Modern Challenges of Economic Governance

Abstract

The COVID-19 crisis is the largest shock to the global economy since the Great Depression of the early 1930s, with more than 100 million people falling below the poverty line in 2020-21. The pandemic found most countries totally unprepared to deal effectively with its devastating consequences. However, climate change may prove to induce similar effects on the global economy. There is broad recognition that the national emission targets put forth by the Parties at COP 21 in Paris in 2015 are not consistent with limiting a temperature rise to 2◦C above preindustrial levels. Given the associated damage to the global economy and its supporting ecosystems, there has been increasing emphasis in recent years in identifying regulatory and fiscal policies that might facilitate climate change mitigation and adaptation. However, this question has moved centerstage against the background of COVID-19, the responses to which have greatly stretched budget resources virtually everywhere. Without the types of interventions that improve adaptation and resilience climate change will severely put out of reach the attainment of many of the SDGs, including on the elimination of extreme poverty. Thus, what does the pandemic say about spending priorities, against the background of future claims on public resources linked to climate change mitigation and adaptation? What, in fact, are the main lessons to emerge from the pandemic and how can we rethink economic governance with a view to enhancing human welfare? How can we equitably secure the financial resources needed for the adaptation and resilience to food security, agricultural productivity, emerging water scarcity, and disaster risk management? A look at these most important questions.