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Here at CGD, we’ve been following the numbers on the Sustainable Development Goals: 17 goals, 169 targets, 1063 proposed indicators. We can now add a new number to that list: 230, the number of indicators that have finally been approved by the UN to measure development progress.
If the SDGs answered the “what” question of the 2030 development agenda, the indicators answer the “how.” But as CGD senior policy analyst Casey Dunning tells me on this week’s podcast, those 230 indicators raise new questions as well.
First, with 230 sets of data to collect, how are countries supposed to prioritize? The indicators are meant to create “a full and complete SDG agenda, not a menu of options,” Dunning says. However, with so many indicators, the menu approach may start looking more likely in practice.
Then there are the indicators themselves, some of which are going to be hard to pin down. Or, as Dunning tells me, “they defy logic. You can’t even define them in a single country context, much less apply [them] to a global context – and that’s the definition of the indicator, not even how you would actually operationalize it and measure it.”
Finally, there’s the question of whether all 17 goals are “nationally appropriate” worldwide. Should rich countries like Belgium and Luxembourg dedicate limited resources to reporting on the lack of extreme poverty within their borders? Logically, this seems like a waste.
But here’s the problem: where do you draw the line on what is “inappropriate” for a specific country?” As Dunning explains in the clip below, “you can use that same logic to apply to sexual and reproductive health and rights, or governance, or democracy. Choose your highly contentious issue.”
For so long we’ve operated under the prevailing assumption that greater economic cooperation among countries would guarantee peace and stability. But now, the world finds itself in a dramatically different context—one that is fractured socially, politically, and economically. Today, more than 2,500 top decision-makers from around the world are gathering to kick off the 48th World Economic Forum Annual Meeting in Davos, Switzerland to address these new challenges.
This year’s theme, “Creating a Shared Future in a Fractured World,” sets the stage for important discussions that prioritize global engagement and innovative solutions to address today’s challenges. Below, CGD’s experts weigh in to shed some light on the ongoing debates, with innovative evidence-based solutions to the world’s most urgent challenges, and also discuss what’s not on the agenda but should be.
For the policymaker looking to improve the delivery of benefits, or for the financial institution trying to expand its customer base, the gap between technical solutions and the situation of the average technology user represents fertile ground for the many new opportunities that the digital economy provides.
This year, the global migration crisis finds itself buried in the agenda. However, it will remain one of the most urgent issues for generations to come if international leadership fail to tackle human mobility with pragmatic, fact-based policy tools. Now more than ever, innovation is imperative. To that end, Michael Clemens has a unique proposal.
Meeting the Sustainable Development Goals will require a major ratcheting up of private finance. So far, that hasn’t happened. Strengthening the role of the MDBs in mobilizing the private sector should be high on the agenda at Davos, says Nancy Lee.
There is no shortage of skepticism about whether global leaders at WEF are serious about addressing the needs of the poor and vulnerable, writes Cindy Huang. Visible progress through core business commitments would send an important signal that refugees are a crucial investment, not a cost—and that corporate leaders are committed to taking action towards, not just talking about, solutions that deliver social and economic impact.
In a world with the 2030 Agenda for Sustainable Development, the international investment policy system stands as an obsolete regime in urgent need of revision and reform. This is the main conclusion of the analysis that the think tank CIECODE conducted for CGD’s 2017 Commitment to Development Index (CDI). The analysis measures the amount of “sustainable development content” included in International Investment Agreements (IIAs) signed between developing and developed countries. Here, we look at best practices, main issues and which countries could do better.
But, first, what do IIAs have to do with sustainable development? By balancing foreign investor’s protection on one hand and States’ right to pursue public policy interests on the other, IIAs have the capacity to influence the type of foreign investments and the conditions under which they are made. Foreign investments have been developing countries’ main source of external finance for the last two decades (beyond remittances, external debt, or ODA) and that they have concrete implications in host countries’ day-to-day realities (job creation, environmental impact, fiscal revenues generation, or the promotion of vulnerable social groups).
Worldwide, the investment regime is a complex spaghetti bowl made up of more than 3300 IIAs (mainly, Bilateral Investment Treaties and Free Trade Agreements), which has been expanding relentlessly since the early 80’s.
Figure 1: Trends in Number of IIAs Signed, 1980-2017
Note: Preliminary data for 2017. 3,323 is the cumulative number of all signed IIAs, independently of their entry into force. Terminated IIAs, for which termination has entered into effect, are not included.
CIECODE has analyzed over 300 IIAs signed by developing countries with the 27 CDI countries, and has observed that sustainable development is often poorly secured in these agreements. When IIAs include social or environmental safeguards, they are so weak and full of caveats that their impact is highly diminished. They are focused on protecting foreign investors’ rights and interests leaving aside their obligations. Finally, they have failed in finding equilibrium between protecting foreign investors from unjustified discrimination measures by the host states and ensuring that these retain their right to regulate for pursuing public policy interests. This bias has prevented IIAs from becoming a useful tool to boost and promote sustainable investments at the global and domestic level.
CIECODE’s analysis also shows that IIAs signed with those developed countries most in need are the ones presenting the scarcest development content.
Figure 2: Development Content of IIAs Related to Human Development of Partner Country
Source: CIECODE’s analysis for 2017’ Commitment to Development Index. Data available.
Leaders and laggards
These general conclusions hide many interesting facts and variance at country level. For instance:
Four EU countries (Denmark, Germany, Portugal, and Spain) have obtained the minimum score on all the analyzed issues, meaning that in their treaties there is no disposition in place promoting sustainable development through foreign investment. This is a surprising result as both Denmark and Germany are leaders on the CDI overall—ranked first and fifth in the 2017 edition.
At the upper end of the scoreboard, Canada stands alone as the best student of the class, with the United States and New Zealand in second and third, respectively. In their treaties, they explicitly recognize the right of the Parties to regulate in pursuit of their legitimate public policy objectives. Further, detailed provisions to ensure the independence and transparency of the dispute resolution system are in place.
Although none of the existing IIAs are yet perfect instruments to promote sustainable development, the results of the analysis indicate that some countries are aware of the links between foreign investment and sustainable development when drafting and negotiating their agreements. There is a huge opportunity for countries to learn from each other’s policy design and make their investment agreements more development-friendly.
There is some good news
In terms of the inclusion of sustainable development and human rights content in investment treaties, the overall situation is still unsatisfactory (the average score of the 300 IIAs analyzed by CIECODE is below 2 out of 10). But, it’s at the same time true that almost all the improvements have taken place in the last 5 to 10 years (see Figure 3). The Investor-State Dispute Settlement system (ISDS) is a relevant area in which some advances have been observed.
Figure 3: The Evolution of Development Content on IIAs (2017-2000)
Originally, the ISDS was designed as a tool to protect foreign investors against undoubtedly discriminatory measures by host states. It grants foreign investors the possibility to take their disputes with host states to private international arbitration courts and seek for economic compensation if they believe any law or measure by the host state has damaged its investments and reduced its expected profit.
Today, with more than 60 new ISDS cases presented to tribunals each year, the system has mutated into something vastly different from its original expectations—at times with grave consequences. It gives foreign investors the power to challenge democratic choices by host states, elevates property rights over any other consideration (incl. human rights) and allows for fully confidential procedures. In recent decades, it has allowed investors to oppose health legislations against tobacco and environmental laws against industrial discharges' contamination, and even to challenge the end-of-apartheid laws in South Africa. States, exposed to unforeseen legal and financial risks, may decide to freeze legitimate government policymaking or even withdraw existing regulations. Many actors—from the UN and the EU to academia—agree on the main strands of this verdict.
CIECODE’s analysis shows that the ISDS dispositions are the ones in which few improvements have been made. Around 70 percent of the analyzed agreements do not include any meaningful content to improve the ISDS’ transparency, impartiality, or due process standards.
But there is a new and promising trend. More than 20 States have signed the UN’s Convention on Transparency in ISDS since 2014. This Convention, once in force, will oblige States (and their investors) to comply with a set of stringent transparency standards such as the publication of all relevant documents by the ISDS tribunal or the admittance of any “third persons” affected by the dispute to the process. While these might seem as minor improvements, they are almost disruptive innovations in a system that has remained untouched for almost three decades.
Sustainability and public pressure
One of the most unexpected conclusions of the analysis comes from applying CIECODE’s methodology to the investment chapter of the draft version of the EU-US Transatlantic Trade and Investment Partnership (TTIP). Despite the concerns with loss of democracy and the power of big corporations that the TTIP provoked in European and North American societies, none of the 300 IIAs analyzed in CIECODE’s study have shown a more development-friendly approach than the TTIP’s draft. This draft safeguarded states’ policy space to “achieve legitimate policy objectives, such as the protection of public health, safety, environment or consumer protection” and granted that the ISDS would operate under adequate independence, fairness, and openness.
The fact that the TTIP’s draft—being produced under high levels of social awareness and public scrutiny—is the IIA with the most advanced provisions in terms of development-content and transparency highlights the importance of public scrutiny to achieve sustainability outcomes in policymaking.
Meeting the 2030 Agenda
Today, it is no longer enough for investments to create jobs, contribute to economic growth, or generate foreign exchange. The development challenges that lie ahead demand investments that, on top of everything else, are not harmful for the environment, bring social benefits, promote gender equality, and help local companies to move up the global value chain.
If the 2030 Agenda for Sustainable Development is to be taken seriously, the international community must rise to the occasion and fast track the reform of the global investment policy regime in a coherent and ambitious manner. There are evidences, experiences, and best practices ready to be exploited.
Javier Perez is the director of CIECODE, a Spanish research institute working in development and specialized in the analysis of public policies with an impact on sustainable development, social justice and human rights. Economist and jurist, his main area of expertise is international trade policies and its implications for development and human rights. Lately he has lead two innovative projects to monitor and evaluate the Spanish parliamentarian activity from a PCD perspective. Javier worked until 2011 at Oxfam International as Economic Justice Research Coordinator.
Maria Vega is a researcher at CIECODE. She holds a BA in Journalism from Universidad Complutense de Madrid and a MA in International Public Administrations and Politics from Roskilde University. Her main area of expertise is the analysis of migration public policies from a PCD perspective.
Over the last few weeks a couple of (fantastic) co-authors and I have published two papers about progress towards the SDGs (links below). Working on the papers has helped me think through what a short time fifteen years is in development, and how much a timeframe can shape what is seen as the best solution to a problem. And they raise the question: do the fifteen year targets of the SDGs stand in the way of their vision of integration and sustainability? If you wanted to achieve long term development progress, you’d probably focus on technology change, learning and innovation in policies, and improving institutional functioning. If you wanted to improve outcomes in fifteen years, you’d probably focus on throwing money at technical solutions. The problems with the second approach include that we don’t have the money, and the technical solutions won’t necessarily work best over the long term.
The first paper, written with Dev Patel, looks at the demand for innovation to meet the SDGs. At one level, it suggests that the need for new technologies and approaches is actually quite low: along most of the income distribution, there are countries already (reportedly) succeeding in meeting the SDG targets we look at, suggesting it may be possible with the body of knowledge that currently exists to bring the maternal mortality ratio of a country with a GDP PPP per capita of $2,850 to under 70, for example. The amount of progress most countries could get by “moving to the policy frontier” is more than they would get from the world as a whole moving to better outcomes at a given level of income at any reasonable rate of global technology advance. Or to put it another way, in a period of 15 years, national policy decisions on funding and focus likely dominate global technology change as the most powerful tool for increasing the rate of progress.
A second paper with Mallika Snyder asks Meeting the Sustainable Development Goal Zero Targets: What Could We Do? The paper emphasizes how much more than money achieving the targets would take—including massively improving the quality and sustainability of service delivery alongside increasing demand, for example. But it also notes that in many cases we do at least understand the technical solutions that could deliver (close to) zero goals. It also suggests if we used such solutions and achieved a lot of progress towards the SDGs by 2030, we would likely have spent trillions of dollars in the effort.
Looking at the papers together leaves me with the feeling that fifteen years may be too short a period to map out a holistic, far reaching vision of sustainable development. As the 2015 UN General Assembly resolution proclaimed, the SDGs present an “integrated and indivisible” balance of the three dimensions of sustainable development: the economic, social and environmental. They recognize the “deep interconnections and many cross-cutting elements” of the goals and that “social and economic development depends on the sustainable management of our planet’s natural resources.” I strongly believe all of that is true about long term development, but I think this is less true about progress over a decade and a half.
For example, over periods as short as fifteen years, the link between increases in income and increases in health are fragile. Over a decade and a half, the generational effects of greater school enrollment on child health will only have started to emerge. For a process that will play out over a few centuries, the relationship between climate change and broader development progress over fifteen years is going to be comparatively limited—and the vast majority of climate change that will occur over that time is locked in by emissions we’ve already released.
Again, as the analysis in my paper with Dev suggests, the hope for making considerably accelerated progress during the SDG timeframe relies primarily on “moving to the existing policy frontier” rather than investing in technology. In part, that reflects that researching and rolling out technologies simply takes too long to imagine a huge impact of new technologies in fifteen years. (Think: adoption of TCP/IP in 1983 and only three percent of the world using the Internet in 1998, or the first mobile phone call in 1973 and less than one mobile subscriber per 1,000 people worldwide in 1988).
So while long term development is driven by interlinked progress across a range of measures of the quality of life underpinned by institutional development and technological change, rapid progress over a period of as short as fifteen years is more likely to be driven by spending more on existing solutions. The problem with an approach based on existing technical solutions is the same as it was when proposed by “costing studies” of the Millennium Development Goals fifteen years ago. It ignores the institutional and other barriers to effective rollout.
One case where this isn’t true appears to be basic health programs including vaccination and bednet provision, where rollout of simple solutions at scale really has made a huge difference to health outcomes. And there will be other exceptions across the SDGs—including cases where norms and institutions or complementary outcomes and technology availability change so rapidly that fifteen years is quite long enough to see a major impact. Again, it isn’t clear the SDGs are actually having the effect of encouraging short-termism. And, frankly, when it comes to people dying from easily prevented conditions, short-termism is not only justifiable but a moral imperative. Still, when it comes to sustainable global progress, fifteen years simply isn’t a long enough time-frame to realize the full vision of the SDGs.