To kick off the Future Development blog in 2021, we present the second piece in a four-part series on how 2021 will be different from 2020. See the first, third, and fourth installments.
In the novel “Brave New World,” Aldous Huxley writes: “Their world didn’t allow them … to be sane, virtuous, happy. … They were not conditioned to obey … what with all the diseases … uncertainties and poverty … they were forced to feel strongly … [so] how could they be stable?” He goes on to describe a world where peace and stability are achieved only through building a system in which human beings all behave the same, organized by an all-powerful nanny state.
Enter 2021. We will have our fill of diseases, uncertainties, and poverty in every country. We almost certainly need collaborative action to avoid traps on the path to sustainable development, but thankfully, we do not have to make all humans behave in the same way to achieve them.
Emerging market and developing economies (EMDEs) are entering 2021 with a high level and steep rise in new COVID-19 cases per week. In summer 2020, EMDEs had appeared to reach a plateau of around 200,000 new cases per week, a level that was stable for about 4 months until November. Since then, the number of new cases per week has started to accelerate, has already roughly doubled, and shows no signs of stabilizing at a new plateau yet. COVAX, the international consortium making donor-funded vaccines available to developing countries, hopes to start its first shipments in the first quarter of 2021, and has set itself a target of delivering 2 billion doses during 2021, but it is still far short of being financially and technically able to meet this goal. On the disease front, 2021 may be more hopeful for many people in EMDEs who can start to see the endgame but will almost certainly be far worse in terms of outcomes—deaths, hospitalizations, and number of total cases—compared to 2020.
Looking into the future is particularly difficult for 2021. For EMDEs, there is a range of commodity price uncertainties that are of first-order import for some countries and regions. The slowest rebounds in economic growth in 2021 are projected right now to be in commodity-exporting regions like Latin America, the Middle East, and sub-Saharan Africa, but these countries could surprise if commodity prices were to strengthen.
A second major uncertainty is over debt and flows of capital. The worst fears of widespread debt defaults in 2020 did not come to pass. A combination of a moratorium for some countries, a drawdown of reserves for others, and the ability of still others to access capital markets, albeit paying higher risk premia, helped stave off the worst effects. But matters could deteriorate in 2021. There is over $100 billion in external debt service due from 61 countries who are likely to face serious financing difficulties. As we have shown in an earlier paper, at least half of this is owed by countries that need significant debt relief. Yet despite the lessons of history (negotiate haircuts, act with speed, treat all creditors fairly), there is nothing on the table to implement serious programs. Everyone seems to be against the current process of waiting for the proverbial shoe to drop, and then entering into protracted negotiations on a case-by-case basis where power and connections dictate what each creditor can extract. But bad as it is, this outcome seems preferable to the idea of a collective international effort to minimize the development damage.
Global poverty numbers have become a headline, rather than a driver of change. The extraordinary turnaround from a world that was seeing annual reductions in poverty of 100 million people per year in 2013 to an increase in poverty of 100 million in 2020 has been almost totally disregarded. No new global programs have been put on the table, aid is at best holding steady, and conflict, climate change, political repression, and economic depressions are taking their toll.
Entering 2021, more autocratic states in East Asia are doing far better in protecting economic livelihoods than more individualistic and democratic states elsewhere. The shadow of 1984 is long.
Yet there are grounds for optimism.
The first is that agreement on the correct way forward has never been stronger. Deniers of the merits of sustainable development—in its full meaning of economic, social, and governance sustainability—are in retreat. Everyone, from governments at G-20, IMF, and U.N. meetings, to corporations at the World Economic Forum summit, to civil society advocates, agrees that sustainable development is the only path. It’s no coincidence that the Nobel Peace Prize in 2020 was awarded to the World Food Program, and that the Nobel Prize for economics went to Robert Wilson and Paul Milgrom for their work on auction theory that is the bedrock for the design of programs to allocate rights to emit greenhouse gases.
2021 could well go down as the year when the business community finally commits to sustainable development.
A second reason for optimism is technology. Bringing a vaccine to the market in under a year was an extraordinary feat only made possible by advances in science, artificial intelligence, and digitization. Government social assistance programs in response to COVID-19 may have benefited 1.8 billion people in 2020, with 1.1 billion new recipients being registered. Along with colleagues at Brookings and the Japan International Cooperation Agency Ogata Research Institute, I am co-editing a collection of wonderful expert contributions on new breakthroughs to achieve the Sustainable Development Goals, a topic which has gone from anecdotal to extensive in just a few years. The range and ambition of these breakthroughs, the science as well as the applications, is immense.
2021 could be the year when we see major technological breakthroughs either happening or likely to happen in the not-too-far-distant future.
My friend Paul O’Brien has a new book in which he quotes Thomas Friedman as saying “pessimists are usually right and optimists are usually wrong, but all the great changes have been accomplished by optimists.” Let’s all be optimists in 2021.