The fallouts from the Covid-19 pandemic for the medium to long term have been a widely discussed issue for the past few months. Besides generating a health crisis in several countries, it has also harshly affected social and economic lives across the globe.
In today’s interconnected world, the pandemic has produced a contagion effect worse than the 2008 financial crisis and possibly the Great Depression of the 1930s. In this context, it is necessary to inspect the achievements so far of the 193 countries devoted to fulfilling the United Nations Sustainable Development Goals and their way forward.
The SDG framework consists of 17 goals formulated under five pillars (people, planet, prosperity, peace and partnership) built on seven dimensions, namely moral, ecological, social, economic, legal, technical, and political. While the ecological, social, economic and technical dimensions receive much attention in economic literature, the other three dimensions remain largely ignored.
Economic implications
As a result of the pandemic, there have been significant declines in the growth rates of many economies. According to the World Economic Outlook Report 2020, the projected growth rates for almost all advanced economies as well as developing and emerging economies for the year 2020 will be negative, with minor recoveries in 2021.
In India, unemployment and business shutdowns have seen massive increases during the Covid-19 crisis. But India is not alone. The economic effects of the pandemic will undoubtedly push millions of people into the clutches of poverty and hunger all over the world, leading to an enormous increase in global, regional and local socio-economic problems.
During an era when the global development agenda is aimed at reducing divergences and ameliorating economic disparities between nations, the after-effects of the pandemic are bound to worsen the situation in the near future.
These issues will be reflected by significant setbacks in the global economy with respect to SDG 1 (no poverty), SDG 2 (zero hunger), SDG 3 (good health and well-being), SDG 4 (quality education), SDG 5 (gender equality), SDG 8 (decent work and economic growth), SDG 10 (reduced inequalities), SDG 11 (sustainable cities and communities) and SDG 12 (responsible production and consumption).
Moreover, lags in economic growth will in turn deter progress in SDGs related to ecological development and environmental sustainability.
Consequently, when a country slides down the ranks with respect to any of the sustainable-development programs, its progress with respect to other measures of sustainability are also affected. This is due to a large number of forward and backward linkages within the framework of the SDGs.
First, aggravation of poverty and inequalities significantly affect market demand even when there is economic growth, since consumption propensities differ significantly among the rich and the poor.
Second, progress regarding SDG 9 related to industry and innovation influences prospective profitability. Hence a setback in their progress can ultimately influence the flow of private investments (domestic as well as foreign) in and out of specific regions.
Long-term capital
The reason the SDGs require a renewed focus in the post-pandemic world is that they are in essence interlinked with various forms of capital: human capital (SDGs 1-6), physical capital (SDGs 7-9), natural capital (SDGs 12-15) and social capital (SDGs 10, 11, 16 and 17). These forms of capital are important for providing a long-term boost to the ailing business environments in the current scenario.
In fact, an Observer Research Foundation study suggests strong econometric evidence that the Indian states’ SDG scores are statistically significant in explaining those states’ ease-of-doing-business performance and foreign-direct-investment inflows.
The intrinsic capital linkages within the SDGs catalyze businesses in the long run by decreasing the environmental, political and social risks over the years; enhancing transparent governance structures in tackling sustainability risks and impacts; creation of new market opportunities that are aligned with the SDGs; and establishing deep public and private partnership networks which improves market resilience and competitiveness.
It follows from logic that congenial business conditions will invariably attract more companies in search of business opportunities in the economy. Hence it will be important to channel the private sector and promote market stimulus in synchronization with the SDGs in the post-pandemic global economy.
Conclusion
The SDGs focus on encouraging mechanisms toward greater inclusive development. This becomes all the more relevant in light of the fact that the Covid-19 pandemic has more or less affected all sections of the society and placed each class of individuals and nations at a disadvantage compared with their earlier position. However, there is no denying that those in extreme poverty or those most vulnerable to job losses are the worst hit in an economic sense.
Since the private sector is largely driven by incentives and ideas of individualism, in the aftermath of the crisis, the role of governments as well as global institutions like the International Monetary Fund or the World Bank should be relatively independent, at least until the worst-hit economies are on their path to recovery.
Unless governments successfully establish conditions to turn social objectives into private incentives, working toward SDG 17 (relating to partnerships for the goals) could in fact lead to significant setbacks with regards to SDG 16 (relating to peace, justice and strong institutions).
This article was co-authored with Debosmita Sarkar, who is pursuing postgraduate studies in economics at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.