More from UNDESA Vol 22, No. 08 - August 2018

Making Belt and Road Initiative work for sustainable development

Announced by the Chinese government in 2013, the Belt and Road Initiative maps out a grand vision for international development cooperation, covering five key areas—policy coordination, infrastructure, trade, financing and people-to-people connectivity. Ambitious financial commitments have been made by China to support the Initiative, and some 100 countries and international organizations have already participated in this initiative in various forms.

As bold infrastructure and trade undertakings begin to take shape, UN DESA’s project on “Strengthening National Policy Capacities for Jointly Building the Belt and Road towards the Sustainable Development Goals” is helping the participating countries ensure that the Initiative can accelerate their achievement of the Sustainable Development Goals.

Located in Southeast Asia, Lao People’s Democratic Republic (Lao PDR) is one of the countries set to benefit from infrastructure megaprojects under the Belt and Road Initiative, such as the China-Laos Railway. Such projects could prove instrumental to the Laotian Government’s efforts to industrialize and modernize the country, and ultimately to boost employment opportunities and lift large sections of the population out of poverty.

But, as Lao PDR prepares to graduate from the category of Least Develop Countries (LDCs) and forgo the associated trade privileges, its policy makers are looking for ways to maximize the direct benefit of the new infrastructure projects for their people.

“When the railway construction completes, China, Lao People’s Democratic Republic (PDR) and other neighbouring countries will be connected together for sure. But, what is there for us? Will it be just a throughway, or bring something to Laos,” said Mr. Phonhxiengdy, Director General of the Bank of Lao PDR.

“We need a cooperation corridor, not a transit corridor,” echoed Dr. Leebouapao, Vice President of Lao PDR’s National Institute for Economic Research. “That way, we can realize the true potential of the Belt and Road connectivity that can lead us to achieving the SDGs [Sustainable Development Goals].”

Step in UN DESA’s project, which is being rolled out in several pilot countries along the Belt and Road Initiative, including in Lao PDR. It aims to strengthen the capacities of policy makers to assess the potential effects of Belt and Road and to help them formulate policies that maximize the Initiative’s benefits while managing the potential risks.

This July, UN DESA’s project team conducted a scoping mission to Lao PDR to introduce the project and to discuss country-specific focus areas with Government officials from various ministries. The team also briefed the UN Country Team as well as relevant multilateral and bilateral development partners.

The Government and international counterparts requested UN DESA to develop a user-friendly assessment modelling tool, that could be used by many parties to formulate policies or make budget proposals. The meeting participants also recommended to hold several regional meetings at various levels to monitor progress and share knowledge on how to maximize the benefits of enhanced connectivity brought on by the railway.

More information: Belt and Road Forum for International Cooperation


Humanitarian concerns cast a shadow on the global outlook

Since mid-2016, the world economy has been experiencing a strong and broad-based recovery, and experts predict an even further uptick in growth. However, the global economic improvement has been eclipsed by elevated risks and humanitarian concerns, including an increase in armed conflicts.

While “trade war” between major economies has been making the headlines for posing a threat to the future of the international economy, the number of violent conflicts have also been on the rise. Recent data shows that the total number of internal and regional conflicts has almost doubled since 2007.

The relationship between conflict and development is complex, with causality running in both directions. Poverty and inequality tend to increase the likelihood of conflict, while economic marginalization and weak job opportunities trigger social discontent.  On the other hand, violence is itself a cause of instability, which can hurt the economic performance of afflicted societies.

A high risk of conflict is a strong deterrent for investors, dampening investment prospects in parts of Africa and Western Asia. Long-standing conflicts, such as in Afghanistan, Syria, and Yemen, have resulted in massive losses of physical and human capital, while weakening institutional capacities.

Conflicts in the Commonwealth of Independent States weighed heavily on their prospects of development as well.  The extensive damage to physical capital and transport networks continues to disrupt trade and production in both Ukraine and Azerbaijan.

For many developing countries, high defence and security expenditures can also divert scarce public resources away from much-needed investment in infrastructure, health and education, undermining progress towards the achievement of the SDGs and the 2030 Agenda.

Often triggered by instability and conflict, migration remains a major political, economic and financial issue. About 85 per cent of refugees are hosted by developing countries, placing severe strain on the limited domestic resources in these countries. The European Union has also seen a major spike in first-time asylum applications, which has generated considerable political and financial pressures.

The Government of Uganda is also grappling with the influx of refugees and migrants from conflict-affected areas. The Eastern-African country provides one of the most progressive refugee assistance programmes in the world, granting refugees the freedom of movement, workers’ rights and access to farmland to engage them in economic activity.  This assistance policy shows that high economic growth can be achieved alongside inclusive policies.

For more information:

Monthly Briefing on the World Economic Situation and Prospect

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