Deutsches Institut für Entwicklungspolitik / Briefing Paper

Social inequality and societal fragmentation have become major concerns in many OECD countries and developing regions in recent years. Policymakers and researchers assume that economic factors such as income inequality and/or unemployment cause and aggravate these trends. The 2030 Agenda acknowledges the challenge and emphasises the importance of inclusive growth, equality and peaceful, inclusive societies. However, for evidence-based policy-making we need more sound and comprehensive empirical evidence of the relationship between economic factors and societal fragmentation.
This Briefing Paper gives an overview of the main findings of economic studies on social cohesion, and introduces the implications for development policies.
Economists find a positive relationship between social cohesion and economic growth, on the basis that social cohesion improves formal and/or social institutions, which causally drives economic growth. Evidence of a relation running from growth to social cohesion exists but is still very scarce and limited to correlation analysis so that neither direction nor causality can be exclusively claimed. One potential mechanism through which growth might influence social cohesion is inclusive, pro-poor-oriented improvements in development outcomes, namely employment creation, education and decreased inequality in income and resource distribution. Another potential mechanism is policy reforms, for instance in the fields of social protection and taxation. More research is needed, however, to fully understand whether there is a feedback loop from growth to social cohesion or whether the relationship primarily runs the other way round.
Development cooperation, particularly that involving Germany, has been increasingly focused on economic development in general and promotion of the private sector in particular. Explicit links to social cohesion are not part of most development strategies, peacebuilding being an exception. However, economic policies and growth do not necessarily raise social cohesion and can even contribute to increasing social dissatisfaction and unrest if not properly distributed.
Social cohesion is primarily a social phenomenon of relations between societal actors and institutions. It therefore requires prudent policies, which ensure that economic development is inclusive and that it translates into changes of social and societal realities that strengthen societal bonds. It is thus desirable that strategies for economic development include mechanisms to foster social cohesion or, at least, do not counter the “togetherness” of a society (“do no harm”).
Policymakers, NGOs, charities and think tanks can address social cohesion as follows:

• Recognise the importance of social cohesion in development strategies. Social cohesion is not only a valuable goal in itself but also a key condition for the impact and sustainability of development cooperation and economic growth.
• Consider trust, identity and solidarity in support of social cohesion. Successful support of individual elements is likely to make a difference for social cohesion in a given society.
• Integrate mechanisms that foster social cohesion into strategies for economic development. Economic development in itself does not automatically increase social cohesion and hence does not necessarily contribute to counteracting the drifting apart of a society.

Social inequality and societal fragmentation have become major concerns in many OECD countries and developing regions in recent years. Policymakers and researchers assume that economic factors such as income inequality and/or unemployment cause and aggravate these trends. The 2030 Agenda acknowledges the challenge and emphasises the importance of inclusive growth, equality and peaceful, inclusive societies. However, for evidence-based policy-making we need more sound and comprehensive empirical evidence of the relationship between economic factors and societal fragmentation.
This Briefing Paper gives an overview of the main findings of economic studies on social cohesion, and introduces the implications for development policies.
Economists find a positive relationship between social cohesion and economic growth, on the basis that social cohesion improves formal and/or social institutions, which causally drives economic growth. Evidence of a relation running from growth to social cohesion exists but is still very scarce and limited to correlation analysis so that neither direction nor causality can be exclusively claimed. One potential mechanism through which growth might influence social cohesion is inclusive, pro-poor-oriented improvements in development outcomes, namely employment creation, education and decreased inequality in income and resource distribution. Another potential mechanism is policy reforms, for instance in the fields of social protection and taxation. More research is needed, however, to fully understand whether there is a feedback loop from growth to social cohesion or whether the relationship primarily runs the other way round.
Development cooperation, particularly that involving Germany, has been increasingly focused on economic development in general and promotion of the private sector in particular. Explicit links to social cohesion are not part of most development strategies, peacebuilding being an exception. However, economic policies and growth do not necessarily raise social cohesion and can even contribute to increasing social dissatisfaction and unrest if not properly distributed.
Social cohesion is primarily a social phenomenon of relations between societal actors and institutions. It therefore requires prudent policies, which ensure that economic development is inclusive and that it translates into changes of social and societal realities that strengthen societal bonds. It is thus desirable that strategies for economic development include mechanisms to foster social cohesion or, at least, do not counter the “togetherness” of a society (“do no harm”).
Policymakers, NGOs, charities and think tanks can address social cohesion as follows:

• Recognise the importance of social cohesion in development strategies. Social cohesion is not only a valuable goal in itself but also a key condition for the impact and sustainability of development cooperation and economic growth.
• Consider trust, identity and solidarity in support of social cohesion. Successful support of individual elements is likely to make a difference for social cohesion in a given society.
• Integrate mechanisms that foster social cohesion into strategies for economic development. Economic development in itself does not automatically increase social cohesion and hence does not necessarily contribute to counteracting the drifting apart of a society.

The implementation of the 2030 Agenda for Sustainable Development requires enormous global investment. In developing countries alone, its realisation requires investment of $4 trillion a year (UNCTAD, 2014). Since the public sector in developing countries is often unable to mobilise sufficient domestic resources, the private sector is needed to help fill this gap. One of the key sources is foreign direct investment (FDI), which not only brings capital into developing countries but also advanced technologies and managerial know-how. It is critical that governments have policies in place to attract FDI, and to harness its advantages by enhancing its contribution to sustainable development. This can be done by establishing linkages between foreign and domestic firms, improving the absorptive capacity of local businesses, and strengthening governance capacities in order to improve environmental and social conditions. Since 2017, a group of emerging and developing countries has been driving discussions at the World Trade Organization (WTO) on the establishment of an international investment facilitation framework (IFF), which should help to increase FDI flows. Investment facilitation covers a wide range of areas, all with a focus on encouraging investment to flow efficiently and for the greatest benefit of host countries. In the light of the 2030 Agenda, a focus on the attraction of more FDI is necessary but not sufficient; it is also important to focus on the qualitative contribution of FDI to economic growth in host countries that is socially just and environmentally friendly. Many developing countries would benefit from attracting more FDI to support their sustainable development, but they remain outside the structured discussions at the WTO. Often, they fear a loss of policy space to pursue domestic developmental strategies. Our research shows that developing countries have implemented fewer investment facilitation measures than have developed countries, and would thus face higher implementation costs in order to comply with an IFF. Furthermore, in light of the non-reciprocal nature of global investment flows, although developing countries would benefit from their own investment facilitation reforms, they would not benefit equally from those of their negotiation partners. An IFF can make four key contributions to sustainable development: it can help attract and retain FDI, enhance the quality of FDI in light of national strategies, build domestic institutions, and enhance international cooperation. In order to realise this potential, we make six recommendations: 1.   Bridge the implementation gap by providing capacity building. 2.   Strengthen developing countries’ negotiation capacities. 3.   Respect the policy space of developing countries. 4.   Focus special and differential treatment on longer implementation periods. 5.   Include a commitment by home countries to support their investors’ responsible-business conduct. 6.   Establish international cooperation mechanisms and increase inclusivity by supporting multi-stakeholder processes.

The implementation of the 2030 Agenda for Sustainable Development requires enormous global investment. In developing countries alone, its realisation requires investment of $4 trillion a year (UNCTAD, 2014). Since the public sector in developing countries is often unable to mobilise sufficient domestic resources, the private sector is needed to help fill this gap. One of the key sources is foreign direct investment (FDI), which not only brings capital into developing countries but also advanced technologies and managerial know-how. It is critical that governments have policies in place to attract FDI, and to harness its advantages by enhancing its contribution to sustainable development. This can be done by establishing linkages between foreign and domestic firms, improving the absorptive capacity of local businesses, and strengthening governance capacities in order to improve environmental and social conditions. Since 2017, a group of emerging and developing countries has been driving discussions at the World Trade Organization (WTO) on the establishment of an international investment facilitation framework (IFF), which should help to increase FDI flows. Investment facilitation covers a wide range of areas, all with a focus on encouraging investment to flow efficiently and for the greatest benefit of host countries. In the light of the 2030 Agenda, a focus on the attraction of more FDI is necessary but not sufficient; it is also important to focus on the qualitative contribution of FDI to economic growth in host countries that is socially just and environmentally friendly. Many developing countries would benefit from attracting more FDI to support their sustainable development, but they remain outside the structured discussions at the WTO. Often, they fear a loss of policy space to pursue domestic developmental strategies. Our research shows that developing countries have implemented fewer investment facilitation measures than have developed countries, and would thus face higher implementation costs in order to comply with an IFF. Furthermore, in light of the non-reciprocal nature of global investment flows, although developing countries would benefit from their own investment facilitation reforms, they would not benefit equally from those of their negotiation partners. An IFF can make four key contributions to sustainable development: it can help attract and retain FDI, enhance the quality of FDI in light of national strategies, build domestic institutions, and enhance international cooperation. In order to realise this potential, we make six recommendations: 1.   Bridge the implementation gap by providing capacity building. 2.   Strengthen developing countries’ negotiation capacities. 3.   Respect the policy space of developing countries. 4.   Focus special and differential treatment on longer implementation periods. 5.   Include a commitment by home countries to support their investors’ responsible-business conduct. 6.   Establish international cooperation mechanisms and increase inclusivity by supporting multi-stakeholder processes.

A country where an individual’s chances of success depend little on the socio-economic success of his or her parents is said to be a country with high relative intergenerational mobility. A government’s motivation for seeking to improve mobility is arguably two-fold. There is a fairness argument and an economic efficiency argument. When mobility is low, it means that individuals are not operating on a level playing field. The odds of someone born to parents from the bottom of their generation will be stacked against him or her. This is not only unfair but also leads to a waste of human capital, as talented individuals may not be given the opportunity to reach their full potential. Reducing this inefficiency will raise the stock of human capital and thereby stimulate economic growth. Since the waste of human capital tends to be concentrated toward the bottom of the distribution, the growth brought about by mobility-promoting policy interventions tends to be of an inclusive nature, in line with the spirit of Sustainable Development Goal (SDG) 10 on reducing inequality.
For large parts of the world’s population, individual education is still too closely tied to the education of one’s parents, and there is a clear divide between the high-income and developing world. The patterns observed globally are also observed within Europe. Intergenerational mobility (or equality of opportunity) is visibly lower in the new member states (i.e. Eastern Europe), where national incomes are lower.
Raising investment in the human capital of poor children towards levels that are more comparable to the investment received by children from richer families will curb the importance of parental background in determining an individual’s human capital. Countries at any stage of development can raise intergenerational mobility by investing more to equalise opportunities. The evidence strongly suggests that public interventions are more likely to increase mobility when:
a)    public investments are sufficiently large,
b)    are targeted to benefit disadvantaged families/ neighbourhoods,
c)    focus on early childhood, and
d)    when there is a low degree of political power captured by the rich.

A country where an individual’s chances of success depend little on the socio-economic success of his or her parents is said to be a country with high relative intergenerational mobility. A government’s motivation for seeking to improve mobility is arguably two-fold. There is a fairness argument and an economic efficiency argument. When mobility is low, it means that individuals are not operating on a level playing field. The odds of someone born to parents from the bottom of their generation will be stacked against him or her. This is not only unfair but also leads to a waste of human capital, as talented individuals may not be given the opportunity to reach their full potential. Reducing this inefficiency will raise the stock of human capital and thereby stimulate economic growth. Since the waste of human capital tends to be concentrated toward the bottom of the distribution, the growth brought about by mobility-promoting policy interventions tends to be of an inclusive nature, in line with the spirit of Sustainable Development Goal (SDG) 10 on reducing inequality.
For large parts of the world’s population, individual education is still too closely tied to the education of one’s parents, and there is a clear divide between the high-income and developing world. The patterns observed globally are also observed within Europe. Intergenerational mobility (or equality of opportunity) is visibly lower in the new member states (i.e. Eastern Europe), where national incomes are lower.
Raising investment in the human capital of poor children towards levels that are more comparable to the investment received by children from richer families will curb the importance of parental background in determining an individual’s human capital. Countries at any stage of development can raise intergenerational mobility by investing more to equalise opportunities. The evidence strongly suggests that public interventions are more likely to increase mobility when:
a)    public investments are sufficiently large,
b)    are targeted to benefit disadvantaged families/ neighbourhoods,
c)    focus on early childhood, and
d)    when there is a low degree of political power captured by the rich.

To achieve the Sustainable Development Goals (SDGs) by 2030, developing countries need additional funding. Funding can come from four sources: domestic public resources (or revenues), international public resources, domestic private resources or international private resources. Of these four sources, domestic revenues from taxes and non-tax sources (e.g. profits from state-owned oil companies) are by far the most important. Tax revenues amounted to USD 4.3 trillion in 2016 for low- and middle-income countries alone, which is more than double the amount of international public and private capital these countries received in the same year. Domestic revenues have been growing in a majority of low- and lower-middle-income countries over the last 15 years. However, these increases remain insufficient to cover the financing needs of the SDGs, estimated at USD 2.5 trillion per year for developing countries, according to figures from the United Nations Conference on Trade and Development. In addition, these countries have to deal with the recent decline in financial flows from international public and private sources – a decline of 12 per cent between 2013 and 2016. As a result, many governments are under pressure to mobilise more revenues at home. What options do they have to achieve this goal?
In this briefing paper, we focus on the international dimensions of the issue. We argue that governments need to act multilaterally in three key areas.
First, tax avoidance by multinational corporations (MNCs) remains a global problem, despite important progress in recent years. Though not openly illegal, tax avoidance causes considerable damage to developing countries. Poorer countries depend to a higher degree on corporate taxes than richer countries and are thus more vulnerable to these practices. International initiatives to act upon tax avoidance – for instance, by introducing a minimum tax and by taxing the digitalised economy – should take the taxation rights of poorer countries into account.
Second, fighting illegal tax evasion is another relevant topic. At an international scale, the exchange of tax-related information – for instance, on the beneficial ownership of assets – is a key factor, and developing countries need to participate in this exchange on a broad scale. This will require additional domestic and international efforts to boost capacity and credibility.
Third, governments worldwide should increase trans¬parency on their tax expenditures and dismantle those structures that prove to be either harmful or ineffective in fiscal, social or environmental terms, or create negative spillovers for other countries. As a first step, governments should agree on common reporting standards and start producing regular, public and encompassing reports on the tax expenditure schemes in place.
Evidently, this is not an agenda for individual countries or a call for unilateral action. Current approaches to international tax cooperation – mostly propelled by the Organisation for Economic Co-operation and Development (OECD) and the G20 – need to be broadened and include all countries on an equal footing; they should also be deepened to cover those aspects of taxation that are not yet being sufficiently addressed. It is also clear, however, that the degree to which developing countries will take part in international standard-setting and regulation depends to a considerable degree on their capability to push forward critical governance reforms at the domestic level.

To achieve the Sustainable Development Goals (SDGs) by 2030, developing countries need additional funding. Funding can come from four sources: domestic public resources (or revenues), international public resources, domestic private resources or international private resources. Of these four sources, domestic revenues from taxes and non-tax sources (e.g. profits from state-owned oil companies) are by far the most important. Tax revenues amounted to USD 4.3 trillion in 2016 for low- and middle-income countries alone, which is more than double the amount of international public and private capital these countries received in the same year. Domestic revenues have been growing in a majority of low- and lower-middle-income countries over the last 15 years. However, these increases remain insufficient to cover the financing needs of the SDGs, estimated at USD 2.5 trillion per year for developing countries, according to figures from the United Nations Conference on Trade and Development. In addition, these countries have to deal with the recent decline in financial flows from international public and private sources – a decline of 12 per cent between 2013 and 2016. As a result, many governments are under pressure to mobilise more revenues at home. What options do they have to achieve this goal?
In this briefing paper, we focus on the international dimensions of the issue. We argue that governments need to act multilaterally in three key areas.
First, tax avoidance by multinational corporations (MNCs) remains a global problem, despite important progress in recent years. Though not openly illegal, tax avoidance causes considerable damage to developing countries. Poorer countries depend to a higher degree on corporate taxes than richer countries and are thus more vulnerable to these practices. International initiatives to act upon tax avoidance – for instance, by introducing a minimum tax and by taxing the digitalised economy – should take the taxation rights of poorer countries into account.
Second, fighting illegal tax evasion is another relevant topic. At an international scale, the exchange of tax-related information – for instance, on the beneficial ownership of assets – is a key factor, and developing countries need to participate in this exchange on a broad scale. This will require additional domestic and international efforts to boost capacity and credibility.
Third, governments worldwide should increase trans¬parency on their tax expenditures and dismantle those structures that prove to be either harmful or ineffective in fiscal, social or environmental terms, or create negative spillovers for other countries. As a first step, governments should agree on common reporting standards and start producing regular, public and encompassing reports on the tax expenditure schemes in place.
Evidently, this is not an agenda for individual countries or a call for unilateral action. Current approaches to international tax cooperation – mostly propelled by the Organisation for Economic Co-operation and Development (OECD) and the G20 – need to be broadened and include all countries on an equal footing; they should also be deepened to cover those aspects of taxation that are not yet being sufficiently addressed. It is also clear, however, that the degree to which developing countries will take part in international standard-setting and regulation depends to a considerable degree on their capability to push forward critical governance reforms at the domestic level.

This paper provides an overview of what is actually known about the relationship between climate change and human mobility in West, East and Southern Africa – the most affected regions of Sub-Saharan Africa. Although there is a general lack of data on “climate migration”, trends can be deduced from the growing number of case studies and research projects. This paper also formulates some recommendations for German and European development policies for addressing “climate migration” in Africa.
The adverse effects of climate change in the three regions are mainly linked to increasing rainfall variability and a higher frequency or intensity of floods and droughts. These effects are a major challenge for human security. The consequences for human mobility, which range from forced displacement to circular labour migration, are embedded in a complex and very context-specific set of political, social, economic, cultural and ecological factors. Due to generally fragile contexts and armed conflicts, the risk of forced displacement in the context of climate change is probably the highest in the Horn of Africa. In all three regions, many households affected by climate change can be considered “trapped” – mobility is not an option for them at all. If mobility is possible, it often takes the form of individual and circular labour migration. Under favourable circumstance (e.g. in the absence of labour exploitation), money earned by migrants might help their households to compensate or at least mitigate the losses induced by climate change (“migration as adaptation”).
The ideal political response towards human mobility in the context of climate change is to avoid forced displacement, to maximise positive mechanisms of migration and to minimise negative aspects like labour exploitation. This demands a multi-sectoral and multi-level policy approach.
To achieve this, we have formulated the following recommendations:

• Capacity building and bridging gaps between different policy fields. Dialogue processes between the different (policy) fields and communities need to be fostered. As concepts of migration differ significantly between relevant policy fields, a common understanding of the challenges related to human (im-)mobility in the context of climate change has to be created.
• Multi-level governance and local empowerment. Open policy spaces should be established and more resources mobilised to strengthen vulnerable groups and communities, which have so far only played a marginal role in relevant policy processes.
• Collection of data and best practices. The creation of an appropriate database and documentation of best practices regarding the complex problems of local vulnerability and the role of human mobility is absolutely essential for further action. There are severe gaps in this regard.

In every fourth post-conflict country a new constitution is written, but the effect of these post-conflict constitution-making processes on peace remains understudied. Constitution-making has become a corner stone of peacebuilding efforts in post-conflict societies and is widely supported by international actors. It is often seen as a main component of a political transition necessary in states that have experienced internal warfare. This is because a successful constitution-making process establishes a new and potentially permanent governance framework that regulates access to power. However, systematic analyses of the effect of post-conflict constitution-making on peace have been lacking. This Briefing Paper presents new, empirical evidence showing that post-conflict constitution-making can contribute to peace.
Countries emerging from conflict often adopt new constitutions in order to signal a clear break with the past regime and to reform the institutions that are often seen as at least partially responsible for conflict having erupted in the first place. Post-conflict constitution-making has taken place in highly diverse settings – ranging from the aftermath of civil war, as in Nepal or South Africa, to interethnic clashes or electoral violence, as in Kyrgyzstan or Kenya. And in the current peace talks around Syria the question of writing a new constitution also plays a prominent role. Since academic evidence is lacking as to whether constitution-making can contribute to peace after civil war, it remains an open question whether efforts in this regard should be pursued by international actors.
This Briefing Paper presents evidence that writing a new constitution positively influences post-conflict countries’ prospects for peace (for the full analysis see Fiedler, 2019). It summarises innovative, statistical research on post-conflict constitution-making, conducted by the DIE project “Supporting Sustainable Peace”. Based on an analysis of 236 post-conflict episodes between 1946 and 2010, two main results with clear policy implications emerge:

• Writing a new constitution reduces the risk of conflict recurrence. The analysis shows a statistically significant and robust association between writing a new constitution after experiencing violent conflict and sustaining peace. International efforts to support post-conflict constitution-making are hence well-founded. The theoretical argument behind the relationship suggests that it is important that constitution-making processes enable an extensive inter-elite dialogue that helps build trust in the post-conflict period.
• Post-conflict constitution-making processes that take longer are more beneficial for peace. This is likely because the trust-building effect of constitution-making only occurs when enough time enables bargaining and the development of a broad compromise. International actors frequently pressure post-conflict countries to go through these processes very quickly, in only a matter of months. The results question this approach, as very short constitution-making processes do not positively affect peace.

With a collective responsibility for 80% of global greenhouse gas emissions, while representing 80% of global wealth, it is imperative that the countries of the G20 throw their weight behind the implementation of both the Paris Climate Agree-ment and the 2030 Agenda for Sustainable Develop¬ment. In the past, the G20 has demonstrated that it can do that. The G20 Summit in November 2015 in Antalya, Turkey, provided strong support for the climate agreement signed a month later at the UN Climate Change Conference (COP21) in Paris. In 2016 in Hangzhou, China, the G20 adopted an Action Plan on the 2030 Agenda for Sustainable Develop¬ment and committed to “further align its work” with the 2030 Agenda. Even though both agendas have emerged in the multilateral context of the United Nations system, the G20 is expected to exert strong political leadership to address global climate change and to achieve sustainable development.
Yet, since 2017 the G20 has struggled to provide such leadership, as support for multilateral commitments, especially those involving ambitious climate actions, appears to be fading. Crucially, opposition to strong multilateral climate policy in the US and Brazil resorts to outright climate denialism at the highest levels of government. These developments are challenging the G20, and BRICS and the G7 for that matter, to sustain support for multilateral commitments on climate and sustainable development. The rise of populist and unilaterally minded parties in European club members may further the risk of side-lining climate and sustainability-related issues in the G20 process. This does not bode well at a time when the G20’s support could be a vital ingredient for the success of the United Nations’ summits on climate action and sustainable development, both scheduled to convene in New York in September 2019 – less than three months after the Osaka G20 Summit in Japan.
Following our analysis, we identify four ways forward that should be conducive to harnessing the G20’s economic weight and political clout to push more ambitious global action towards climate-friendly sustainable development, in spite of apparent discrepancies between domestic agendas and global understandings:

1. Strive for strong political declarations in support of the multilateral commitments on climate and sustainable development. Yet, focus at the same time on advancing specific issue-centred initiatives that are palatable to domestic audiences and compatible with the objectives of the Paris Agreement and 2030 Agenda, without framing them as “climate policy” or “sustainability policy”.
2. Embrace non-state and subnational actors as strategic partners to safeguard continuity in times of antagonistic member governments and volatile policies, as well as to build capacities and strengthen implementation of pertinent policies. The so-called G20 Engagement Groups representing business, labour, civil society, women and think tanks are key partners in this respect.
3. G20 workstreams should strive to co-produce specific climate- and sustainability-related initiatives across G20 workstreams as a means to overcome policy silos and to increase ownership and uptake beyond the “usual suspects”.
4. The Think20 (T20) should concentrate – rather than further expand – pertinent expertise and policy advice to leverage crosscutting action by G20 workstreams. Furthermore, detaching its working approach from the official G20 calendar could improve its ability to inform strategic agenda setting.

Conventional economic wisdom has long maintained that there is a necessary trade-off between pursuit of the efficiency of a system and any attempts to improve equity between participants within that system. Economist Robert Lucas demonstrated the implications of this common economic axiom when he wrote: “Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution [...] the potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.” (Lucas, 2004)
Indeed, many economists have suggested that too little inequality or too generous a distribution of benefits may undermine the individual’s incentive to work hard and take risks. Setting aside the harsh rhetoric used by Lucas, the practical and ethical acceptability of such a trade-off is debatable. Moreover, evidence from recent decades suggests that the trade-off itself is, in many cases, entirely avoidable.
A large body of research has shown that improved competition and economic efficiency are indeed compatible with government efforts to address inequality and reduce poverty, as assessed in a World Bank report (World Bank, 2016). Contrary to another common belief about economic interventions, this research indicates that such policy interventions can be tailored to succeed in all countries and at all times; even low- and middle-income countries in times of economic crisis can successfully pursue policies to improve economic distribution, with negligible negative impacts on efficiency and, in many cases, even positive ones. Some examples of such pro-equity and pro-efficiency measures include those promoting early childhood development, universal health care, quality education, conditional cash transfers, rural infra-structure investment, and well-designed tax policy.
Overall, four critical policy points stand out:

1. A trade-off is not inevitable. Policymakers do not need to give up on reducing inequality for the sake of growth. A good choice of policies can achieve both.
2. In the last two decades, research has generated substantive evidence about which policies work to foster growth and reduce inequalities.
3. Policies can redress the inequalities children are born into while fostering growth. But the wrong sets of policies can magnify inequalities early in life and thereafter.
4. All countries can, under most circumstances, implement policies that are both pro-equity and pro-efficiency.

Digitalisation is transforming the economy and redefining trade. Recently, members of the World Trade Organization (WTO) have started to discuss how trade policies and rules should be adapted to address this transformation. For example, in January 2019, 76 WTO members announced the launch of “negotiations on trade-related aspects of electronic commerce”. The scope of these e-commerce negotiations is yet to be defined, but to ban tariffs on electronic trans­missions will certainly be on the priority list of WTO members such as the United States (US) and the European Union (EU). The idea of banning tariffs on electronic transmission originated at the WTO’s Ministerial Conference (MC) in 1998, when Members declared that they would “continue their current practice of not imposing customs duties on electronic transmissions”. This temporary moratorium on e-commerce tariffs needs to be regularly extended, requiring a decision made “by consensus”. Members have repeatedly extended the moratorium on tariffs on “electronic trans­missions”, most recently at the latest WTO MC in 2017. But the WTO e-commerce moratorium is increasingly disputed: First, while net exporters of digital products and services, typically industrialised countries, understand the tariff ban to apply to digital content, net importers interpret it as referring only to electronic carriers (e.g. CDs, electronic bits), which means that they regard themselves as permitted to impose customs duties on the content of online trade. Second, while net exporters like the US and the EU propose a permanent ban on e-commerce tariffs in order to provide greater certainty to consumers and business, arguing that the resulting revenue losses are small, net importers like India and South Africa underline that they suffer much greater revenue losses than industrialised countries and have to bear the brunt of the moratorium. Third, while industrialised countries argue that the ban on tariffs on electronic transmissions would reduce market distortions, developing countries are concerned that a permanent moratorium would limit their options to protect domestic products and services traded online. Fourth, the moratorium has stirred a debate about how to create a level playing field between domestic and foreign suppliers of digital products and services. We argue that WTO members should take the ongoing debate as an opportunity for the WTO to play an important role in redefining trade in a digitalised economy. To take up this challenge, we recommend the following: (a)   WTO Members should seek agreement on what the e-commerce tariff moratorium covers and what it does not. (b)   Concerns about who wins and who loses in the wake of the moratorium require deep-dive reflections. WTO members should thus not rush to make the moratorium permanent. They should consider extending it for (at least) another two years at MC12 and use this time to prepare a fully fledged agreement to replace the tempo­rary decision and which could be called the Agreement on Digital Products and Other Services (ADPOS). (c)   The WTO secretariat should actively engage in the ongoing broader discussions about taxation in the digitalised economy. New evolutions of international and national tax reforms and data-driven digital trade offer unprecedented opportunities for the WTO to reshape the trade agenda. But the WTO may be left behind in addressing the future of trade in a digitalised economy if it does not respond strategically.

While global investment needs are enormous in order to bolster the implementation of the 2030 Agenda for Sustainable Development, developing countries are often excluded from global foreign direct investment (FDI) flows. Beyond economic fundamentals like market size, infra¬structure and labour, the impediments to FDI in developing countries relate to the predictability, transparency and ease of the regulatory environment. In contrast, tax incentives and international investment agreements (IIAs) have been found to be less important (World Bank, 2018). To harness the advantages of FDI, it is critical that governments have policies and regulations in place that help to attract and retain FDI and enhance its contribution to sustainable development. The 2030 Agenda and the Addis Ababa Action Agenda, thus, call for appropriate international frameworks to support investments in developing countries.
In this context, the Joint Ministerial Statement on Investment Facilitation for Development adopted at the 11th Ministerial Conference of the World Trade Organization (WTO) in December 2017 called for the start of “structured discussions with the aim of developing a multilateral framework on investment facilitation”. Investment facilitation refers to a set of practical measures concerned with improving the transparency and predict¬ability of investment frameworks, streamlining procedures related to foreign investors, and enhancing coordination and cooperation between stakeholders, such as host and home country government, foreign investors and domestic corporations, as well as societal actors.
Despite the deadlock in the WTO’s 17-year-old Doha Round negotiations, the structured discussions on investment facilitation, which have been under way since March 2018, show that the members of the WTO take a strong interest in using the WTO as a platform to negotiate new international rules at the interface of trade and investment. In contrast to previous attempts by developed countries to establish multilateral rules for investment, the structured discussions are mainly driven by emerging and developing countries. Most of them have evolved over the past years into FDI host and home countries reflecting the changing geography of economic power in the world. Their increased role has led to a shift of policy agendas, focusing on practical measures to promote FDI in developing countries while excluding contentious issues such as investment liberali¬sation and protection, and investor–state dispute settlement (ISDS).
This policy brief provides an overview of the emerging policy debate about investment facilitation. We highlight that four key challenges need to be tackled in order to negotiate an investment facilitation framework (IFF) in the WTO that supports sustainable development:

1. There is a need to properly conceptualise the scope of investment facilitation as a basis for empirical analyses of the potential impact of a multilateral IFF.
2. Many less- and least-developed countries do not yet participate in the structured discussions. It is necessary to enhance their capacity to participate in the structured discussions and address their specific concerns.
3. In order to enhance the contribution of FDI to sustainable development it is necessary to support the development of governance mechanisms at the domestic level.
4. It is key to ensure transparency towards countries not yet participating in the discussions, the business sector and societal actors to support a successful policy process.

Blockchain technology (BT), famous due to its use in digital currencies, also offers new opportunities in other fields, one of which is trade integration. Developing countries especially could benefit from greater trade integration with BT, as the technology can, for example, remedy deficiencies with regard to financial system access, intellectual property protection and tax administration. BT allows virtually tamper-proof storage of transactions and other data on decentralised computer networks. In fact, it is possible to store not only data, but also entire programmes this securely: Smart contracts enable the automation of private transactions and administrative processes. This article summarises the latest research on the use of BT in trade integration by examining in more detail five key and, in some cases, linked fields of application.
The first is trade finance, where BT could deliver direct cost savings for exporters and importers by removing the need for credit-lending intermediaries. Second, tamper-proof storage of information on the origin and composition of goods could enhance supply chain documentation. This makes it possible to more reliably verify compliance with sustainability standards, particularly for globally produced goods. However, for the information in blockchains to be truthful, it must be entered correctly (it is then tamperproof), a process that therefore requires monitoring.
Third, BT could deliver improvements in the field of trade facilitation by making it easier for border authorities to access information on goods and thus easing reporting requirements for exporting firms. By reducing dependence on central database operators, BT could help bring about a breakthrough with existing digital technology in the area of trade. Fourth, facilitating access to information on goods could also simplify customs and taxation procedures and make them less vulnerable to corruption and fraud. This goes hand in hand with cost reductions for exporters and better mobilisation of domestic resources for public budgets. Fifth, in the field of digital trade, BT also facilitates management of digital file rights in environments where, for institutional reasons, there is little intellectual property protection. This could help to promote digital industries in developing countries.
However, when it comes to using BT in border and customs systems in particular, it is essential to involve the relevant authorities at an early stage. At the same time, it is necessary to promote uniform technical standards for supply chain documentation in order to safeguard interoperability between the different systems across actors and national borders and thus fully leverage the cost advantages. If these guidelines are taken into account, then BT could effectively support sustainable trade integration of developing countries.

Societies that have experienced violent conflict face considerable challenges in building sustainable peace. One crucial question they need to address is how to deal with their violent past and atrocities that were committed – for example, whether perpetrators should be held accountable by judicial means, or whether the focus should be laid on truth telling and the compensation of victims. Transitional justice (TJ) offers a range of instruments that aim to help societies come to terms with their history of violent conflict. Systematic, empirical analyses of TJ instruments have been emerging over the last years. This Briefing Paper summarises the policy-relevant insights they provide regarding the main TJ instruments: trials; truth commissions; reparations for victims; and amnesties. Reviewing academic literature on the effects of transitional justice in post-conflict contexts, three main messages emerge:

• Initial evidence suggests that transitional justice can help to foster peace. Contrary to concerns that actively dealing with the past may deepen societal divisions and cause renewed conflict, most statistical studies find either positive effects or no effects of the various instruments on peace.
• Research indicates that amnesties can help to build peace, though not as a response to severe war crimes. Contrary to strong reservations against amnesties at the international level (especially on normative grounds), several academic studies find that amnesties can statistically significantly reduce the risk of conflict recurrence. However, the most extensive and recent study also shows that this effect varies depending on the context: amnesties can contribute to peace when they are included in peace agreements, but have no effect after episodes of very severe violence.
• To effectively foster peace, trials should target all perpetrators involved in the conflict, not only the defeated party. A likely explanation for this finding from a recent study is that otherwise domestic trials can be used by the victorious party to punish and repress the defeated side. More generally, donors should be aware that if a political regime is able to instrumentalise a transitional justice process, for instance after a one-sided victory or in an undemocratic environment, the process is often not conducive to peace.

Reviewing the literature also makes clear that important, open questions remain:

• Can transitional justice contribute to a deeper quality of peace that goes beyond the absence of violence? TJ should be able to foster reconciliation and mend broken societal relationships. However, if and how TJ can affect social cohesion after conflict needs to be better understood.
• How do various transitional justice instruments need to be combined? Both the academic literature and policy documents suggest that it is important to find the right mix of instruments, but more systematic analyses of successful combinations of TJ instruments are necessary.
• What role does donor support play in processes of transitional justice? Although transitional justice can be strongly domestically driven, such as in Colombia, donor funding often facilitates these processes. However, we still know too little about the effectiveness of such support.

Following the decision of the British referendum on 23 June 2016, the United Kingdom (UK) plans to exit the European Union (EU). Article 50 of the Lisbon Treaty was invoked at the end of March 2017 and the UK will officially leave the single market and customs union in March 2019. Brexit negotiations have proven difficult due to diverging positions of the two partners on many issues, such as freedom of movement, financial contributions and the potential re-emergence of a tough border between the Republic of Ireland and Northern Ireland. Despite the successfully negotiated Withdrawal Agreement and Political Declaration, there is still con¬siderable political uncertainty about the final EU-UK deal.
Regardless of the final outcome of the negotiations, Brexit implies fundamental changes in the British trade regime concerning third countries. This starts with a negotiation of national terms of access for World Trade Organization (WTO) membership and extends to renegotiation of the numerous EU free trade agreements. Moreover, the UK will no longer be part of the European Generalised Scheme of Preferences (GSP) or the Everything But Arms (EBA) treaty, which allow vulnerable developing countries to pay fewer or no duties on their exports to the EU. The Economic Partnership Agree-ments (EPAs) between the EU and African, Caribbean and Pacific countries will not apply to the UK either.
While the negative effects of Brexit on the UK and EU are in the limelight, the implications for third countries receive less attention. This paper puts the spotlight on these often-overlooked issues by presenting new findings on Brexit implications for Least Developed Countries (LDCs) and discussing policy recommendations.
Developing countries with close ties to the UK will suffer from Brexit as import duties are once again imposed.
In particular, 49 of the world’s poorest countries presently benefit from preferential treatment that covers 99% of all products under the EBA agreement. Although these countries account for only 1.15% of the UK’s imports, the share of their exports to the UK exceeds 35% in apparel, 21% in textiles and 9% in sugar (calculations based on the UN Comtrade data for 2013-2015). Our findings show that losing these preferences together with the UK’s withdrawal from the EU may cause EBA countries’ GDPs to fall by -0.01% to -1.08%. Our simulations also indicate that the highest losses will occur in Cambodia and Malawi, where dependence on the UK market is strong. Moreover, Brexit may cause the number of those living in extreme poverty (PPP $1.90 a day) to rise by nearly 1.7 million in all EBA countries. These are conservative estimates of Brexit’s negative impacts; they do not take into account the addi¬tional implications of uncertainty, depreciation of the pound sterling, reduced aid spending, remittances and investments.
The UK must act to mitigate the adverse effects on economically vulnerable countries. Such action may include replicating existing EU treaties that grant preferential access to goods from LDCs, creating a more development-friendly UK trade policy with preferential access to services imports and cumulative rules of origin, as well as offering better-targeted aid for trade initiatives. The EU could also support LDCs by implementing liberal cumulative rules of origin and applying its preferential treatment partly to goods with a low value-added content from considered countries.
In addition, developing countries should diversify their export destinations and industries as well as engage in economic transformation that makes them less dependent on UK trade, aid and foreign direct investment (FDI).

The vision of a united Africa and the rejection of the arbitrary borders created by European colonial powers have for decades been at the heart of pan-African endeavours. Achieving the free movement of persons on the continent was a key aim of the 1991 Abuja Treaty, which established the African Economic Community (AEC). And in the ensuing decades, this goal was under¬scored in agreements on African economic integration and in the African Union (AU)’s Agenda 2063. In January 2018, the member states of the AU finally agreed on the Protocol to the Treaty Establishing the African Economic Community Relating to Free Movement of Persons, Right of Residence and Right of Establishment.
The continental agendas state that the process of implementing free movement must begin with Africa’s sub-regions. This is not least due to historical reasons. The Economic Community of West African States (ECOWAS) was a pioneer in this regard, with its Free Movement Protocol dating back to 1979. The years that followed saw the free movement of persons integrated into other African regionalisation processes as well. The East African Community (EAC), for instance, has agreed, at least in part, on far-reaching steps; other sub-regions (such as the North African Intergovernmental Authority on Develop¬ment (IGAD)) are currently working towards relevant accords.
The present analysis of ECOWAS (West Africa) and IGAD (North-East Africa) shows that both regional organisa¬tions face difficulties with their free movement policies, though the respective challenges emerge in different phases of the political process. In the IGAD region, member states have so far been unable to agree on any free movement treaty, while the ECOWAS region is experiencing delays in the national and subnational implementation of established legislation. These differences can primarily be explained by historic path dependencies, divergent degrees of legalisa¬tion, and differing interests on the part of subregional powers. Finally, regional free movement is being hampered in both regions by internal capacity issues and growing external influences on intra-African migration management and border control.
From the perspective of development policy, it is expedient to support free movement at subregional level in Africa. The following recommendations arose from the analysis:

• Promote regional capacities: Personnel and financial support should be provided to regional organisations to assist them with formulating free movement standards and implementing them at national and subnational level.
• Harmonise security and free-movement policies: European initiatives on border control and migration management must provide greater support for free movement rather than inhibit intraregional migration and free movement policies.
• Offer cross-sectoral incentives: The German Government and the European Union should encourage progress with the regionalisation of free movement regimes in related areas of cooperation.

In order to effectively implement the recommendations, it is also important to recognise and flesh out the role of regional organisations at global level as well.

peacekeeping can be an effective instrument in maintaining peace, but little systematic knowledge exists on the roles that other types of peace support can play. International peacebuilding encompasses a broad range of activities beyond peacekeeping. It includes non-military support to increase security through disarmament, demobilisation, the reintegration (DDR) of former combatants, as well as security sector reform (SSR) and demining; support for governance to strengthen political institutions and state capacity; support for socioeconomic development to create a peace dividend through reconstruction, basic services, jobs and macroeconomic stability; and support for societal conflict transformation, including reconciliation, dialogue and transitional justice programmes.
This briefing paper presents the results of a comprehensive analysis of disaggregated external support in post-conflict situations, undertaken recently within the DIE research project “Supporting Sustainable Peace”. Analysing combinations of peace support provided during the first five years of 36 post-civil war episodes since 1990, we find that international peacebuilding can clearly make a difference. More specifically, our findings show that

• international peacekeeping is one, but not the only, means of support associated with sustained peace;
• contrary to concerns regarding the destabilising effects of democratisation, the majority of successful cases are in fact characterised by substantial international support in the field of politics and governance in democratising contexts;
• only combined international efforts across all types of support can help prevent renewed conflict in contexts of a high risk of recurrence; and
• countries that did not receive any substantial peace support experienced conflict recurrence within five years.

In light of these findings, we recommend the following to the international community when faced with post-civil war situations:

• Engage substantially in post-conflict countries. Our results show that international peacebuilding can be effective, even where there is a high structural risk of conflict recurrence. While success will never be guaranteed, countries that receive substantial international support often remain peaceful, whereas all countries that were neglected by the international community experienced conflict recurrence.
• Pay particular attention, and provide substantial support, to the field of politics and governance in post-conflict countries that begin to democratise. While it is well known that democratisation processes are conflict prone, our analyses demonstrate that donor engagement geared towards supporting such processes can help mitigate conflict and contribute to peace. When a post-conflict country has decided to embark on political reforms donors should offer governance support to help overcome potential destabilising effects of democratisation processes.
• Invest in an international approach that encompasses all areas of peacebuilding early on after the end of a civil war. Especially in contexts with a high structural risk of renewed violent conflict, the chances of sustained peace are increased by simultaneous support for security, institutions, livelihoods and societal conflict transformation.

Intense negotiations about migration management policies are taking place inside the European Union (EU), and between the EU and African states. Although these two negotiation processes are often analysed separately, they are actually interlinked. Drawing on interviews with representatives of European and African states and regional organisations as well as on policy analysis, this Briefing Paper argues that negotia¬tions inside the EU restrict EU-Africa cooperation on migration in two ways: first, by transmitting a strengthened focus on border control from the internal to the external dimension of EU migration management policies; second, by framing migration in a narrow way, which has hindered progress with regard to transnational development.
Intra-EU policy negotiations on migration are essential for the evolvement of EU-Africa cooperation on migration. Their increasing focus on border controls in Europe and Africa hinders the adoption of policies that support the potential of migration to contribute towards transnational resilience and development. Therefore, addressing the divisions on the internal dimension of EU migration management policy is a prerequisite for identifying sustainable EU-Africa cooperation pathways and supporting African migrants as actors of transnational development.
There are two important lessons that the Commission and the member states can learn from their difficulties in reaching an internal agreement on how to manage migration inside and outside the EU. The first lesson is that they need to address the challenge of balancing European national and transnational competencies and approaches. This challenge is inherent to the EU being a transnational union of nation states. The second lesson is that they need to take into greater consideration the needs of vulnerable citizens of both European and African countries.
In particular, the EU and its member states should:

• Focus on the internal dimension of migration management and rebalance the current distribution of national and EU transnational competencies on migration. This is needed to address the conflicts of competencies that are currently hindering the nego¬tiations on common policies. In particular, they should explore the feasibility of transferring some national competencies to the EU, including through the creation of a pilot EU Agency on Labour Migration.
• Introduce effective mechanisms of transnational responsibility-sharing in the EU in order to safeguard free movement within the Schengen Area. In particular, they should foresee an EU relocation system based on incentives and sanctions as part of a reform of the Dublin Regulation.
• Take the needs of young and low-skilled workers as well as migrant European workers into greater consideration by promoting employment, job security and labour rights, with funding through the European Social Fund.

Reintroduce policy and development cooperation measures supporting the potential of African migration to contribute towards transnational resilience and development and provide adequate funding through the Multiannual Financial Framework 2021-2027. In particular, such measures should support self-determined strategies of African migrants, for example by facilitating circular mobility and the transfer of remittances.