The United Nations 75th anniversary has reminded us of the importance of promoting cooperative “solutions of international economic, social, health, and related problems,” as outlined in the UN Charter. In the aftermath of the Second World War, the principle of solidarity paved the way to recovery from hunger, poverty and underdevelopment. Seventy-five years ago, our enduring tradition of development commitment harnessed global opportunities to spur economic revitalization, institutional modernization and societal transformation.
Fast forward to today and the world is witnessing an unprecedented socio-economic crisis due to the COVID-19 pandemic. Increasing levels of multi-dimensional poverty, widening inequality and growing unemployment are threatening the lives and livelihoods of over 4.6 billion people in the Asia-Pacific region. To address this pandemic-induced crisis, governments are working towards the implementation of socio-economic response plans to protect hard-won development gains.
Today, there are enormous opportunities to turn policy lessons of the past into policy insights for the future, to help recover from the COVID-19 crisis.
Multi-country and multi-regional cooperation emerged during the 1970s crisis
The 1970s was marred by volatility in energy prices that severely impacted oil-importing countries. The increased macroeconomic imbalances and prolonged financial market pressures induced debt crises in several Asia-Pacific countries. Economies experienced soaring food inflation, along with a fall in real wages that later impacted productivity growth.
This energy-induced socio-economic crisis disrupted the livelihoods of over 500 million people in absolute poverty, along with the underdeveloped labour market in the region. At the time, government responses focused on equity, economic stability and self-reliance along with the establishment of a new international economic order.
Member States promoted the idea of adopting multi-country and multi-regional technology cooperation and development partnerships to meet common regional demands.
Early warning systems for crisis management gained momentum during the 1990s crisis
By the late 1990s, the Asian financial crisis had shed light on the importance of managing financial risks. The rapid contagion effects of capital market volatility in trade, private sector investment and labour markets became all but certain within the first few months of its unveiling in 1997.
With over 30 million additional people pushed into extreme poverty by 1998, the crisis increased economic insecurity, intensified job losses, and exacerbated social exclusion. In preparing for recovery plans, governments employed inclusive socio-economic policies to support private sector enterprises that enabled new sustainable growth potential and accelerated inter-regional and sub-regional cooperation on finance, trade and inclusive development.
An improved regional surveillance mechanism was one of the key drivers for reforming the financial system and international economic governance architecture. In 2000, ASEAN members along with China, Japan and the Republic of Korea established the Chiang Mai Initiative Multilateralization for bilateral swaps to manage short-term liquidity problems at the subregional and regional levels. The establishment of the Asian fund was later proposed to address future crises.
Global policy coordination increased principles of shared responsibility in the 2000s crisis
In September 2008, the subprime mortgage crisis in the United States spilled over to global financial markets. Consequently, the Asia-Pacific region witnessed one of the severest economic downturns since the Great Depression. This global financial and economic crisis constrained domestic economic activities, destabilized external sectors, and caused hardship for millions of people in the Asia-Pacific region.
With around 947 million people living under $1.25 a day, the Great Recession severely impacted the prospects of advancing the Millennium Development Goals. In response, governments prioritized an anti-poverty agenda and scaled up productive investment.
The G20 Leaders’ Summit agreed to systemically promote policy coordination on fiscal, financial and monetary responses to reduce the severity and length of the 2008 crisis. Governments announced fiscal stimulus packages to the tune of 2 percent of world GDP to address anaemic economic growth, lacklustre trade and unsustainable environmental management. These efforts reinvigorated cooperation in global policy coordination.
Building back better in the post-COVID-19 era
Today, with a worsening climate emergency and socio-economic crisis, how do we build back better? There is no doubt that in the end, solidarity remains our greatest asset to ensure sustainable recovery from the COVID-19 pandemic.
Past policy measures in recovering from socio-economic crises provide valuable insights for today’s policymaking. In this turbulent time, promoting a cooperative framework must be prioritised to prepare for sustainable recovery.
Now is the time to foster compassionate leadership to deliver on ambitions for a new social contract. Multilateralism is essential to inspire leaders and citizens to work together. Despite ongoing uncertainty, sharing and learning from our experiences and advancing our common agenda will be crucial to build back better for a more resilient and sustainable future for all.