Diplomacy & Defense Think Tank News

The expansion of social assistance in low‐ and middle‐income countries raises important issues for inclusive growth. Labour is by far the principal asset of low‐income groups. Changes in the quantity, quality, and allocation of labour associated with social assistance will impact on the productive capacity of low‐income groups and therefore on inclusive growth. The article re‐assesses the findings reported by impact evaluations of social assistance in low‐ and middle‐income countries to address this issue. Most studies have tested for potentially adverse labour supply incentive effects from transfers but have failed to find supportive evidence. The article highlights findings from this literature on the effects of social assistance on human capital accumulation and labour reallocation. They point to the conclusion that well‐designed and well‐implemented social assistance contributes to inclusive growth.

The expansion of social assistance in low‐ and middle‐income countries raises important issues for inclusive growth. Labour is by far the principal asset of low‐income groups. Changes in the quantity, quality, and allocation of labour associated with social assistance will impact on the productive capacity of low‐income groups and therefore on inclusive growth. The article re‐assesses the findings reported by impact evaluations of social assistance in low‐ and middle‐income countries to address this issue. Most studies have tested for potentially adverse labour supply incentive effects from transfers but have failed to find supportive evidence. The article highlights findings from this literature on the effects of social assistance on human capital accumulation and labour reallocation. They point to the conclusion that well‐designed and well‐implemented social assistance contributes to inclusive growth.

The expansion of social assistance in low‐ and middle‐income countries raises important issues for inclusive growth. Labour is by far the principal asset of low‐income groups. Changes in the quantity, quality, and allocation of labour associated with social assistance will impact on the productive capacity of low‐income groups and therefore on inclusive growth. The article re‐assesses the findings reported by impact evaluations of social assistance in low‐ and middle‐income countries to address this issue. Most studies have tested for potentially adverse labour supply incentive effects from transfers but have failed to find supportive evidence. The article highlights findings from this literature on the effects of social assistance on human capital accumulation and labour reallocation. They point to the conclusion that well‐designed and well‐implemented social assistance contributes to inclusive growth.

Social protection and revenue collection are often regarded as potential drivers of social cohesion. The article joins this debate, providing three main contributions. First, we carefully discuss the concept of social cohesion and endorse one specific definition. Second, we propose using the concept of the “fiscal contract” as the key theoretical lens to understand the often neglected potential joint effects of social protection and revenue collection policies on social cohesion. Third, we illustrate three main mechanisms through which these policies can have positive or negative impacts on the different components of social cohesion and highlight the relevance of these for policy‐makers deliberations.

Social protection and revenue collection are often regarded as potential drivers of social cohesion. The article joins this debate, providing three main contributions. First, we carefully discuss the concept of social cohesion and endorse one specific definition. Second, we propose using the concept of the “fiscal contract” as the key theoretical lens to understand the often neglected potential joint effects of social protection and revenue collection policies on social cohesion. Third, we illustrate three main mechanisms through which these policies can have positive or negative impacts on the different components of social cohesion and highlight the relevance of these for policy‐makers deliberations.

Social protection and revenue collection are often regarded as potential drivers of social cohesion. The article joins this debate, providing three main contributions. First, we carefully discuss the concept of social cohesion and endorse one specific definition. Second, we propose using the concept of the “fiscal contract” as the key theoretical lens to understand the often neglected potential joint effects of social protection and revenue collection policies on social cohesion. Third, we illustrate three main mechanisms through which these policies can have positive or negative impacts on the different components of social cohesion and highlight the relevance of these for policy‐makers deliberations.

Die Abteilung Staat (Public Economics) im DIW Berlin sucht zum nächstmöglichen Zeitpunkt eine

studentische Hilfskraft (m/w/div)

für 10 Wochenstunden.

Die Abteilung Makroökonomie sucht zur Mitarbeit in Forschungsprojekten ab dem 1. Dezember 2020 bis zum 31. Mai 2021

eine studentische Hilfskraft (w/m/div)

für 10 Wochenstunden.

 Paris Climate Agreement. Standards for when a financial product can be considered sustainable must be clearly defined and internationally agreed.
Standards and criteria are needed to determine when a financial instrument is sound and sustainable. Such standards improve transparency and strengthen investors’ trust. The criteria enable investors to differentiate between “green” and “non-green” activities and distinguish related financial instruments.
In addition, financial institutions themselves need standards for “green” financial instruments for purposes of internal budgeting, accounting, performance measurement and environmental risk management. Of course, standards also enable policy makers to design tax breaks and subsidies in ways to ensure that financial instruments truly support sustainable development. On the other hand, if the criteria defining “green” financial instruments are too strict, they can impede development of products such as green bonds. In order to reap the full benefits of standards, different standards should be coordinated at an international level. It does not make sense for each country using its own definition of what a “green bond” is.
The European Union has addressed these problems. In 2018, the European Commission (EC) drew up an Action Plan for financing sustainable growth, including a strategy for a sustainable financial system (EC 2018).

 Paris Climate Agreement. Standards for when a financial product can be considered sustainable must be clearly defined and internationally agreed.
Standards and criteria are needed to determine when a financial instrument is sound and sustainable. Such standards improve transparency and strengthen investors’ trust. The criteria enable investors to differentiate between “green” and “non-green” activities and distinguish related financial instruments.
In addition, financial institutions themselves need standards for “green” financial instruments for purposes of internal budgeting, accounting, performance measurement and environmental risk management. Of course, standards also enable policy makers to design tax breaks and subsidies in ways to ensure that financial instruments truly support sustainable development. On the other hand, if the criteria defining “green” financial instruments are too strict, they can impede development of products such as green bonds. In order to reap the full benefits of standards, different standards should be coordinated at an international level. It does not make sense for each country using its own definition of what a “green bond” is.
The European Union has addressed these problems. In 2018, the European Commission (EC) drew up an Action Plan for financing sustainable growth, including a strategy for a sustainable financial system (EC 2018).

Sustainable financing will play a key role in the economic recovery from the Covid-19 pandemic. The European Council recognised the central role of the Green Deal – a plan to make the EU’s economy sustainable – in its “Roadmap for Recovery”. The Green Deal includes a growth strategy designed to create a low-carbon economy.
To implement the Green Deal, substantial investments in sustainable activities will be required. Estimates vary concerning the amounts required. According to the UN Conference on Trade and Development, the developing countries need an annual $ 2.5 trillion more than is made available to achieve the Sustainable Development Goals (SDGs). Such sums cannot be provided by governments alone. For the transition to a more sustainable economy substantial private investment will be needed as well.
One of the greatest problems for mobilising private capital is the absence of harmonised standards for defining and verifying sustainable financial instruments (see main text). Other obstacles are a general lack of transparency and the different levels of information of investors and debtors. Due to a lack of transparency and disclosure it is difficult for regulators, non-governmental organisations and researchers to assess sustainable financial instruments.
Moreover, relatively long-term sustainable investment projects do not fit the short-term time thinking of many savers and investors. Political risks are relevant too, including the lack of strategic direction, sudden national political changes, regulatory shifts or biased policymaking. In developing countries, further difficulties arise from poorly developed capital markets with only rather few sustainable financial products. Moreover, they typically have too few investors, too little technical expertise and insufficient institutional capacities for evaluating financial products.

Sustainable financing will play a key role in the economic recovery from the Covid-19 pandemic. The European Council recognised the central role of the Green Deal – a plan to make the EU’s economy sustainable – in its “Roadmap for Recovery”. The Green Deal includes a growth strategy designed to create a low-carbon economy.
To implement the Green Deal, substantial investments in sustainable activities will be required. Estimates vary concerning the amounts required. According to the UN Conference on Trade and Development, the developing countries need an annual $ 2.5 trillion more than is made available to achieve the Sustainable Development Goals (SDGs). Such sums cannot be provided by governments alone. For the transition to a more sustainable economy substantial private investment will be needed as well.
One of the greatest problems for mobilising private capital is the absence of harmonised standards for defining and verifying sustainable financial instruments (see main text). Other obstacles are a general lack of transparency and the different levels of information of investors and debtors. Due to a lack of transparency and disclosure it is difficult for regulators, non-governmental organisations and researchers to assess sustainable financial instruments.
Moreover, relatively long-term sustainable investment projects do not fit the short-term time thinking of many savers and investors. Political risks are relevant too, including the lack of strategic direction, sudden national political changes, regulatory shifts or biased policymaking. In developing countries, further difficulties arise from poorly developed capital markets with only rather few sustainable financial products. Moreover, they typically have too few investors, too little technical expertise and insufficient institutional capacities for evaluating financial products.

Sustainable financing will play a key role in the economic recovery from the Covid-19 pandemic. The European Council recognised the central role of the Green Deal – a plan to make the EU’s economy sustainable – in its “Roadmap for Recovery”. The Green Deal includes a growth strategy designed to create a low-carbon economy.
To implement the Green Deal, substantial investments in sustainable activities will be required. Estimates vary concerning the amounts required. According to the UN Conference on Trade and Development, the developing countries need an annual $ 2.5 trillion more than is made available to achieve the Sustainable Development Goals (SDGs). Such sums cannot be provided by governments alone. For the transition to a more sustainable economy substantial private investment will be needed as well.
One of the greatest problems for mobilising private capital is the absence of harmonised standards for defining and verifying sustainable financial instruments (see main text). Other obstacles are a general lack of transparency and the different levels of information of investors and debtors. Due to a lack of transparency and disclosure it is difficult for regulators, non-governmental organisations and researchers to assess sustainable financial instruments.
Moreover, relatively long-term sustainable investment projects do not fit the short-term time thinking of many savers and investors. Political risks are relevant too, including the lack of strategic direction, sudden national political changes, regulatory shifts or biased policymaking. In developing countries, further difficulties arise from poorly developed capital markets with only rather few sustainable financial products. Moreover, they typically have too few investors, too little technical expertise and insufficient institutional capacities for evaluating financial products.

Nachhaltige Finanzierung wird bei der Erholung von der Covid-19-Pandemie eine Schlüsselrolle spielen. Der Europäische Rat hat die zentrale Funktion des Green Deals in seiner „Roadmap for Recovery“ anerkannt . Der Green Deal umfasst eine neue Wachstumsstrategie, die eine ressourcenschonende Wirtschaft zum Ziel hat.
Zur Umsetzung des Green Deals sind nachhaltige Investitionen in enormer Höhe erforderlich. Dazu, wie hoch der Finanzbedarf sein wird, gibt es unterschiedliche Schätzungen. Die Konferenz der Vereinten Nationen für Handel und Entwicklung (United Nations Conference on Trade and Development – UNCTAD) schätzte 2014 beispielsweise die jährliche Investitionslücke für Entwicklungsländer zum Erreichen der Ziele für nachhaltige Entwicklung (Sustainable Develpoment Goals – SDGs) auf zirka 2,5 Billionen Dollar.
Dieses Volumen kann nicht allein mit öffentlichen Mitteln finanziert werden. Aus diesem Grund sind für den Übergang zu einer nachhaltigeren Wirtschaft umfangreiche Investitionen des Privatsektors erforderlich.
Zu den größten Problemen für die Mobilisierung privaten Kapitals zählt das Fehlen harmonisierter Standards für die Definition und Überprüfung nachhaltiger Finanzinstrumente (s. Haupttext). Weitere Hürden sind der oft unterschiedliche Informationsstand von Investoren und Schuldnern sowie mangelnde Transparenz und Offenlegung, die es Regulierern, Nichtregierungsorganisationen und Forschungseinrichtungen erschwert, nachhaltige Finanzinstrumente zu bewerten. Des Weiteren passen die eher langfristigen nachhaltigen Investitionsvorhaben nicht zum kurzfristigen Zeithorizont vieler Sparer und Investoren. Politische Risiken wie fehlende strategische Signale, politische Länderrisiken, regulatorische Risiken oder verzerrende politische Maßnahmen spielen ebenfalls eine Rolle.
In Entwicklungsländern kommt erschwerend hinzu, dass wenig entwickelte Kapitalmärkte nur wenige nachhaltige Finanzprodukte anbieten. Es gibt auch nur wenige Investoren. Oft fehlt Fachexpertise, und Institutionen haben keine ausreichenden Evaluierungskapazitäten.

Nachhaltige Finanzierung wird bei der Erholung von der Covid-19-Pandemie eine Schlüsselrolle spielen. Der Europäische Rat hat die zentrale Funktion des Green Deals in seiner „Roadmap for Recovery“ anerkannt . Der Green Deal umfasst eine neue Wachstumsstrategie, die eine ressourcenschonende Wirtschaft zum Ziel hat.
Zur Umsetzung des Green Deals sind nachhaltige Investitionen in enormer Höhe erforderlich. Dazu, wie hoch der Finanzbedarf sein wird, gibt es unterschiedliche Schätzungen. Die Konferenz der Vereinten Nationen für Handel und Entwicklung (United Nations Conference on Trade and Development – UNCTAD) schätzte 2014 beispielsweise die jährliche Investitionslücke für Entwicklungsländer zum Erreichen der Ziele für nachhaltige Entwicklung (Sustainable Develpoment Goals – SDGs) auf zirka 2,5 Billionen Dollar.
Dieses Volumen kann nicht allein mit öffentlichen Mitteln finanziert werden. Aus diesem Grund sind für den Übergang zu einer nachhaltigeren Wirtschaft umfangreiche Investitionen des Privatsektors erforderlich.
Zu den größten Problemen für die Mobilisierung privaten Kapitals zählt das Fehlen harmonisierter Standards für die Definition und Überprüfung nachhaltiger Finanzinstrumente (s. Haupttext). Weitere Hürden sind der oft unterschiedliche Informationsstand von Investoren und Schuldnern sowie mangelnde Transparenz und Offenlegung, die es Regulierern, Nichtregierungsorganisationen und Forschungseinrichtungen erschwert, nachhaltige Finanzinstrumente zu bewerten. Des Weiteren passen die eher langfristigen nachhaltigen Investitionsvorhaben nicht zum kurzfristigen Zeithorizont vieler Sparer und Investoren. Politische Risiken wie fehlende strategische Signale, politische Länderrisiken, regulatorische Risiken oder verzerrende politische Maßnahmen spielen ebenfalls eine Rolle.
In Entwicklungsländern kommt erschwerend hinzu, dass wenig entwickelte Kapitalmärkte nur wenige nachhaltige Finanzprodukte anbieten. Es gibt auch nur wenige Investoren. Oft fehlt Fachexpertise, und Institutionen haben keine ausreichenden Evaluierungskapazitäten.

Nachhaltige Finanzierung wird bei der Erholung von der Covid-19-Pandemie eine Schlüsselrolle spielen. Der Europäische Rat hat die zentrale Funktion des Green Deals in seiner „Roadmap for Recovery“ anerkannt . Der Green Deal umfasst eine neue Wachstumsstrategie, die eine ressourcenschonende Wirtschaft zum Ziel hat.
Zur Umsetzung des Green Deals sind nachhaltige Investitionen in enormer Höhe erforderlich. Dazu, wie hoch der Finanzbedarf sein wird, gibt es unterschiedliche Schätzungen. Die Konferenz der Vereinten Nationen für Handel und Entwicklung (United Nations Conference on Trade and Development – UNCTAD) schätzte 2014 beispielsweise die jährliche Investitionslücke für Entwicklungsländer zum Erreichen der Ziele für nachhaltige Entwicklung (Sustainable Develpoment Goals – SDGs) auf zirka 2,5 Billionen Dollar.
Dieses Volumen kann nicht allein mit öffentlichen Mitteln finanziert werden. Aus diesem Grund sind für den Übergang zu einer nachhaltigeren Wirtschaft umfangreiche Investitionen des Privatsektors erforderlich.
Zu den größten Problemen für die Mobilisierung privaten Kapitals zählt das Fehlen harmonisierter Standards für die Definition und Überprüfung nachhaltiger Finanzinstrumente (s. Haupttext). Weitere Hürden sind der oft unterschiedliche Informationsstand von Investoren und Schuldnern sowie mangelnde Transparenz und Offenlegung, die es Regulierern, Nichtregierungsorganisationen und Forschungseinrichtungen erschwert, nachhaltige Finanzinstrumente zu bewerten. Des Weiteren passen die eher langfristigen nachhaltigen Investitionsvorhaben nicht zum kurzfristigen Zeithorizont vieler Sparer und Investoren. Politische Risiken wie fehlende strategische Signale, politische Länderrisiken, regulatorische Risiken oder verzerrende politische Maßnahmen spielen ebenfalls eine Rolle.
In Entwicklungsländern kommt erschwerend hinzu, dass wenig entwickelte Kapitalmärkte nur wenige nachhaltige Finanzprodukte anbieten. Es gibt auch nur wenige Investoren. Oft fehlt Fachexpertise, und Institutionen haben keine ausreichenden Evaluierungskapazitäten.

As low-income countries (LICs) need assistance to manage the effects of the COVID-19 crisis, the G20 can play an important role in providing short-term liquidity with a suspension of debt service payments and debt relief. However, debt relief should be bound to reforms, and LICs bear part of the responsibility for coping with the crisis. To prevent a debt crisis in the long term, the G20 could implement measures to promote responsible lending and borrowing among LICs. Two instruments are particularly important: (i) guidelines for responsible lending and borrowing, and (ii) effective debt management.

As low-income countries (LICs) need assistance to manage the effects of the COVID-19 crisis, the G20 can play an important role in providing short-term liquidity with a suspension of debt service payments and debt relief. However, debt relief should be bound to reforms, and LICs bear part of the responsibility for coping with the crisis. To prevent a debt crisis in the long term, the G20 could implement measures to promote responsible lending and borrowing among LICs. Two instruments are particularly important: (i) guidelines for responsible lending and borrowing, and (ii) effective debt management.

As low-income countries (LICs) need assistance to manage the effects of the COVID-19 crisis, the G20 can play an important role in providing short-term liquidity with a suspension of debt service payments and debt relief. However, debt relief should be bound to reforms, and LICs bear part of the responsibility for coping with the crisis. To prevent a debt crisis in the long term, the G20 could implement measures to promote responsible lending and borrowing among LICs. Two instruments are particularly important: (i) guidelines for responsible lending and borrowing, and (ii) effective debt management.

Poor countries with heavy debt burdens need debt relief to cope with the Covid-19 crisis. The funding provided by the international community so far is not enough. More is needed than the suspension of debt servicing which public lenders have agreed on.
Even before the pandemic started, about half of the world’s low-income countries were heavily indebted according to the International Monetary Fund (IMF) and the World Bank. Covid-19 will plunge yet more countries into debt. Left to themselves, they will not be able to cope with the crisis. Their government revenues are plainly too small.
The only solution in this precarious setting is debt relief for developing countries. The IMF has recently reformed the Catastrophe Containment and Relief Trust which serves the purpose of relieving debt-servicing. More countries can now benefit from it at the same time and on short notice. Nonetheless, more extensive debt relief is necessary. For good reason, Gerd Müller, Germany’s federal minister for economic cooperation and development, has also advocated debt relief for the poorest countries in his “Emergency Covid-19 support programme”.
To ensure that individual creditors do not benefit disproportionately to the detriment of other creditors, all public and private creditors should participate in debt relief equally, and that in turn will require that they all make the conditionalities of their loans publicly transparent. Since debt relief should only be granted to heavily indebted countries, moreover, a maximum debt limit needs to be defined.
We must consider, moreover, that debt relief only heals the symptoms of indebtedness, but does not tackle the underlying reasons. Debt relief must therefore be linked to beneficiaries investing in poverty reduction, infrastructure development and better debt management.