The report titled, World Economic Situation and Prospects 2019, presents an uncertain and potentially unstable outlook for global economic growth and sustainability in 2019, given the trends, tendencies and risks of the past years. In such a scenario, the prospects for global macro-economic development need to be strengthened, alongside fundamental transformations to sustainably boost global production and consumption systems.
According to the report, policy imperatives will play a critical role within this scenario, given the challenges underlying multilateral approaches to global policy-making. There is a growing realisation that the benefits of increasing economic integration and trade liberalisation have not been equitably shared between and within countries, thereby causing exacerbations in income and wealth inequalities. In many instances, these have led to an undermining of national sovereignty and limiting of policy spaces.
Multilateralism is being threatened at a time when the need for international cooperation and governance is increasingly becoming more important. The institutions and agreements that glue together the global multilateral economic system have been under increased pressures, vis-à-vis international trade, development finance and climate change. The risks and uncertainties underlying the 2030 Agenda for Sustainable Development are inherently global in nature and demand collective and cooperative action.
The report further states that a closely integrated world economy with internationally agreed rules and institutions is vital for ensuring well-functioning markets, resolving disagreements and ensuring stability.This entails the need to fortify an effective, inclusive, flexible and responsive multilateral system that can play a central role in advancing sustainable development globally, while responding adequately to legitimate concerns.
The world’s multilateral trading system must be in alignment with the 2030 Agenda for Sustainable Development, creating an inclusive, transparent and development-friendly framework for international trade. Some examples of this include – progress in international tax cooperation to enable all countries to receive fair share of taxes from international companies (especially critical for the poorer countries) and greater international cooperation vis-à-vis green technology to halt global warming via affordable technology transfer to support transition towards sustainable production in many developing countries, especially the least developed countries (LDCs).
The report calls for complementing effective national tax policies with international tax cooperation. The international community must work towards a fair, sustainable and modern international tax system that is supported by pro-growth tax policies. Related efforts must be universal and multilateral in approach and scope, while taking into consideration increasing global digitalization as well as the differing needs and capacities of countries.
Thus, countries must be able to adopt effective tax policies that enhance domestic public finance for sustainable development. Domestic policies must focus on effective budgeting, mobilization and utilization of public resources to provide essential public goods and services and strengthened infrastructure, while ensuring reductions in inequalities and supporting overall macro-economic stability.
In order to successfully deliver environmentally sustainable growth, fundamental shifts in policy and consumption are required. Economic decision-making must be grounded in the alleviation of negative risks of climate change by reducing emissions via tools like carbon pricing measures, energy efficiency regulations, minimum performance standards, building codes and reductions in socially inefficient fossil fuel subsidy regimes.
The government must promote policies that reduce the demand for carbon-intensive services and fossil fuel-based technology, especially in cases of high reliance, via economic diversification. The use of new energy-saving technologies must be encouraged via incentives like research and development subsidies. In order to effectively manage a country’s wealth of natural resources, the domestic government must develop and implement far-sighted policy strategies.
This demands a comprehensive approach to commodity management that is embedded in a broader sustainable development strategy. Returns from commodities can become a vital source of revenue for supporting broader access to healthcare and education, investment in critical infrastructure, provision of crucial social protection services and promotion of economic diversification. Diversification is necessary for strengthening economic and environmental resilience. Key elements include robust institutions, transparency, counter-cyclical policies and targeted investment in human capital.
A major barrier to the achievement of the 2030 Sustainable Development Agenda is the prevalent levels of global inequality. Building access to robust education (quality) and employment policies (expanded social protection, higher minimum wages) as well as rural infrastructure (public investment in transport, agriculture and energy) must be central to efforts aimed at alleviating poverty, reducing inequalities, narrowing the rural-urban divide and raising overall living standards, of those at the lowest rungs of the income ladder.
All the countries have a shared policy priority to rapidly and collaboratively resolve any trade disagreements and the resulting policy uncertainties, rather than raise harmful trade barriers that would destabilize an already slowed-down global economy. All economies must adopt measures that boost the potential for output growth in order to enhance inclusivity and strengthen the fiscal and financial buffers, within an environment of high debt burdens and tighter financial conditions.
India Outbound
January 25, 2019
source https://indiaoutbound.org/policy-challenges-underlying-sustainable-economic-growth/
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