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Floundering economies look to IMF, World Bank for meaningful change

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Rebecca Valli

With the coronavirus pandemic challenging the wellbeing of people and countries around the world, global financial institutions face the tremendous task of coordinating economic policies and offering relief for the most vulnerable countries. Such effort will be on display this week, as the International Monetary Fund and the World Bank hold their annual spring meetings. Cornell University experts are available to discuss the gravity of this week’s deliberations as well as their hope for what should be accomplished.   


Kaushik Basu

Professor of Economics and International Studies

Kaushik Basu, professor of economics at Cornell University and former Chief Economist at the World Bank, says that the meetings will offer a chance to go beyond ceremony and offer urgently needed guidelines to balance saving lives and promoting the economy.

 

Basu says:

“The spring and annual meetings of the World Bank have become landmark global gatherings to discuss multilateral policy. Starting with the inaugural meeting in Savannah, Georgia, in 1946, these meetings have been held all over the world – from London in 1947 to Washington, D.C., last year. This is the first year that it will be held nowhere in particular. Thanks to COVID-19, it will be a virtual meeting. Nevertheless, this will be one of the most keenly watched Spring Meetings, not for the routine speeches and decisions but for ideas. 

“Sitting in my lockdown in Mumbai – I was in India for some meetings when the lockdown happened – what worries me most is that nations are floundering in terms of policy. We have had great depressions and great recessions but never a ‘great whiplash’ of the magnitude as created by this pandemic. 

“The challenge is to strike the right balance between the stringency of the lockdown to control the virus, and space for economic activity and trade. It is wrong to think of this as a tussle between saving lives and promoting the economy. A floundering economy can cause huge losses in lives, especially in developing economies. What is urgently needed are some guidelines for striking the right balance. I know from my own four years at the World Bank, these institutions have a staggering amount of expertise and talent. It will be a great service to the world, especially developing economies, if the Spring Meetings go beyond ceremony to offer a prospectus on how to navigate the pandemic.”      

Victoria Beard

Professor of City and Regional Planning, Associate Dean of Research at AAP

Victoria Beard is a professor of city and regional planning at Cornell University and a fellow at the World Resources Institute. Beard’s research focuses on how planners need to address urban inequality and poverty, with an emphasis on the Global South. She says that the current crisis underscores long-standing problems of infrastructure and services in the Global South. The time for addressing these issues at the margins is over, she adds.  

 

Beard says:

“The current COVID-19 pandemic draws in sharp relief the fragility of our global economic system and underscores the interconnectedness of us all. In a world where the majority of people are living in cities and towns, government capacity to provide a social safety net, basic services, and coordinate action is paramount.

“In cities in the Global South where 50 to 80 percent of the workforce is informally employed, including home-based workers, domestic workers, street vendors, waste pickers, transportation workers, and construction workers, social distancing as it is envisaged in the Global North cannot be practiced. 

“In a study of 15 cities in the Global South, in 12 out of 15 cities, where 58 percent of households are connected to the municipal piped water system, these households only received water intermittently (in some cases two hours a day, three days per week, or less). 

“Where households are not connected, they must either pay exorbitant prices for water or leave their homes, wait in line, and use facilities outside the home. Simply put, washing your hands for the recommended 20 seconds is not possible. Any public health crisis will underscore the need for government capacity to coordinate action and the necessity for a social safety net. These problems will exist after the current crisis passes – the time for addressing these issues at the margins is over, meaningful change will require sustained political commitment and public investment.”

Muna Ndulo

William Nelson Cromwell Professor of International & Comparative Law

Muna Ndulo, professor of international and comparative law and director of the Institute for African Development at Cornell University, says that in the absence of international cooperation, thousands of people will die.

 

Ndulo says: 

“COVID-19 has engulfed the world into an unpreceded economic, health and human crisis unimaginable a few months ago. As the United Nations Conference on Trade and Development (UNCTAD), IMF and World Bank have observed, developing countries are unprepared to deal with the economic and health impacts of the coronavirus.

“The fragile health care systems and economies mean that in the absence of international cooperation, thousands of people will die. Assistance should be directed at building financial and infrastructural capacity that will help countries deal with the negative effects of COVID-19. If nothing else, this crisis has shown how unstable and ineffective the current economic and health care systems are, and how critical it is to underpin the structure of these systems with equity for all.”


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