New economics and international development: crisis or opportunity?              

The year has started with geopolitical ‘headwinds’ likely to have global economic impacts.

Donald Trump has imposed tariffs on the US’s major trading partners, taken a hatchet to US overseas aid, and shaken major security alliances to their core. “‘Big man’” power politics is back, and the ‘br-oligarchy’ is demonstrating its powerflexing its muscles. Whilst the wealthiest 1% have always controlled more resources than much of humanity, billionaire wealth is expanding. and as Oxfam remind us most “is taken, not earned – 60% comes from inheritance, cronyism, corruption or monopoly power”.

A focus on continuous economic growth is driving the climate crisis and increasing inequality. But many doubt that continual economic growth in high-income countries is environmentally sustainable, socially beneficial, or economically achievable. It is becoming increasingly clear we need a rethink of the global economy, away from one geared to further enriching the rich, to one that serves all the world’s people, and protects the planet.

There are proposals on how to reconceptualise ‘beyond GDP‘ and some positive examples, such as New Zealand’s ‘wellbeing budget’. But the predominant paradigm remains one of continuous GDP growth.

An insatiable growth focus?

In the UK, Labour’s strategy includes objectives to drive growth and raise living standards. Following a budget that saw Labour accused of ‘not understanding business’, the government is under political pressure, despite its large majority. As a result, it is focusing on ‘quick returns’ on growth rather than a more sustainable approach. This may make progressive approaches harder to sell in, and push the Labour government towards traditional neoliberal solutions.

Conversely, could this provide an opportunity for the UK – which has expertise across academia, new economics and civil society – to champion a new approach to growth which includes the wellbeing of people and planet (and takes the focus off GDP targets)? There are plenty of progressive ideas out there: doughnut economics, post-growth, wellbeing economies, global public investment and feminist economic approaches, to name a few (the Lancet has a useful review of some of these). If policy proposals based on these ideas can be shown to work, are accessible and ‘fully baked’, they may have a chance of landing.

Debt – who owes who?

Between them, low- and lower-middle income countries have an external debt of US$ 1.45 trillion, and paid US$ 138 billion just to service their debts in 2023. Over 75% of all low- and lower-middle income countries spend more on debt servicing than they do on healthcare.

ActionAid’s new report highlights these stats and poses a big question: given the historic, practical and moral debts that rich countries owe – whether related to climate change, colonialism, slavery or illicit financial flows – who really owes who?

The Pope has declared 2025 a Jubilee Year – a year in which debts should be forgiven – and trying to tackle the debt burden of countries least able to pay will again be on the global agenda. Given the cuts to UK overseas development assistance (ODA), perhaps cancelling debt, and legislating for private creditors to do the same, is a global good where the UK can still lead by example?

Businesses and economic transformation 

Businesses are, of course, key to economies and growth. While some have used Trump’s scepticism as an excuse to backtrack on climate commitments, many businesses, and national and local governments are quietly carrying on. Employee ownership and other alternative enterprise structures continue to grow, as does the importance of public policy for fostering these models.

But real change will require a rethink of the ‘deep design’ of business. We need to get back to a situation in which businesses take their societal responsibilities seriously rather than maximising profits purely for shareholders. There are some influential allies out there, like Mark Carney (although he might have his hands full as the recently-appointed Canadian Prime Minister). Indeed, the climate emergency means we may need to move from voluntary approaches, taken up by ‘good’ businesses, to mandatory rules which create a level playing field and protect people and planet.

Opportunities and challenges in the international sphere

Despite the difficult headwinds, there may be some opportunities internationally to turn crisis into opportunity, particularly with South Africa chairing the G20 this year, and the UK doing so in 2027 (although the US will chair in between).

I see genuine opportunity in the following areas:

• Debt: Working alongside faith-based agencies in this ‘jubilee’ year, can we make progress on ‘dropping the debt’?
• Tax: There is momentum behind a UN Tax Convention and lots of talk about extreme wealth taxes for social purposes. Can this be turned into reality?
• The City: The UK is a finance heavy-weight. Can we make the City of London a world leading ‘responsible lender’, as opposed to a centre of tax avoidance and illicit financial flows?
• Multilateral institution reform: Cuts to global ODA make the questions of where development and climate finance is going, to whom, for what and at what price even more critical. Can the momentum behind the Bridgetown agenda be turned into genuine reform of the international financial institutions?

For those of us working in international development these opportunities raise key questions to consider:

• As we reevaluate the role of INGOs in terms of shifting power and decolonising our approaches, have we thought enough about our role in pushing for a fairer global economic system?
• Are we properly equipped to engage in debates about systemic and economic change? Are we able to articulate a vision of multilateralism that is worth saving?
• Do we have enough concrete policy proposals around regenerative and distributive economies ready to sell in? How will we do it?
• How can we grow a movement that is able to tackle vested economic interests and grasp the political narrative (which the political right is currently dictating)?
• How can we work more effectively across sectors to bolster chances of success?

Finding answers to these questions could unlock opportunities amid the current crisis, and ultimately move us closer to a fairer, more sustainable global economy.