued implementation of critical policy reforms in sectors such as energy and agriculture helps create a conducive environment for transformative investments being made in these sectors by the Government, with support from development partners,” said Dr. Khwima Nthara, World Bank Liberia Country Manager.  

Building on reforms supported under the first reform program approved last year, the key reforms under this second program are expected to help increase agriculture productivity by promoting farmers’ access to certified seeds; reduce power theft and commercial losses at the Liberia Electricity Corporation (LEC) by making electricity affordable for the small consumers with the reduction in electricity tariffs for poor households from $0.385/kWh to $0.22/kWh in May 2021; streamline and increase the transparency of tax waivers and in turn, improve revenues to enhance the provision of public services, especially for poor households; strengthen the oversight and transparency of State-owned Enterprises (SOEs); promote financial inclusion through the amendment of the Payments Act and introduction of digital credit; and finally, create an efficient, transparent and sustainable Social Safety Net System.  

“Strengthening Domestic Revenue Mobilization, through reduction of duty waivers and tax holidays, is critical to expanding fiscal space for increased public investment that is domestically financed,” said Mamadou Ndione, World Bank Senior Economist and Task Team Leader of the IGDPO program.

The reform programs being supported are aligned with the Liberia’s Pro-poor Agenda for Prosperity and Development and the World Bank’s Country Partnership Framework.

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Health & Wellness

Suicide remains one of the leading causes of death worldwide

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New research published by the UN health agency on Thursday revealed that suicide remains one of the leading causes of death worldwide – taking more lives each year than HIV, malaria, breast cancer, war and homicide.

Based on its estimates that more than 700,000 people, or one-in-100, died by suicide in 2019, the World Health Organization (WHO) produced new LIVE LIFE guidelines to help countries reduce that rate by a third, no later than 2030.

“We cannot – and must not – ignore suicide”, said WHO chief Tedros Adhanom Ghebreyesus.

COVID pressure

From job loss to financial stress and social isolation, the many risk factors triggered by the COVID-19 pandemic make suicide prevention “even more important now”, said the top WHO official.

The WHO guidance “provides a clear path for stepping up suicide prevention efforts”, he added.

Suicide breakdown

Among young people aged 15-29, suicide was the fourth leading cause of death after road injury, tuberculosis and interpersonal violence, according to the study: Suicide worldwide in 2019.

While rates varied between countries, regions and gender, the analysis shows that more than twice as many men kill themselves, than women.

Those rates are generally greater in high-income countries, while the highest suicide rates for women were found in lower middle-income countries.

Per 100,000 people, the 2019 global average of suicide rates stood at 9.0, while that number jumped to 11.2 in the WHO Africa region; 10.5 in Europe; and 10.2 in Southeast Asia. At 6.4, the Eastern Mediterranean region had the lowest rate.

“Each one is a tragedy”, said the WHO chief.

While the report showed a global suicide drop of 36 per cent between 2000 and 2019, the Americas Region witnessed a 17 per cent surge.

WHO said, “a significant acceleration” in suicide reduction is needed to meet the Sustainable Development Goal (SDG) target by 2030.

Interventions

WHO’s guidance to suicide prevention, zeros in on four strategies: limiting access to the means of suicide; educating the media on responsible suicide reporting; fostering socio-emotional life skills in adolescents; and early identification, assessment, management and follow-up of those with suicidal thoughts and behaviour.

The guidance highlights that in the social media age, media reports can prompt copycat suicides, especially when surrounding a celebrity. It calls for suicide coverage to be counteracted with articles highlighting successful recovery from mental health challenges or suicidal thoughts. It also recommends working with social media companies to increase awareness and remove harmful content.

Since half of all mental health conditions appear before children reach 14, adolescence is a critical period, according to WHO, which encourages anti-bullying programmes, support services and clear protocols for people working in schools when suicide risk is identified.

Prevent heartbreak

A previous suicide attempt is one of the most important risk factors for a future suicide, said the UN health agency.

Healthcare workers should be trained in early identification, assessment, management and follow-up and crisis services should also be available to individuals in acute distress, according to the guidance.

“A comprehensive national suicide prevention strategy should be the ultimate goal for all Governments”, said Alexandra Fleischmann, WHO suicide prevention expert, adding that “LIVE LIFE interventions can save lives and prevent the heartbreak that follows for those left behind”. 

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Africa Today

World Bank Supports Recovery and Resilience of Rwanda’s COVID-19-Affected Businesses

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The World Bank Group today approved $150 million from the International Development Association (IDA)* to help the Government of Rwanda increase access to finance and to support recovery and resilience of businesses affected by the COVID-19 pandemic.

The Access to Finance for Recovery and Resilience (AFIRR) Project also benefits from $25 million in IDA grants, as well as an additional $7.5 million grant from the Global Risk Financing Facility (GRiF), to help enhance business’ access to finance.

This project is an important contribution to the government’s post-COVID Economic Recovery Plan, promoting investment in priority growth sectors, supporting jobs and reinforcing Rwanda’s financial system’s crisis preparedness.” said Rolande Pryce, World Bank Country M anager. “The AFIRR project provides significant resources to help further capitalize the Economic Recovery Fund coupled with enhanced support programs to improve firms’ capacity and remove barriers to access to finance. It provides a suite of instruments that strengthen the existing recovery ecosystem ranging from financial instruments to adjustment mechanisms that include innovative risk mitigation solutions.”

The project will provide financing targeting affected businesses to facilitate refinancing of existing debt obligations, provide working capital, and support investments for business adaptation and growth through the provision of longer-term sources of finance. This will be complemented by risk sharing instruments, including a partial credit guarantee scheme and a bridge loan and insurance facility, to increase access to finance for underserved segments, such as micro, small and medium sized enterprises (MSMEs). In addition, the project will provide targeted technical assistance to firms, participating financial institutions, and government implementing agencies, to address existing constraints for increasing uptake of the Economic Recovery Fund.

Interventions under the project will help businesses to continue to operate and adapt to the post-COVID-19 environment. They will also provide a lifeline to firms in growth-potential sectors that find it difficult to access financing from financial institutions; this will contribute to preserving jobs and mitigating loss of otherwise productive firms that can help drive economic recovery” said Brice Gakombe, World Bank Financial Sector Specialist, and Task Team Leader of the project.

In addition to providing financing, the AFIRR project will bolster the capacity of key government and private sector stakeholders on the technical aspects of the financing and risk-sharing instruments, as well as disaster risk financing principles. As women were hardest hit by the COVID-19 (coronavirus) pandemic, the project focuses on increasing the share of women-inclusive enterprises able to access financing under the liquidity and financing facility and through targeted training to address gender specific constraints for MSMEs as well as improve outreach in underserved segments.

The AFIRR project will be co-financed in the amount of $100 million by the Asian Infrastructure Investment Bank (AIIB), of which Rwanda is a non-regional member. It is AIIB’s first investment in Rwanda.

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