Peace, Justice and Strong Institutions

Climate-related shocks are growing in intensity and frequency while the ability of developing countries to address mounting climate challenges is heavily impaired by unsustainable debt burdens. Achieving climate-resilient structural transformation will require many of them to take on more debt. This policy brief highlights the growing overlap between debt and climate vulnerabilities in developing countries and the urgent need for improved access by vulnerable countries to financing on terms consistent with both long-term sustainable development and debt sustainability. It proposes a policy agenda that focuses on a reform of the international debt architecture and on scaling-up public-led and affordable development financing for climate investments.

The pandemic has progressed differently across the world. Using monthly data on COVID-19 cases and fatalities, we evaluate whether income inequality is an important factor in explaining cross-country differences in the spread and mortality of the virus. The results show that income inequality is positively correlated with the number of COVID-19 cases. Higher income inequality is associated with a more rapid spread of the virus and an increase in the number of cases, indirectly increasing mortality rates as well. Also, higher levels of inequality are associated with reduced effectiveness of social distancing measures in containing new infections. Thus, elevated inequalities place societies in a more vulnerable position to confront this pandemic, and more unequal countries would need more robust public responses to contain the spread of the virus.

As developing countries pursue infrastructure projects, they should aim to address a combination of the pandemic, climate, inequality, and other crises with the right mix of economic and social infrastructure. To do this, governments must invest in a national infrastructure planning process, align planning with the SDGs, and prioritize sustainable infrastructure over infrastructure that does not put people and the planet first. There is no silver bullet for all the challenges; however, incremental changes based on innovative precedents can potentially make a difference on the ground. This paper proposes an analytical framework to consider these challenges and concludes with possible solutions.

Financing for development requires that countries simultaneously mobilize resources from various sources while tackling financial leakages. This policy brief discusses how cryptocurrencies have become a new channel undermining domestic resource mobilization in developing countries. While cryptocurrencies can facilitate remittances, these same digital technologies may also enable tax evasion or avoidance through offshore flows whose ownership is not easily identifiable. In this way, they may curb the effectiveness of capital controls, a key instrument for developing countries to preserve their policy and fiscal space and macroeconomic stability. This policy brief recommends policies to reduce the financial leakages from cryptocurrencies. Given the global nature of cryptocurrencies, it highlights the importance and urgency of international cooperation regarding cryptocurrency tax treatments, regulation and information sharing as well as of redesigning capital controls to take account of the decentralized, borderless and pseudonymous features of cryptocurrencies.

Development organizations and conflict experts struggle to manage the magnitude, complexity and persistent volatility that characterize contemporary crises. Conflicts evolve at such a rapid pace that the amount of data produced by conflict or crisis situations is simply overwhelming. Because of the sheer amount of data and the pace at which they are being produced, human beings are unable to track crisis evolutions and manage effective decision-making processes. Under these radically changing circumstances, artificial intelligence (AI) can help us understand, and even anticipate, the outbreak and evolution of a crisis. Human-in-the-loop (HITL) AI combines the power of machine learning with human intelligence to address complex issues. This brief presents examples from Afghanistan and Ukraine to showcase applications of HILT artificial intelligence in the sphere of conflict resolution, particularly emphasizing risk anticipation and violence prevention.

Climate change and its impacts on the daily lives of billions of people require innovative actions. One potential component of such initiatives could be to advocate for and foster an industrial hemp sector, for exploitation and valorization based on a “whole plant” approach that uses all parts of the plant. Such exploitation could be achieved in most regions of the world, and the whole plant approach would help promote the establishment of various production chains. As discussed in this policy brief, industrial hemp value chains have the potential to be carbon negative and ecologically sustainable and can therefore effectively supplement strategies for sustainable development and the transition to clean energy. Practical experiences worldwide highlight the need for Governments to establish a regulatory and institutional framework supporting the exploitation of all parts of the industrial hemp plant. In this regard, the categorization of industrial hemp as an agricultural commodity subject to regulatory oversight by an agricultural department, as in many member countries of the European Union, rather than a controlled substance, as in Malawi and the United Kingdom of Great Britain and Northern Ireland, is of paramount importance.

The African Continental Free Trade Area is set to promote structural transformation in States parties, in addition to strengthening sustainable and inclusive socioeconomic development and improving gender equality. However, to achieve the desired outcomes and maximize benefits, it is imperative for implementation to be undertaken carefully, with strong and appropriate institutions underpinning the process. A key aspect of any trade agreement involving different parties is the dispute settlement mechanism, aimed at fostering trust, accountability and the rule of law in operationalizing the agreement. UNCTAD, in this policy brief, analyses the framework of the dispute settlement mechanism under the African Continental Free Trade Area Agreement by comparing it with other dispute settlement mechanisms under regional economic communities and the World Trade Organization, with a focus on challenges. In addition, recommendations are made for enhancing the dispute settlement mechanism, to ensure that it is more accessible and aligned with the preferences of member States of the African Continental Free Trade Area.

This paper showcases how a model that uses gender-responsive budgeting as a tool to promote gender equality, developed in the context of the Programme for Consolidating Economic Governance and PFMS in the PALOP-TL countries, Pro PALOP-TL SAI, leads to transformational and structural changes in PFMS and, consequently, results in more gender-equal economies and gender equality in the referenced countries (and could also be applied to other countries or at regional/global levels).

This policy brief explores how Governments can assess competing policy priorities, manage trade-offs and enhance synergies to accelerate the implementation of the 2030 Agenda, drawing from expert contributions to Chapter 2 of the World Public Sector Report 2023: Transforming institutions to achieve the Sustainable Development Goals after the pandemic. Renewed efforts in enhancing policy coherence are required to leverage synergies at different levels and unleash the transformations needed to achieve the SDGs. However, public entities face challenges in identifying and leveraging SDG interdependencies and translating relevant plans into action. The brief highlights actionable ways to support integration and address existing barriers to unlock SDG progress in a way that contributes to building trust, enhancing resilience and advancing innovation.

The benefits of governing through digital technologies are well recognized; however, growing recognition of the risks of digital technologies require similar acknowledgement of the importance of the governance of digital technologies. It is well-known that digital technologies can help transform governance and service delivery, enabling efficiency, inclusion, and accountability. However, these technologies are not neutral and introduce new risks that challenge their developmental potential. This paper documents these benefits and risks and argues for effective governance of digital technologies to mitigate these challenges. Three recommendations are made to support this: adopting a politically informed approach to digital transformation, addressing the governance gap and building digital public infrastructure for the public sphere.