Navigating shifting tides: Transforming economies for sustainable development

The pursuit of the Sustainable Development Goals (SDGs) is getting steeper, as calls for more concerted action increase. Climate change-driven anomalies, stuttering economies, rising costs of living and indebtedness are adding on to the challenges already posed by the disruptive megatrends reshaping our world. Developing thriving and dynamic economies is one of the most important precursors for sustainable development but doing that now requires a fundamental revisit of how we approach economic thinking and policy.

1. The strides we have made

Before we look at where we should go, let’s take stock of how far we have come.

In the last few decades, we have made considerable socio-economic progress. At the global aggregate level, economies have grown, absolute poverty has been reduced, and standards of living have improved. The average person today is 28 times richer than she was in 1960!

However, beneath the surface of these trends lies a far less encouraging picture. Varying growth rates and howthe way in which incomes are distributed have led to increased inequalities, both within and between the countries.

Considerable gains in overcoming global poverty.

As of 2019, approximately 8.6 per cent of the global population live in extreme poverty compared with 36 per cent in 1990. On average, the number of people living in extreme poverty has declined by more than 40 million annually since 1990.

Despite an overall decreasing trend in global poverty numbers, meeting the poverty targets in the SDGs remains challenging as progress in reducing poverty has slowed over the past decade.

Climate change, conflict, and the pandemic have made the target of eradicating extreme poverty harder to achieve.  Based on recent estimates from the World Bank, which factors in the effects of the pandemic and the compounding shocks of inflation and conflict in 2022, we will miss the Sustainable Development Goal to eliminate extreme poverty by 2030. Approximately 7 per cent of the global population will still be living in extreme poverty by then end of this decade.

2. The headwinds we face

Rising inequality

Trends in economic growth may be a key indicator of the health of an economy but does not tell us  how the fruits of economic activity are distributed.

Inequality has been a constant feature in our socioeconomic history. Indeed, he world has become more equal than it was in the centuries and decades past. However, this isrelative, not absolute progress, as we are far from a fair and equitable distribution of income and wealth. Income and wealth inequality between and within countries around the world are at alarming levels!

Climate change caused by greenhouse gas emissions from our past has severe economic consequences today, especially in more vulnerable areas of the world. Our current emission levels foretell even greater challenges to come! Without immediate, robust, progressive and sustained action to stall global emissions, it is almost certain that climate changes will surpass the limits critical for our survival and prosperity. 
 
Looking through the economic lens alone, here is how much economic loss different regions of the world are expected to experience due to climate change alone:

Precarity of labour and employment

While fluctuating for most of the last five decades, labour productivity (measured as GDP per employed person) has been increasing globally, recording consistent annual growth since 2010. However, the global share of labour in total income has been declining since 2004, despite higher productivity.

According to the International Labour Organization, over 60 per cent of workers worldwide lack an employment contract due to labour market informality and a lack of oversight and enforcement. Employment and livelihood opportunities are progressively limited for youth worldwide. Let’s take a look at the trends in youth unemployment over the last two decades.

Economic activity is not an end but a means to sustainably advance human well-being within our ecological boundaries and the overarching principle of leaving no one behind.

3. Adjusting the sails

Transforming our thinking on economic progress and welfare is a critical and necessary first step to strategically reconfiguring our development compass in a way that helps people, societies and nature on the path to sustainable development. Let’s take a look at some of these critical imperatives: 

Reimagining value

As we pursue economic well-being and prosperity in our societies around the world, we tend to view it from a narrower lens of Gross Domestic Product (GDP). While still being an adequate indicator of material welfare, this falls short in effectively capturing the intricate weave of social, environmental, and economic threads that constitute the substantive dimensions of human prosperity.

Instead, a paradigm shift is required that values economic, social, and environmental progress with equal fervour, ensuring that none is overshadowed or neglected. This symbiotic relationship recognizes that true prosperity can't be achieved by advancing one area at the expense of another. The UN is leading the efforts in this regard and working towards alternative measures of progress and welfare. Learn more here: UN ‘Beyond GDP’

Investing in people: The cornerstone of progress

In the face of globally disruptive megatrends — from technological advances to climate change — the necessity of this transformative approach becomes all the more evident. For too long, policies have been fragmented, often catering to one aspect of progress while neglecting others. To navigate this successfully, we need to craft new strategies that are versatile, dynamic, and comprehensive, anticipating the multifaceted challenges of the modern world.

Central to this narrative is the emphasis on creating avenues for decent work and promoting lifelong learning. These aren't mere buzzwords, they're pillars of sustainable economic progress. By nurturing human capabilities, societies empower individuals to not only participate in dynamic labour markets but also to innovate, adapt, and flourish.

Progressive investments in areas like education, skills development, health, and overall well-being are strategic imperatives. This will not only ensure labour-force participation but also amplify their potential to create, contribute, and drive meaningful economic value. The dividends of such investments manifest in the form of better livelihood opportunities, increased innovation, and a more resilient and adaptable society.

4. UNSSC and the economic transformation narrative

The intersection of socio-economic and environmental objectives presents a complex puzzle, but it's one that we must solve — and swiftly. Understanding this need, UNSSC Knowledge Centre for Sustainable Development developed and delivered the inaugural edition of a facilitated online course on Transforming Economies for Sustainable Development. In this highly selective, five-week online course, we had around 200 participants of which half were UN staff members, from over 80 countries.

We also had the privilege of being joined by some of the frontier thinkers in economic development, including Nobel Laureate Dr. Michael Spence, Prof. Jayati Ghosh, Prof. Adil Najam, and Dr. Kunal Sen. Also enriching our programme with their insights were Dr. Joy Kategekwa, Max Lawson, Nabil Ahmed, and Dr. Basani Baloyi.

Here are some of their reflections:
 

 

Read more about this course