Tragic levels of death, destruction, displacement and disorder from ongoing conflicts in Iraq, Libya, Syria and Yemen require a new approach focused on building — not rebuilding — to support transitions to sustainable peace. This is the key message of the new World Bank report, Building for Peace: Reconstruction for Security, Sustainable Peace, and Equity in MENA (B4P), funded by the German Federal Ministry for Economic Cooperation and Development (BMZ).
Examining nearly a decade of reconstruction and peacebuilding approaches that have mostly been centered on top-down state-building, experts from the World Bank and BMZ joined efforts to take a fresh look at reconstruction, development and the transformation process to sustainable peace in the Middle East and North Africa region and beyond.
The resulting report, Building for Peace: Reconstruction for Security, Sustainable Peace, and Equity in MENA, utilizes a multidisciplinary approach to develop a thorough understanding of how conflict is embedded within complex national, local and regional dynamics and political and economic power structures. This approach helps map a long-term vision for sustainable and inclusive peace, recognizing the tradeoffs and risks that policymakers and practitioners face to build after conflict.
“After a decade of conflict that has inflicted severe and senseless suffering, we need a paradigm shift from ‘building back better’ to building sustainable peace,” said Ferid Belhaj, World Bank Vice President for the Middle East and North Africa. “Building for Peace shows, in grave detail, the importance of addressing past grievances; rethinks the entire approach to building after conflict; and gives us a roadmap for helping create sustainable economic opportunities for all.“
Building for Peace urges policymakers and development practitioners to focus on bottom-up, inclusive engagement to build stronger physical infrastructure and central government institutions. It suggests supporting legitimate and inclusive institutions at all levels, restarting local economies to create sustainable economic opportunities, and leveraging resilient assets. This approach ensures that interventions are anchored in the priorities and assets of the communities affected by conflict to promote social cohesion and build social capital.
The report makes the case for broadening our knowledge and creating a long-term vision based on more comprehensive and dynamic assessments to lay the foundation for interventions in these complex environments. These assessments should identify local, subnational and regional dynamics, institutions, and structural factors and how they interact with political and economic dynamics over time. The assessment should go beyond a snapshot of conditions at one point in time and should be a living narrative — an ongoing, multidimensional process of analysis.
“A comprehensive understanding of the situation on the ground can help prevent ‘blinders in policy design’ and ill-conceived interventions that could undermine the future of peace,” said Francesca Recanatini, a member of the core team behind the report. “Developing such an understanding requires much broader outreach to a wide range of stakeholders and informants and the creative use of new technologies and innovations.“
The report benefited from the inputs and collective thinking of more than 15 think-tanks and policy institutions; academic researchers; policymakers; government officials; practitioners on the ground; and colleagues from other international organizations and NGOs, from the MENA region and globally, which worked collaboratively over a period of two years. It has also benefited from the views and collective feedback of citizens, experts, and practitioners through a series of consultative workshops and online surveys conducted anonymously in Iraq, Libya and Yemen.
“This regional and cross-sectoral project has shown the importance of pursuing a multi-dimensional, collaborative approach that brings together a variety of stakeholders with a range of different perspectives and backgrounds. This is exactly what is needed in crisis contexts, and we should apply it in other regions beyond MENA,” said Volker Oel, Commissioner for the Middle East, Southeastern and Eastern Europe, and Latin America at Germany’s Federal Ministry for Economic Cooperation and Development (BMZ). “Meeting the challenges of protracted conflict and violence requires more effective partnerships between different actors and informed interventions driven by international commitment and backed by predictable resources. We are looking forward to establishing a platform for further learning and the operationalization of the Building for Peace approach together with the World Bank.”
Building for Peace links to the new World Bank Group Strategy for Fragility, Conflict, and Violence 2020-2025, and it is anchored on its pillars II and III by offering approaches to remaining engaged in situations of active conflict and violence and helping countries escape the fragility trap. The report also resonates strongly with the new Transitional Development Assistance strategy of BMZ, which has just been released.
The report will officially launch on July 15, 2020 as part of the virtual Fragility Forum 2020.
Amidst Strong Economic Rebound in Russia, Risks Stemming from COVID-19 and Inflation
Following a strong economic rebound in 2021, with 4.3 percent growth, Russia’s growth is expected to slow in 2022 and 2023, with a forecast of 2.4 percent and 1.8 percent growth, respectively, according to the World Bank’s latest Regular Economic Report for Russia (#46 in the series).
The Russian economy has now recovered to above its pre-pandemic peak, with growth driven by a strong rebound in consumer demand. In 2022, growth will be supported by continued strength in commodity markets, but will likely also be hampered by COVID-19 control measures and tighter interest rates.
Household consumption in the second quarter increased to more than 9 percent on the previous quarter (seasonally adjusted), showing the fastest rate of growth in a decade. Labor markets also saw a substantial upswing, with unemployment falling to a four-year low and real wages growing.
Russia’s current account surplus has also been exceptionally strong, on the back of high commodity prices and low levels of outbound tourism. The federal budget has been consolidated, led by a strong growth in revenue, and is on track to meet the authorities’ target of meeting the fiscal rule next year.
“This surge in spending resulted from the release of pent-up demand created by pandemic restrictions,” said David Knight, Lead Economist and Program Leader, World Bank. “It was aided by increased credit, Russian tourists staying at home for the holidays this year, and resource inflows via the energy sector.”
The report assesses the short-term risks weighing on Russia’s growth and finds that low vaccination rates are necessitating stricter COVID-19 control measures that may reduce economic activity, while more persistent inflation will likely call for tighter interest rates for a longer period, limiting the growth outlook.
The report also analyzes how Russia could be impacted by global economic growth under three different green transition scenarios, and suggests that domestic climate action can help mitigate some of the possible impacts of a global green transition and create new opportunities for Russia.
The country’s new low-carbon development strategy, which aims for a 70 percent reduction in net emissions by 2050 and net carbon neutrality by 2060, will become an important first step for Russia. A focus on enabling the transition to a more diversified and faster growing economy will call for strengthening of a broad range of assets including human capital, knowledge, and world-class market institutions.
“Environmental sustainability is becoming central to the global economic agenda. Increased commitments by countries and firms to carbon neutrality signal that wholesale changes to policy frameworks will be needed in the coming years,” said Renaud Seligmann, World Bank Country Director for Russia. “With Russia’s pledge to become carbon neutral by 2060, the country now needs to take concrete actions of moving towards decarbonization.”
To accomplish these goals, the report recommends the implementation of carbon pricing and the consolidation of energy subsidies for consumers in Russia. At the same time, measures should be taken to ensure people are protected from the costs and any adverse impacts of the transition.
The report estimates that consumer energy subsidies on electricity, gas and petroleum in Russia amounted to 1.4 percent of the country’s GDP in 2019. By redeploying these resources, the authorities could increase GDP and ensure that no consumers are left worse off. At the same time, this would help reduce greenhouse gas emissions and move Russia closer to its goal of a green and sustainable economy.
World trade reaches all-time high, but 2022 outlook ‘uncertain’
Global trade is expected to be worth about $28 trillion this year – an increase of 23 per cent compared with 2020 – but the outlook for 2022 remains very uncertain, UN economists said on Tuesday.
This strong growth in demand – for goods, as opposed to services – is largely the result of pandemic restrictions easing, but also from economic stimulus packages and sharp increases in the price of raw materials.
According to UN trade and development body UNCTAD, although worldwide commerce stabilized during the second half of 2021, trade in goods went on to reach record levels between July and September.
Services still sluggish
In line with this overall increase, the services sector picked up too, but it has remained below 2019 levels.
From a regional perspective, trade growth remained uneven for the first half of the year, but it had a “broader” reach in the three months that followed, UNCTAD’s Global Trade update said.
Trade flows continued to increase more strongly for developing countries in comparison to developed economies overall in the third quarter of the year, moreover.
The report valued the global goods trade at $5.6 trillion in the third quarter of this year, which is a new all-time record, while services stood at about $1.5 trillion.
For the remainder of this year, UNCTAD has forecast slower growth for the trade in goods but “a more positive trend for services”, albeit from a lower starting point.
Among the factors contributing to uncertainty about next year, UNCTAD cited China’s “below expectations” growth in the third quarter of 2021.
“Lower-than-expected economic growth rates are generally reflected in more downcast global trade trends,” UNCTAD noted, while also pointing to inflationary pressures” that may also negatively impact national economies and international trade flows.
The UN body’s global trade outlook also noted that “many economies, including those in the European Union”, continue to face COVID-19-related disruption which may affect consumer demand in 2022.
Semiconductor stress test
In addition to the “large and unpredictable swings in demand” that have characterized 2021, high fuel prices have also caused shipping costs to spiral and contributed to supply shortages.
This has contributed to backlogs across major supply chains that could continue into next year and could even “reshape trade flows across the world”, UNCTAD cautioned.
Geopolitical factors may also play a role in this change, as regional trade within Africa and within the Asia-Pacific area increases on the one hand, “diverting trade away from other routes”.
Similarly, efforts towards a more socially and environmentally sustainable economy may also affect international trade, by disincentivizing high carbon products.
The need to protect countries’ own strategic interests and weaknesses in specific sectors could also influence trade in 2022, UNCTAD noted, amid a shortage of microprocessors called semiconductors that “has already disrupted many industries, notably the automotive sector”.
“Since the onset of the COVID-19 pandemic, the semiconductor industry has been facing headwind due to unanticipated surges in demand and persisting supply constraints…If persistent, this shortage could continue to negatively affect production and trade in many manufacturing sectors.”
Small Businesses Adapting to Rapidly Changing Economic Landscape
The World Economic Forum has long been at the forefront of recognizing the strategic importance of sustainable value creation objectives for business. While interest has mostly focused on how large corporations contribute to the global economy and sustainable development objectives, small and mid-sized enterprises (SMEs) are often overlooked as major drivers of economic activity, as well as social and environmental progress around the world.
A new report released today finds factors that previously disadvantaged SMEs can lead them to new opportunities. Nine case studies from multiple industries and regions highlight what SMEs can do to increase their future readiness.
Developed in collaboration with the National University of Singapore Business School, the University of Cambridge Judge Business School and Entrepreneurs’ Organization, the report also finds that SMEs are lagging behind in terms of societal impact. Although there is a clear need to operate in line with sustainability goals, many SMEs have yet to include explicit strategies and performance measurement centred on societal impact.
The top challenges cited by SME executives include talent acquisition and retention (for 52.5% respondents), survival and expansion (43.8%), funding and access to capital (35.7%), non-supportive policy environment (21%), the difficulty of maintaining a strong culture and clear company purpose and value (20%).
SMEs can leverage their size, networks, people and the strengths of technology to support their goals of sustainable growth, positive societal impact and robust adaptive capacity. While it is essential for SMEs and the wider economy to increase their future readiness, they can thrive only insofar as the necessary supporting infrastructure and regulatory frameworks exist.
“We hope this will inspire and encourage SMEs and mid-sized companies to harness their potential in becoming a major driver of sustainable and inclusive economic growth and innovation by focusing on several core dimensions of future readiness,” said Børge Brende, President, World Economic Forum.
“Through this report, the Forum aims to highlight the significant role SMEs can play not just locally but also globally. The New Champions Community is a step towards bringing these smaller companies into the forefront of global discourse around socioeconomic development and engaging them in a community of forward-thinking companies from across the world,” said Stephan Mergenthaler, Head of Strategic Intelligence and Member of the Executive Committee, World Economic Forum.
The report aims to develop a deeper understanding of organizational capabilities and orientations needed for SMEs to successfully generate lasting financial growth, affect society and the environment positively, and develop high levels of resilience and agility.
It relies on robust research methods and combines rigorous primary and secondary research. The takeaways and conclusions presented in the research have been derived from an analysis of over 200 peer-reviewed articles and engagement of more than 300 CEOs and founders of SMEs through surveys and in-depth interviews.
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