Covid-19 Is Preventing Sustainable Investment In Developing Nations

(Posted on Wednesday, December 16, 2020)

Covid-19 has occupied most of our attention in 2020, and for good reason. We’ve had over 70 million infections, about 1.6 million deaths, and hundreds of thousands more contracting the disease every day. That said, yesteryear’s issues persist, such as our ongoing climate crisis and countries’ attempts at developing their economies to be more sustainable. Covid-19’s economic devastation stripped nations of their sustainable growth financing. The world’s economic powers must step in to fill the gaps.

All countries, regardless of economic size, have struggled in the wake of the pandemic. As borders closed, workers stayed home, and social activity seized, the global economy experienced its worst downfall since the 1930s. Developing countries, however, faced a particularly severe crash. According to the United Nations Development Program, the average income lost for a developing country because of Covid-19 will exceed $200 billion. 

All countries, regardless of economic size, have struggled in the wake of the pandemic. As borders closed, workers stayed home, and social activity seized, the global economy experienced its worst downfall since the 1930s. Developing countries, however, faced a particularly severe crash. According to the United Nations Development Program, the average income lost for a developing country because of Covid-19 will exceed $200 billion.

Many of these countries rely on tourism and international assistance to boost their economies, two items that are sorely lacking in the time of Covid-19. Understandably, many developing countries are focusing their efforts on rebuilding their crumbled economies. However, Covid-19 does not erase the existential threat of climate change, and many of these countries have goals revolving around sustainable development, such as the United Nations 2030 sustainable development goals. It seems these goals are set aside for the moment.

According to the OECD’s Global Outlook on Financing for Sustainable Development, developing countries face a shortfall of $1.7 trillion for sustainable economic growth. OECD Secretary-General Angel Gurria noted that “Covid-19 is erasing years of development progress and causing major setbacks…for developing countries under stress.” Of the $379 trillion in total global financial assets, the 122 developing countries only hold about 20% of those assets. A large cut in sustainable-growth financing will only exacerbate this economic divide.

Without financial support promoting sustainable growth, less sustainable industries will take root in their place. We have already seen practices like unregulated mass logging in South America cause vast devastation to regional wildlife and indigenous populations. Efforts to bolster sustainable logging and other sustainable practices will fall to the wayside if Covid-19 continues to drive economic havoc.

The forthcoming vaccines may be a path to controlling Covid-19, but it seems likely that we will be living with continued economic devastation for at least a few years. A Brookings Institute report estimates that Covid-19 financial ramifications will force over a hundred million people into extreme poverty, meaning household spending of less than $1.90 per day per person. Economic powers like the United States, China, and Europe have to help these people living in struggling countries.

To financially assist these countries, perhaps economic recuperation from Covid-19 can work in tandem with sustainable development. For instance, international partnerships like the United Nations could establish national work programs, employing those facing extreme poverty. These work programs could focus on developing a sustainable industry while pulling a country’s residents from poverty. For example, perhaps the United Nations could send a few engineers and supplies to high poverty areas to help them build solar, wind, or water-powered generators for local communities.

A program like this would have to be financed by industrialized economies, but that’s a necessary investment. Covid-19 is forcing aggregate wealth more into the hands of the already wealthy. Reversing that trend and returning wealth to developing countries would be no less than economic justice. Without help from advanced economies, developing nations will fall far behind their sustainable goals and revert to unsustainable development. For the health of the people living in developing countries, the plants and animals habiting developing nations, and the planet in general, we must counter Covid-19’s attack on sustainability.

Read the full article on Forbes.

Originally published on December 16, 2020.