By CDP Chair Jose Antonio Ocampo

When the Committee for Development Policy (CDP) met in February, we considered the structural shifts that are redefining the global economy and discussed pathways in this new context. Within that framework, we addressed several issues, including technological change, financing for development (FfD), trade, ecological crises, human and social development, and issues specifically related to the least developed countries (LDC) category.  One message came out loud and clear: strong multilateralism is imperative, now as ever.

This does not mean closing our eyes to the challenges facing our multilateral institutions and rules. Strong multilateralism requires pragmatism and innovation as well as ambition. It needs to be rooted in an inclusive and representative framework, advance genuine consensus on common goals, and ultimately deliver results for people everywhere, particularly those furthest behind. To do so, it must acknowledge and respond to the asymmetries in needs and capabilities across countries.

One important milestone in the configuration of the multilateral system for the coming years is the Fourth International Conference on Financing for Development (FfD4), to take place in Sevilla, Spain, starting at the end of June. In the context of the preparatory process for the conference, the CDP has highlighted the importance of:

• securing debt sustainability and reducing the debt burden which weighs heavily on the public budgets of developing countries;
• reducing the excessively high cost of borrowing;
• improving tax cooperation to enhance the capacity of countries to mobilize domestic resources; and
• maximizing the potential of multilateral development banks (MDBs) in helping countries advance in structural transformation.

It made recommendations for institutional reforms in these and other areas, which align with the proposals of the International Commission of Experts on Financing for Development, which I also have the honor to chair.

Another milestone this year will be the Second World Summit on Social Development. Poverty eradication is a core theme of social development, along with full and productive employment and decent work for all and social integration. The Summit is framed in the context of the 2030 Agenda, which gives priority to leaving no one behind and recognizes that eradicating poverty in all its forms and dimensions, including extreme poverty, is the greatest global challenge. The Summit’s ambitions call for new, research-based, pragmatic solutions to this challenge. The CDP has emphasized that how poverty eradication goals are framed and how indicators are chosen has significant practical importance for the effectiveness of policy. We make recommendations on the measurement of poverty and poverty reduction and will continue to elaborate these and other recommendations as part of our upcoming contributions to the Summit.

Eradicating poverty and ensuring financing for sustainable development, particularly in the context of constrained and declining aid, depends on countries’ capacities to progress on structural transformation, for which trade has a central role. Trade has played a critical part in the remarkable progress of some of the LDCs that have advanced towards graduation, while in general there has been limited and fragile economic convergence between the group of LDCs and other developing and developed countries, despite some progress towards convergence in human and social development.

When the CDP met in February, the potential of trade as an engine for sustainable development was central to our discussions. We emphasized the importance and the challenges of building productive capacity to take advantage of the potential of trade for sustainable development in a context of digitalization, artificial intelligence (AI), the energy transition, and advances towards a circular economy.  There was already concern expressed over the increasingly complex and uncertain setting, with geopolitical and geoeconomic shifts generating significant headwinds and adding to existing challenges. 

Since our meeting, global trade has been hit by a tremendous shock in the form of unprecedented tariffs unilaterally imposed by the US, despite its many bilateral and regional trade agreements and the longstanding commitments under the World Trade Organization (WTO) – and thus in contradiction with multilateral, regional, and bilateral agreements. The consequences, in the short and in the long term, are hard to fathom, but undoubtedly immense. Developing countries, and particularly the LDCs, some of which were hit with the highest tariff rates, are the least equipped to address the fallout, and will suffer significant setbacks in terms of their national development pathways, their structural transformation processes, and consequently their capacity to eradicate poverty. As some of the tariffs announced on 2 April have now been paused for 90 days, it remains to be seen what will happen after that period.

These new challenges add to the mounting impacts of climate change, armed conflicts, long-lasting negative effects from the COVID-19 pandemic, macroeconomic challenges, and looming massive reductions in official development assistance (ODA).  As much as ever, we need a renewed commitment to multilateralism and in particular to a trade ecosystem anchored in a rules-based, fair, transparent, and supportive multilateral trading system (MTS) that reflects asymmetries in global development and contemporary challenges and opportunities. 

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CDP Chair Jose Antonio Ocampo is Professor at the School of International and Public Affairs and Member of the Committee on Global Thought at Columbia University. He was UN Under-Secretary-General for Economic and Social Affairs, Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), and Minister of Finance of Colombia on two occasions, among other high-level positions.

The CDP advises the UN Economic and Social Council (ECOSOC) on issues that are relevant for the implementation of the 2030 Agenda for Sustainable Development and on matters specifically related to the LDC category. Its 24 members are nominated in their personal capacity by the UN Secretary-General and are appointed by ECOSOC. They include academics and policy practitioners from a wide diversity of backgrounds. For more information, see https://cdp.un.org.