J.Stiglitz, M.Spence and members of the Inet Commission on Global Economic Transformation

I.S.E.O. Institute is partnering with Università degli Studi di Brescia for the project “Nobels, Economists and Scientists for Covid-19”: a gathering of articles, essays and short videos by Nobel Laureates in Economics, economists and scientists from all over the world willing to give their contribute to comprehend what effects the Covid-19 spread will have on our lives and economies. We will be regularly publishing columns on our website (under the section Conferences/Covid) and on the webpage of University of Brescia. This is exactly the mission our beloved founder Franco Modigliani wanted the I.S.E.O. Institute to have: help understanding global economy.

The Pandemic and the Economic Crisis: A Global Agenda for Urgent Action

Interim Report by INET’s Commission on Global Economic Transformation

This Interim Report of the Commission focuses on actions that need to be taken immediately to get the pandemic under control and to ensure a prompt and robust recovery. It takes an explicitly global perspective on these issues, with particular attention to what the international community needs to do to help those in the developing world and emerging markets. The central thrust is that there are a series of actions that the developed countries could take today, at low cost to themselves, but which would be in their enlightened self-interest—and would be of enormous benefit to the billions of people in the developing world and emerging markets.

Section I focuses on worldwide access to vaccines and other medicines. The ugliness of vaccine and other aspects of pandemic nationalism has exposed deficiencies in our international trade and in the global intellectual property rights regime.

The advanced countries, especially the United States, have taken strong actions to reignite their economies and to protect the vulnerable, the many especially low-income individuals that have been badly affected by the pandemic downturn. The risks of doing too little are far greater than those of doing too much. The advanced countries learned, even if briefly, that austerity is counterproductive. Most developing countries are struggling to get the funds to continue existing programs, let alone meet the additional costs imposed by the pandemic. In Section II, we take up this issue, arguing that those countries with fiscal space need to take advantage of it; and that the international community should take actions—like a massive issuance of Special Drawing Rights—to provide more fiscal space to developing countries and emerging markets.

Section III discusses the urgency of addressing the debt issue. One way of giving more fiscal space to developing countries and emerging markets is a comprehensive standstill on debt servicing. But with the pandemic having now stretched to over a year, more is required in the case of some countries: there is a need for a comprehensive debt restructuring, one which doesn’t fall into the usual trap of “too little too late,” setting the stage for another crisis a few years down the line. The Report describes specific actions that could be taken to facilitate such a comprehensive debt restructuring. There is real urgency in addressing the three issues we have highlighted. All of this can be done quickly if political leaders in the developed world recognize that no one is safe until everyone is safe and that a healthy world economy is not possible without recovery in its poorer parts.

Here below you can download the Interim Report and watch the press conference held on the 11th March 2021 with the Nobel Laureates in Economics Joseph Stiglitz and Michael Spence, among others.