The Ends and the Means of Development

By Augusto Lopez-Claros The birth of the United Nations With the entry of the United States into the war in December 1941 efforts were set in motion for the creation of a new organization that might provide a secure basis for peace and prosperity. The organization that emerged from the efforts at the San Francisco conference in 1945 was the United Nations, but the work leading to this outcome was the result of long and delicate negotiations. On January 1, 1942 the United States, Great Britain, the Soviet Union, China and 22 other nations then fighting the Axis powers created an alliance in which members pledged to work for the establishment of a broad-based and effective system of international security. The name adopted for this alliance was United Nations, suggested by President Roosevelt himself. This was no small act of imagination. In early 1942, the war effort was not going well for the United States and its allies; Japan had made major territorial gains in Asia and G...

By Augusto Lopez-Claros Last week, on the eve of the Russian invasion of Ukraine, I was contacted by a radio station in Moscow. The journalist, who had interviewed me before, wanted to hear my views on the current situation. In my remarks I focused on the likely impact on the Russian economy of the sanctions which were then being contemplated. I told him that I feared that the impact would be devastating and that it would lead not only to a huge economic contraction, perhaps as large as that seen during the global financial crisis in 2009 when the Russian economy contracted by close to 8 percent, but that it would also contribute to substantially widen the gap with respect to China and India, two other emerging market giants. Russia’s recent dismal economic performance As best as I could I described to the journalist the gist of the insight conveyed by the chart below, which shows that over the period 2000-2021 the Russian economy has, broadly speaking, expanded by a facto...

Women under the Taliban The plight of Afghan women during the period 1996-2001, when the Taliban were last in power in Afghanistan, has been well documented. A UNHCR (the UN Refugee Agency) report from 1997 referred to the onerous social, cultural and economic restrictions imposed on the population which, in the case of women, meant that they were forbidden to work outside the home, had limited access to healthcare, were subject to a host of mobility restrictions, with girls banned from school and university. The constant threat of physical violence for possible violations of “the bewildering array of new restrictions” was an added burden, with the vast majority of women in the country actually being victims of violence or knowing someone who had suffered from it. This led many to think that the country had “plunged back into the dark ages,” pointing, for instance, to the stoning to death for alleged adultery of a mother of 7 at a stadium in front of a large crowd of men and chi...

Augusto Lopez-Claros The COVID-19 crisis is the largest shock to the global economy since the Great Depression of the early 1930s. The impact has been highly destabilising and global in scope and perhaps no statistic captures more eloquently its welfare costs than that for the first time in 3 decades in 2020 we saw a sharp increase in the number of people classified by the World Bank as “extremely poor;” about 120 million people joined the ranks of the very poor, a reversal likely to continue in 2021, the incipient economic recovery notwithstanding. Not surprisingly the crisis has raised multiple questions about our economic system, its resilience to shocks and, more generally, whether it is on a sustainable path. What are some of the lessons that can be drawn from this past year? Restoring public spending priorities COVID-19 has found the majority of countries totally unprepared to deal effectively with its devastating consequences. Even high-income countries have seen their hospitals...

Augusto Lopez-Claros 1 The economic marginalization of women and ethnic, religious, and other minorities is a pervasive problem in virtually every country in the world. There is compelling economic evidence that shows that excluding minorities from the labor force not only undermines the legitimacy of the governments practicing various forms of discrimination but also ends up eroding the competitive potential of the country in an increasingly global and integrated marketplace. Much of the evidence has focused on how unequal treatment before the law and the associated violation of people’s human rights has adversely affected various metrics of human welfare and development. Perhaps the area that has delivered thus far the greatest insights is in respect of gender discrimination. At the World Bank over the past decade we built up a huge database comprehensively listing such discriminations embedded in the legislation of 190 countries and discovered that they are associated...

This debate about UBI has recently come alive as governments have moved to deal with the asymmetric effects of COVID-19, with vulnerable groups being particularly affected.  Certainly, many countries are already providing temporary cash relief to the poorest, to limit the consequences of the lockdown, but in many countries the question of what happens afterwards has acquired renewed urgency because of the disproportionate effects on low-skilled workers, and the expectation that the world will remain vulnerable to other viruses in the future and the additional impact of climate change.  The opposition to UBI has several dimensions. For many UBI is seen as unaffordable and thus fiscally irresponsible, particularly against the background of the massive worsening of the public finances which will be a legacy of COVID-19. A second set of factors pertain to the role of incentives: delinking income from work and paying people to “stay at home” is seen as potentially destructi...

Andreas Bummel and Augusto Lopez-Claros 1 More than half a century ago UN Secretary General Dag Hammarskjöld said that “the United Nations was not created to bring us to heaven, but in order to save us from hell.” This past year has seen considerable soul-searching about the future of the United Nations, against the background of the 75th anniversary of the adoption of the UN Charter in 1945. Not surprisingly, the debates have not had the intensity that surrounded the creation of the UN during World War II. At the time, President Roosevelt and Prime Minister Churchill brought together the allied nations in the war effort against the Axis powers and there was a tangible sense of urgency; humanity needed to avoid in the future at all costs the calamity of global war, the utter hell associated in the end with some 60 million casualties and the destruction of entire cities and countries. The UN steered the world through the process of decolonization, saw t...

The problem In a recent article in the journal Foreign Affairs Nobel-laurate William Nordhaus argues that although there is broad recognition that climate change is the most important environmental challenge facing the world today, governments have continued to tackle the problem with a deeply flawed architecture that relies on uncoordinated, voluntary arrangements which encourage free-riding in international climate change agreements such as the Kyoto Protocol and the 2015 Paris accord. With a perverse incentive structure embedded in such treaties “the global effort to curb climate change is sure to fail.” Since the national targets agreed in the Paris accord are inconsistent with a two-degree temperature target and because studies have shown that annual global emissions would need to drop by about 3 percent between now and 2030 to limit warming to the two-degree limit, there is growing recognition that without major mitigation of greenhouse gas (GHG) emissions global temperat...

An important question COVID-19 has shown, particularly in the emerging markets and developing world, a whole range of vulnerabilities in the economies of these countries. Public health systems have come under enormous strains, reflecting many decades of neglect. Budgets have been stretched, with very few countries having the fiscal space needed to respond to the crisis in a vigorous way, without imperiling the long-term health of public finances and/or without turning for immediate help from the international financial institutions. We have known for a long time that fiscal policies in the great majority of countries in the world have exhibited a “deficit bias,” that is, a tendency, regardless of the business cycle or whether the economy in question is in a phase of expansion or downturn, to register a budget deficit. Looking at the data for 191 countries over the 41-year period 1980–2020, countries have run deficits 75 percent of the years (with many advanced economies registerin...