This report analyses the state of the world economy a year and half after the Covid-19 outbreak was declared a pandemic by the World Health Organization. The first part of the Report outlines key macro-financial aspects of the global economy focusing in particular on the prospects for a growth recovery while analyzing possible threats from public and private debt from inflationary spikes as well as from a return to the policies of the past. It pays particular attention to the situation of developing countries in the system of global finance and discusses issues of debt sustainability. As this year marks its 40th anniversary the Report also revisits the analyses provided in previous editions in response to shocks setbacks and crises that have hampered development during the era of hyperglobalization and underscores its abiding call for an inclusive global economic governance. The second part focuses on climate adaptation. It calls for a transformative approach to climate adaptation with large-scale public investment programmes to adapt to future as well as current threats and green industrial policies to drive growth and job creation. It also details reforms of the international financial system needed to get more climate adaptation funds flowing to developing countries.

The Trade and Development Report (TDR) launched in 1981 is issued every year for the annual session of the Trade and Development Board. The Report analyses current economic trends and major policy issues of international concern and makes suggestions for addressing these issues at various levels. This year’s Report focuses on the challenges for achieving inclusive growth in an era of austerity hyper globalization and financial fragility. It includes chapters on robotics gender and employment finance and inequality and the growing market power of non-financial corporations. It concludes by calling for Global New Deal and the sorts of policy components it must include in light of the analyses provided.

This publication identifies the key issues in the global economy and the design of development strategies addressed in the Trade and Development Report over the past three decades tracing them through its various editions. It shows how ideas opinions and proposals expressed in the Trade and Development Report and the analytical approaches used differed from those of “the mainstream” and their evolution in response to new challenges. This review revisits the concept of interdependence and explains the approach of the reports to macroeconomic and financial policies in both developed and developing countries. It also summarizes development policy failures and successes over the years.

The Trade and Development Report 2008 subtitled Commodity Prices Capital Flows and the Financing of Investment” highlights the paradox that the “capital poor” developing world is exporting capital to the “capital rich” developed countries. The Report suggests shifting the focus in financial policies from households putting more money aside and imports of foreign savings to the reinvestment of profits and credit creation through the domestic banking system.

The world economy is still expanding but there are serious risks of a setback. Several populous Asian countries in particular China and India have emerged as new engines of economic growth. Thanks to their vigorous expansion and their appetite for natural resources many of their developing-country trade partners have reaped windfall profits from rising commodity prices and from surging demand for intermediate products. Some dark clouds are looming over this rather rosy horizon. Oil prices are historically high and place a huge burden on many developing countries. And there has been no multilateral action that might gently defuse global current-account imbalances. The Trade and Development Report recommends that international initiatives to alleviate poverty and reach the MDGs should not ignore the importance of a smooth unwinding of global economic imbalances that will allow the Asian Miracle to continue along with its positive repercussions for other less wealthy countries.

Since 2002 world economic expansion has had a strong positive impact on growth and helped support progress towards the United Nations Millennium Development Goals. Most developing countries have benefited from this growth momentum as a result of strong demand for their exports of primary commodities and to an increasing extent of manufactures. However global economic imbalances continue to pose a risk to the outlook of the world economy. Much depends on the ability of developing countries to adopt more proactive policies in support of capital formation structural change and technological upgrading and on the latitude available to them in light of international rules and disciplines. The Trade and Development Report 2006 offers relevant ideas and general principles for designing macroeconomic sectoral and trade policies that can help developing countries to succeed in today’s global economic environment.