BY KRISTALINA GEORGIEVA
ESSAY
EARLY IN THE PANDEMIC, EXPERTS PROJECTED THAT the world economy could shrink by almost 10% in 2020. Yet what played out was a contraction of 3.1%—still a huge loss of output, but not nearly as dire. To a large extent, this was due to international cooperation. Countries came together to diagnose the problem: a simultaneous shock to supply and demand. This meant that standard policy responses would not be sufficient. That’s why policymakers took extraordinary fiscal and monetary measures to support businesses and households. Without this coordinated response, we would have faced another Great Depression. And without the global collaboration of scientists and health authorities, we would not have had effective vaccines in record time. When crisis strikes, as it has so often in the past three years, international cooperation can save lives and livelihoods, and lay the foundations for a faster recovery.
Both the financial response and the vaccines are representative of the broader benefits of decades of economic integration and cooperation, which also helped billions of people to become healthier, wealthier, and better educated. Over the past three decades, around 1.3 billion people were lifted out of extreme poverty. To get there, we had to reach across borders. Think of trade integration, spurred by lower trade barriers and the emergence of global supply chains. And think of the spread of new technologies and cross-border capital flows that have underpinned much-needed investment, especially in emerging and developing economies.
BUT THIS IS only part of the story. The dislocations from trade and technological change have harmed some communities. Inward-looking policies and trade tensions have been on the rise for some years. And now geopolitical fragmentation is raising the specter of a “new cold war” that could see the world break into economic blocs at a cost of trillions of dollars in lost productivity.
In other words, unless we confront fragmentation, we are at risk of sleepwalking into a future that is poorer and less secure. And as we work to overcome these divisive forces, we must focus on the most vulnerable. This includes many countries in Africa and the Caribbean that are already bearing the brunt of climate change. Should they face this challenge alone, even though others contributed so much more to the climate crisis? Or consider the growing risk of a debt crisis in emerging and developing economies
