The world desperately needs a fairer economy – here’s how we can make that happen

The Covid-19 pandemic derailed economies everywhere, and in most developing countries incomes remain well below pre-pandemic levels. Inflation, made worse by the war in Ukraine, is particularly painful for low-income and vulnerable countries, where essentials like food and energy dominate household budgets. Higher interest rates are exacerbating debt distress across much of the developing world, squeezing public and private investment and paring back growth. To compound this, the climate crisis is hitting the very countries that contribute least to the problem, and which have the most limited means to cope.

Already, we are seeing the reversal of hard-won development gains. The World Bank estimates that the pandemic and the war in Ukraine have pushed up to 95 million more people into extreme poverty. The World Food Programme projects that almost 350 million people may be food insecure in 2023, more than double the number in 2020. In the wake of the pandemic, unemployment is higher, gender gaps are wider and the share of young people with neither jobs nor sufficient education has risen, according to the International Labour Organization.

None of this is inevitable. If we take the global implementation of the United Nations sustainable development agenda as a barometer of progress, it is true we are on the verge of failing – particularly for countries with inherent vulnerabilities. But governments, the private sector and civil society can make the decisions today that lay a foundation for sustainable development for generations to come. The World Bank and IMF meetings under way in Washington DC this week provide an opportunity to bring these important issues to the table.

International trade has a critical role to play in creating the better jobs, value addition and greater resilience that countries are seeking. We know that over the past 40 years, global economic integration has helped lift more than 1 billion people out of poverty. But even before the pandemic, it had become clear that many people in poor countries had not received a fair share of the gains from globalisation. Neither have many poor people in richer countries.

The weaknesses exposed in global supply chains by the war in Ukraine and the pandemic should be treated as an opportunity to reimagine globalisation, and assist countries and communities left behind during recent decades to use trade as a means to meet their sustainable development aspirations.

At the crux of this reimagined globalisation is the need to bring many more countries into what would become deeper, de-concentrated networks for producing, which would help provide marginalised countries and communities with access to new and existing value chains for both goods and services.

Companies have already been moving to add suppliers in places such as south-east Asia, India and Mexico, rather than just maintain a presence in one market, whether to save on costs or to manage risks. Fast-growing demand for services delivered over the internet is creating opportunities around the world. Extending these realignments to encompass smaller and more vulnerable countries would enable them to use international markets, ideas and capital to create better, more productive jobs.

In addition, drawing more small- and women-owned businesses into these production networks would deliver manifold socioeconomic benefits. Beyond the gains of development and inclusion, more diversified supply chains would also be more resilient to shocks, like extreme weather events or disease outbreaks.

Open and predictable markets are a prerequisite for this re-globalisation process. But they are not sufficient. Access to finance on prolonged and low-cost terms is an indispensable part of building a more sustainable, more inclusive global economy. The Bridgetown Initiative put forward by the government of Barbados calls for a reassessment of the current global financial architecture to drive multilateral and private sector financial resources towards climate mitigation and resilience. Following through on this initiative could play an important role in addressing the climate finance needs of developing countries and indeed the financing of the sustainable development goals.

A strong and effective trading system would amplify the impact of necessary action on debt reform and green investment: exports earn foreign exchange, and access to larger markets increases potential returns on investment.

Equally, the development of a just industrial strategy is critically important as countries work to reach net zero. Promoting innovation and working with developing and least-developed countries to access new technologies and ideas are necessary parts of the equation. This, together with broadly open export markets, increased direct investment and greater access to affordable capital will improve chances for the global south to produce and buy the goods needed to transition to a green economy.

Every part of this agenda is a tall order, all the more so at a time of rising geopolitical tensions. But as governments demonstrated by striking several multilateral agreements at the WTO ministerial conference last June, cooperation on trade is still possible. These efforts must continue so that the multilateral trading system helps all economies seize the opportunities available to them, and cope with the vulnerabilities and challenges. Working together, we can use trade to build a fairer, more just and more resilient economic future.

• Mia Amor Mottley, SC, MP is prime minister of Barbados. Dr Ngozi Okonjo-Iweala is director-general of the World Trade Organization

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