What the Paris Finance Summit Must Do
Western countries must join the effort to transform multilateral financial institutions, even if it means ceding some of their own influence to others who have previously been marginalized. And those pursuing systemic reforms must resist the temptation merely to tweak current arrangements.
PARIS – Lack of investment for sustainable development in the world’s poorest, most vulnerable countries is one of the most pressing global issues today, especially now that many of these countries are in debt distress, or will be soon. The fallout from the COVID-19 pandemic, Russia’s war on Ukraine, and ongoing climate-driven disasters are preventing many developing economies from achieving liftoff and exacerbating the global economy’s structural asymmetries.
This is the decade when we should be ratcheting up investments in sustainable development. In Sub-Saharan Africa, an additional two million decent jobs must be created each month until 2035, just to keep up with growth in the working-age population. Yet major powers like the United States, the European Union, and China are paying scant attention to such challenges. Instead, they are focused on their own technological competition, reindustrialization, decarbonization, and zero-sum strategic maneuvering, all of which could aggravate conditions in developing countries.
As Barbadian Prime Minister Mia Mottley warns, the Global South, including its emerging economies, remains in critical financial condition, much like Europe after World War II. Back then, the US committed reconstruction funding equal to 3% of the recipient countries’ combined national incomes, because it knew that the investment would pay off both economically and geopolitically. Now, the Western countries that still dominate the Bretton Woods institutions must recognize that they, too, have an interest in effectuating global financial and institutional transformative, not just incremental, reform.