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Brazil: Reforms to spur competitiveness would strengthen COVID-19 recovery

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Brazil was pulling out of a long recession when the COVID-19 outbreak hit, bringing the economy back into another, even deeper recession. However, swift government support has helped millions of vulnerable households, including those without formal employment and social protection. A strong and inclusive recovery from the crisis that benefits all Brazilians will require additional ambitious reforms to boost jobs, productivity and trade, as well as to strengthen public finances and improve social protection, according to a new OECD report.

The latest OECD Economic Survey of Brazil says that while the decisive response spared Brazil from a more severe economic impact, the pandemic will still significantly affect well-being and prosperity, taking a toll on people and businesses in the informal economy. The Survey estimates the COVID-19 crisis will cause GDP to shrink by 5% this year, followed by a return to growth of 2.6% in 2021 and 2.2% in 2022. Reforms to help firms to grow and compete internationally would enable Brazil to reap the benefits of integrating into global trade and to address rising poverty and inequality.

“Brazil was making good progress on structural reforms prior to the pandemic, including its successful 2019 pension reform. The shock to the economy and society from COVID-19 makes it paramount to keep momentum going and tackle outstanding barriers to competition, productivity growth and foreign trade, as well as address pressing environmental challenges,” said OECD Secretary-General Angel Gurría, presenting the Survey. “The OECD is committed to work with Brazil to ensure a strong, inclusive and sustainable recovery and to build a better future for all Brazilians.” (Read the speech in full)

The Survey estimates that an ambitious package of reforms to improve domestic regulation and competition, reduce barriers to foreign trade and improve institutions and economic governance would boost per-capita GDP growth by 0.9 percentage points per year over 15 years. Lowering trade barriers could also bring down the prices of many goods, with a tangible impact on the lives of ordinary Brazilians.

The COVID-19 crisis has accentuated the need to further lighten the cumbersome regulations, including complex procedures for taxation, which hamper entrepreneurship and competition. An average medium-sized company in Brazil spends around 1,500 hours a year on procedures to pay taxes compared to 317 hours in Latin American countries or 159 hours in OECD countries. Investment in education, vocational training and adult skills would in turn help to build a more productive workforce ready for a more globally integrated economy. Evidence suggests that adult training programmes can make a real difference for workers seeking to move into better-paying jobs, provided that course content is well-aligned with local labour market needs.

Inequality and poverty have edged up in Brazil over the last few years, reversing progress since 2000 due to strong growth, social transfers and improved education outcomes. The richest 10% of the population earn over four times that of the bottom 40%. Almost half of social benefits go to the wealthiest 20% of households. The Survey recommends better targeting transfers to those most in need, accelerating benefit concession for people who lose their jobs and withdrawing them more gradually. This would help to support the 40% of workers employed in the informal economy and not covered by unemployment schemes, and ensure an inclusive recovery from the crisis.

The efficiency of public spending should be improved, as the pandemic is adding to Brazil’s already high public debt. There is scope to make significant savings with no impact on well-being. The Survey recommends reviewing tax exemptions and subsidies that account for almost 5% of GDP and trimming civil service costs.

Brazil should also use the recovery as an opportunity to strengthen protection of the Amazon rainforest including through stronger enforcement of its forest law to stop illegal deforestation, focusing instead on the sustainable use of the Amazon’s economic potential.

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Multilateralism ‘struggling’ to solve world challenges

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While multilateralism remains “committed to solving global challenges”, the deputy UN chief said on Sunday, United Nations Day, it is “struggling to find the path to effective implementation”.

“In the space of six months of the COVID-19 crisis, cooperation among the world’s top scientists had developed vaccines and multilateralism had delivered a vehicle to ensure their distribution across the world – the COVAX facility”, Deputy Secretary-General Amina Mohammed said at Expo 2020 in Dubai, United Arab Emirates.

“And yet today, we are still struggling to get the resources and cooperation required to ensure vaccine equity and to muster up a recovery that would put us on a better path”.

‘More to give’

In 2015, the landmark Paris Agreement and 2030 Agenda for Sustainable Development were established to deal decisively with the climate crisis and end poverty by 2030.

Yet, there have since been struggles to “translate global commitments and the goodwill of a host of stakeholders into national actions and international finance commensurate with the challenge”, explained the deputy UN chief.

And although the world has the tools, knowledge and forums to prevent conflict, it continues as the planet experiences “the largest humanitarian crisis since the beginning of the second world war”, she added.

“This points to an international order that is not yet capable of following through on its own best intentions”, said Ms. Mohammed. “International cooperation and the United Nations have come a long way, but we have so much more to give”.

Living the goals

With 192 nations represented, the deputy UN chief described the Expo is “an auspicious occasion” to mark 76 years of multilateralism, guided by the founding UN Charter.

“The focus of Expo 2020 on sustainability and connecting minds to change the future is at the heart of…Our Common Agenda…vision for ensuring that multilateralism ensures that we – as one human family – breakthrough together”, said the UN official.

Against the backdrop of a global crisis of confidence, trust and collective action, she upheld the need for more effective multilateralism, renewed social contract, deepened solidarity, and stronger investments in youth – with the Sustainable Development Goals (SDGs) at its core.

It is only through inclusion that we can renew our social contract and rebuild trust. And inclusion can only be achieved if we place our youth and women at the centre of the equation”, Ms. Mohammed spelled out.

UN works toward ‘decisive breakthrough’

As the UN climate conference (COP26) in Glasgow fast approaches, the world “must do better” at ensuring both women and young people are shaping “the critical decisions we need to make as a global society”, argued the UN official.

“What gives me immense hope is that UN staff right across the world are dedicated to nothing more and nothing less than securing that decisive breakthrough”, she stated.

From troubled corners like Afghanistan or Ethiopia to the world of diplomacy, common ground and solutions in New York or Geneva and from teams on the ground in Small Island States to UN Country Teams around the world, UN staff is working hard to achieve the Organization’s aspirations.

And sustainability is not only a common theme in all pavilions but the SDGs are incorporated in many of the Expo’s presentations and exhibits.

“Let us mark this day in full knowledge of the fact that the United Nations is not some abstract international organization but the will and commitment of the nations and peoples of the world to secure a better future”, said the Deputy Secretary-General.

“And let us capitalize on the powerful opportunity Expo offers us to unite in solidarity to end poverty, protect the planet, secure peace and improve the lives of everyone, everywhere in this critical Decade of Action”, she concluded.

Work together for peace

The Emirates Youth Symphony Orchestra also performing a special “Hymn to the United Nations”, which was composed 50 years ago by legendary cellist, composer and conductor Pablo Casals to commemorate the UN’s work on 24 October 1971.

“Our presence at Expo 2020 offers the opportunity to build awareness about and support for the SDGs, the importance of individual actions, solidarity, hope and engagement”, said Maher Nasser, Commissioner-General of the UN at Expo 2020.

“To build a world in which everyone thrives in peace, dignity and equality on a healthy planet, we need to work together”.

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Rush for new profits posing threat to human rights

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The finance industry’s demand for new sources of capital worldwide to satisfy investors, is having a serious negative impact on the enjoyment of human rights, a group of UN-appointed independent rights experts have warned

Among the rights at risk from increasing speculation in the financial markets by hedge funds and other investment funds, are the right to safe drinking water and sanitation, food, adequate housing, development, and a healthy and sustainable environment, among others.  

Exploiting the marginalized 

In a statement, the independent Special Rapporteurs and other experts, expressed their concern over the gradual encroachment of financial speculators into new areas of the economy, putting human rights at risk

They highlighted in particular, trading in areas essential for the enjoyment of human rights of marginalized, indigenous peoples, Afro-descendant and peasant communities, persons with disabilities and persons living with Albinism, as well as those living in areas of conflict. 

The experts also pointed out that so-called financialisation – the growth in new financial instruments since the 1980s managed by new financial services – has a disproportionate impact on the enjoyment of their rights by women and girls, who are systematically victims of discrimination. The impact on older people was also highlighted. 

Effect on housing 

According to a former Special Rapporteur on adequate housing, in recent years massive amounts of global capital have been invested in housing as a commodity, as security for financial instruments that are traded on global markets, and as a means of accumulating wealth. 

However, when the 2008 global financial crisis hit, many houses suddenly lost much of their value, and individuals and families were made homeless overnight. 

The expert also pointed out that in the Global South, informal settlements in Southern cities are regularly demolished for luxury housing and commercial development intended for the wealthiest groups of the population

This process of financialisation of assets, has only been reinforced during the COVID-19 pandemic, the expert said. 

‘Speculative food bubble’ 

In agricultural markets, the experts described how the same big international banks responsible for the global financial crisis, invested billions of dollars in food futures, generating an increase in the prices of raw materials such as wheat, corn and soybean, which doubled and even tripled in a few months, creating a new speculative food bubble

According to the World Bank, between 130 and 150 million more people were pushed into extreme poverty and hunger, mainly in low-income countries depending on food imports to feed their populations. 

The experts highlighted how the financialisation of housing and food has exacerbated inequalities and exclusion, disproportionately affecting heavily indebted households and those on low incomes. 

Applying speculative logic in these areas violates the human rights of people in poverty, exacerbates gender inequality and aggravates the vulnerability of marginalized communities, they said. 

Commodifying nature 

The growing monetization and commodification of ecosystem services, such as carbon storage, were also noted by the experts. 

They warned that it threatens the sustainability of ecosystems, marginalizes natural and cultural values that have no apparent economic value, and weakens the control of indigenous peoples and local communities over their territories

The right to pollute and destroy nature is gradually being legitimized and commercialized, they said. 

They also pointed out that addressing the climate emergency often ignores both the impacts on people in poverty, and undermines the human rights and livelihoods of the poorest. 

The eviction of indigenous peoples from forests or the replacement of complex old-growth forests with monocultures of fast-growing non-native tree species was highlighted as an example of this. 

Treating housing, food, or the environment, as assets to be traded by hedge funds and other financial actors in financial derivatives markets, represents a direct attack on people’s exercise and enjoyment of human rights such as the right to housing, to food, to a healthy environment, or to drinking water and sanitation, the experts stated. 

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Iraq: An Urgent Call for Education Reforms to Ensure Learning for All Children

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A girl student in Basra, Iraq, who benefits from a UNICEF/WFP education stipend programme. UNICEF

Learning levels in Iraq are among the lowest in the Middle East & North Africa (MENA) region and are likely to decline even further because of the impact the COVID-19 pandemic has had on education service delivery, including prolonged school closures.

These low learning levels are putting the future of Iraqi children and the country at risk. A new World Bank report says that while, now more than ever, investments are needed in education to recover lost learning and turn crisis into opportunity, these investments must be accompanied by a comprehensive reform agenda that focuses the system on learning outcomes and builds a more resilient education system for all children. 

The World Bank Group’s new report, Building Forward Better to Ensure Learning for All Children in Iraq: An Education Reform Path, builds on key priorities in education recently identified in the Government of Iraq’s White Paper and the World Bank Group’s Addressing the Human Capital Crisis: A Public Expenditure Review for Human Development Sectors in Iraq report, and provides actionable reform recommendations to boost learning and skills.

Human capital is essential to achieve sustainable and inclusive economic growth. However, according to the World Bank’s 2020 Human Capital Index (HCI), a child born in Iraq today will reach, on average, only 41% of their potential productivity when they grow up. 

At the heart of Iraq’s human capital crisis is a learning crisis, with far-reaching implications. Iraq’s poor performance on the HCI is largely attributed to its low learning levels. COVID-19 has led to intermittent school closures across Iraq, impacting more than 11 million Iraqi students since February 2020. This report highlights that, with schools closed over 75% of the time and opportunities for remote learning limited and unequal, Iraqi children are facing another reduction of learning‑adjusted years of schooling. Effectively, students in Iraq are facing more than a “lost year” of learning. 

Iraq can use lessons learned from the current health crisis, turn recovery into opportunity, and “build forward better,” to ensure it provides learning opportunities for all Iraqi children especially its poorest and most vulnerable children” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “The World Bank is ready to support Iraq in building a more equitable and resilient post-COVID-19 education system that ensures learning for all children and generates the dividends for faster and more inclusive growth”.  

The report Building Forward Better to Ensure Learning for All Children in Iraq: An Education Reform Path puts forward for discussion sector-wide reform recommendations, focusing on immediate crisis response as well as medium and long-term needs across six key strategic areas:  

1. Engaging in an Emergency Crisis response through the mitigation of immediate learning loss and prevention of further dropouts.

2. Improving foundational skills to set a trajectory for learning through improved learning & teaching materials and strengthened teacher practices with a focus on learning for all children.

3. Focusing on the most urgently needed investments, while ensuring better utilization of resources.

4. Improving the governance of the education sector and promoting evidence‑based decision‑making.

5. Developing and implementing an education sector strategy that focuses on learning and “building forward better”.

6. Aligning skills with labor market needs through targeted programs and reforms.

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