Developing countries are always more likely to be vulnerable to any global challenge. Due to the recent shocks, these nations are passing some of their most crucial times of the century. On top of the ongoing climate crisis looming over the developing countries for decades, they faced covid-19, food shortages, fuel price hikes, post covid economic shocks that have shaken their public sectors. These multidimensional issues are interlinked, hindering development and progress in generally deprived regions. In a globalised world, crises should be mitigated through cooperation, and progress should be made together. A post-crisis world is the most vulnerable, but it also holds the most potential to be moulded into a better one for the future.
Bearing the Disproportionate Cost of Climate Change
Without immediate action, climate change could affect developing countries, displacing 200 million people and pushing 130 million people into poverty by 2050. Not to mention creating 1.2 billion climate refugees globally. Although the effect is faced mainly by developing countries, costing them up to 5% of their GDP, the contributor is mainly developed countries. Another 2-3 degrees increase in global warming can result in 150 million more malaria cases worldwide. Global warming also creates issues like hunger, water scarcity, loss of education, and other prolonged issues that threaten decades of progress. However, amidst this bleak future, there is a beam of hope that could pull the rein on this burning issue.
According to a new report from the World Bank Group, investing 1.4% of GDP could reduce 70% of emissions and create a sustainable future. Although the effects are daunting, there is still time to reverse the effect and create a sustainable future for all. As the contributor of nine-tenths of emissions, high-income countries must actively engage in the decarbonising journey and provide financial support. A step towards climate action by all can not only prevent the adverse effects but also generate greater economic growth, help alleviate poverty and encourage progress. The mentioned World Bank report highlights some key conditions for a sustainable future. Countries and leaders worldwide should reform policies for a greener future and invest accordingly. Some activities include better allocating public resources, an eco-friendly lifestyle and supply chain system, investing in sustainable business plans with reduced carbon footprints and higher mobilisation of private capital. Another significant step is that developed communities should finance developing economies to achieve a sustainable future. Developing countries also need integration into global trade to stimulate their growth. Like most other global issues, the issue of climate change asks for international cooperation and immediate action from developed economies.
Pandemic Exposed Vulnerabilities and Inequality
The consequence of the pandemic has been multidimensional within developing countries. It tested the public health capacities, governance efficiency and created an irreparable loss in the education, employment, and gender equality sector. With such huge losses and uncertain growth, developing countries feel the threat of losing a decade to the post-pandemic crisis. During the covid-19, the disparity in vaccine rollout and access to it exposed the lack of cooperation among countries, even in a globalised world. Which also puts a further threat to global recovery and widens inequality. In situations like this, a hindrance to progress in one country hinders the recovery made in another. From global trade to public health, countries are now intertwined more than ever. This lesson from surviving a pandemic made leaders worldwide realise that the development method needed a fundamental change. Governance needs collective effort for progress, which also demands a new definition of development in this century.
Devastating Debt Crisis
The prolonged war between Russia and Ukraine has also revoked the recovery process for developing countries. As the supply chain disrupts, the probability of integration into global trade remains to be determined. There is also a surge in food and fuel price hike along with a skyrocketed inflation rate. All of these combined developing countries have fallen into the loop of a debt crisis that has worsened in 2022. According to the International Debt Report 2022 by The World Bank, 60% of developing nations are in debt crisis. The increase in interest rate will cause these countries $800 billion in forgone income over the years. The financial setback will not only force countries to adapt to tighter monetary policies and less spending on public goods but also hinder climate action and the goal of a greener tomorrow. This financial gap will affect sectors like social protection and public spending while creating income inequality and development crisis as external effects. Developing countries are already spending more on debt than on education and healthcare, according to UNCTAD. This financial crisis is the biggest one after 2008, and it calls for a reform focusing on the current issues. Over the years, multiple loopholes in the previous reform were spotted. Therefore, this debt crisis in developing nations calls for an initiative from multilateral organisations on a newer debt reform structure with a focus on climate financing.
Inclusive and Cooperative Policies
This century faced the most unprecedented issues that shook development processes worldwide. With multiple shocks exposing the loopholes in global policies, the world needs to rethink how we develop and grow in the future. Global recovery brings prosperity and growth; therefore, more than ever, it requires a unified response and contribution. Policymakers worldwide can create the most significant positive impact and drive growth through a more inclusive and cooperative policy.
National leaders can take some recovery steps by spending more on investment-ready capital businesses that promote a sustainable future with growth prospects and the potential to minimise investment gaps, such as renewable energy and climate-resilient infrastructure. Internally, developing countries need domestic revenue mobilisation to address financial shock resilience. It will also close the fiscal gap created by covid and fund necessary investments like climate finance. A stringer fiscal buffer will also give the government more opportunity to build an adaptive public health and social protection system to support those who fell into the poverty trap during the economic crisis. The government in developing countries and international organisations must focus on the growing inequality that differs significantly from poverty.
However, the recovery steps will only fix the damage caused by past mistakes. To build a more resilient world, there is no alternative to knowledge sharing and collaborative culture. Countries can learn from each other’s mistakes and policies to prevent further shocks. How the world could control Covid within a couple of years showed what countries can achieve if they work unitedly. As the world steps into the year of least growth, countries should redefine development that consists of cooperation and support to build a prosperous tomorrow.
