1. Development implications of the financial and economic crisis SNIS Academic Council Debate Series Bern, 23.03.2009 Katja Hujo, Research Coordinator www.unrisd.org

2. What is UNRISD? An autonomous United Nations agency founded in 1963 Engages in multidisciplinary research on the social dimensions of contemporary development issues Stimulates dialogue and contributes to policy debates within and outside the United Nations system

3. How is Research Organized? Cross-country and thematic papers Research coordinators based at UNRISD or in universities 150–250 researchers at country level, 60% from developing countries Country-level research in 50–100 countries

4. How is Research Used? In global, regional, national and local development debates By scholars, activists, government officials, international organization personnel, specialized and mass media, and the general public

5. Research Programmes 1. Social Policy & Development 2. Democracy, Governance & Well-being 3. Markets, Business & Regulation 4. Civil Society & Social Movements 5. Identities, Conflict & Cohesion 6. Gender & Development

6. Social Policy and Development

7. Development Implications of the Global Economic and Financial Crisis Transmission channels of crisis effects on developing countries Possible consequences for social development: –Production, reproduction, protection, redistribution Challenges for Social Policy: –Financing –Equity –Social inclusion and democratization

8. Transmission Channels Foreign capital and domestic credit –Net private capital flows estimated to half in 2008 to US$ 467 billion and to US$165 billion in 2009 (IIF 2009) Trade and FDI Commodity prices Remittances

9. Importance of Aid

10. Trade

11. Commodity Prices

12. Remittances

13. Crisis effects on social development Production –Growth and employment  –Fiscal accounts: budget deficits  –Balance of Payments: Current account deficits  –Public debt  (risk spreads  ) –Financial sector (balance sheet effects, interest rates , credit  ) Reproduction –Gender effects: girls’ schooling and health, maternal health, female employment in export industries and public sector, access to micro-credit –Care burden  –Infant mortality 

14. Crisis effects on social development Redistribution –Vertical: Income and assets –Horizontal: between groups (gender, ethnicity and race, migrants, sectoral and geographical) Protection –Insecurity  –Individual and market-based social protection schemes insufficient –Financing constraints for public schemes

15. Growth

16. Fiscal Accounts

17. Challenges for Social Policy Market-based social insurance schemes highly affected by crisis (example: private pension funds and savings’ accounts) Social protection activities at individual, household or community level adversely affected by systemic crisis (risk pooling, remittances etc.), although likely to bear burden of failed markets and strained public schemes Universal tax- and contribution- financed schemes best suited in case of systemic crisis (counter- cyclical, broadest possible pooling) Expansion of social assistance and emergency programmes recommended

18. Challenges for Social Policy Financing: –Respond to higher need with less money (spending priorities, efficiency etc.)! –No short-term response: expand domestic financing instruments like taxation and social insurance contributions –External financing instrumens (aid, natural resource rents, remittances) more volatile, more difficult to influence through national policy, less synergies for economy and state-citizenship relations

19. Challenges for Social Policy Equity –Multiple redistributive effects of crisis makes it difficult to identify winners and losers –Progressive financing and spending important; good to invest in social infrastructure (gender, vulnerable groups) –Likely move towards targeting,although costly and not inclusive

20. Challenges for Social Policy Social Inclusion and Democratization –« Benefit of Crisis » revisited: Prospects for new development paradigm, new social contract based on solidaristic and democratic values? Or increased social conflict, inequality, informalization and poverty with erosion of rights?

21. Thank you ! Graphs taken from: –World Bank 2009: Swimming against the tide: How developing countries are coping with the global crisis –IMF 2009: The Implications of the Global Financial Crisis for Low-Income Countries