Economic development today has to deal with multiple shocks in greater measure than at any time in recent memory. The financial, food and fuel crises as well as climate-related disasters have dominated the global stage in the past five years. And unless we recognize the interconnectivity among these events, responses will likely remain inadequate.
True, problem-specific actions are more tangible, but today's multi-faceted challenges also call for multi-pronged approaches. The financial, food and fuel crises make clear the need for social safety nets to protect against shocks. The food price hike spotlights not only food production but also the business environment and trade. Climate-related disasters call for improving the environment while boosting agricultural productivity.
The World Bank Group has been able to support multifaceted actions -- financial response that also protects the vulnerable, food response that encourages trade, climate response that drives agricultural productivity. More specifically:
- Social safety nets need to be part of any systemic answer to these crises. Sixty-four million more people were living in extreme poverty (below $1.25 per day) by 2010 due to the financial crisis, in response to which it is not enough to deal with financial transmission mechanisms. The World Bank has supported interlinked actions, including lending to countries for social safety nets -- which over the past decade amounted to $11.5 billion. Countries such as Colombia, Ethiopia or Georgia that had built safety nets programs during more stable times were relatively better positioned.
- The food price hike has drawn attention to food and agricultural production, but the responses have to also encourage greater trade and financial flows and avoid tendencies to protect trade. In the past decade the World Bank Group provided some $25 billion in financing for agriculture in over 100 countries. But in promoting agriculture along with greater trade flows, government interventions in agriculture must be linked to agro-business and trade.
- In confronting the mounting damages from climate change, we need to move to low-carbon development paths, while at the same time raising agricultural productivity. The pursuit of already-attractive energy efficiency options would be a priority. Increased crop resilience involves improving soil and water management to eliminate the yield shortfalls, together with efforts to improve crops and build better institutions for managing water.
Single-issue projects are easier to put together and finance, and have their rightful place in the agenda. Yet, multifaceted approaches need to increasingly complement these specific initiatives. The World Bank Group is well-positioned in this respect, as it is involved in almost all developing countries, multiple sectors and in the public and private arenas. Its reactions to the recent crises have featured some of these crucial inter-linkages. Going forward, the institution can capitalize further on these synergies.
In the face of today's multiple crises, it is no longer sufficient to triage among the top priorities. If development is to stay on track, we must connect the dots and seek synergistic solutions.