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The Covid-19 pandemic requires societies to make essential decisions concerning the form of economies international locations want to rebuild, and change the way in which present levers of the financial construction works, a brand new report launched on Tuesday has mentioned.
Commissioned by the Organisation for Economic Cooperation and Development (OECD) and written by Sheffield University professor Michael Jacobs, it mentioned the pandemic has raised severe challenges, approaching prime of the monetary disaster, local weather change and inequalities of the final decade.
Governments must change the way in which the financial system works within the wake of the pandemic, mentioned the report primarily based on inputs by a world advisory group, calling on international locations to go ‘beyond growth’ and radically reorient financial coverage.
The report warned that the dominant patterns of financial development in OECD international locations have generated ‘significant harms’ over current many years – together with rising inequality and catastrophic environmental degradation.
It referred to as for a paradigm shift in the way in which developed international locations method financial coverage – in order that as an alternative of specializing in gross home product (GDP), they prioritise environmental sustainability, bettering wellbeing, lowering inequality and strengthening financial resilience.
These objectives ought to be constructed into the constructions of the financial system from the outset, fairly than hoped for as a by-product, or added after the occasion, it mentioned.
The report argued that this may require a brand new function for the state, with governments changing into extra entrepreneurial, in search of to form markets and steer the method of financial change, not merely correcting market failures.
This “new kind of social contract” would rework the connection between the state, enterprise, civil society and residents, mentioned the report, titled ‘Beyond Growth: Towards a New Economic Approach’.
Jacobs mentioned: “The Covid-19 crisis needs to lead to a major reset in economic policy. Before the crisis, Western economies were already experiencing financial instability, environmental breakdown and rising inequality, so a return to the status quo would be disastrous.”
“Just as in the 1940s and 1980s major economic crises led to paradigm shifts in economic thinking and policy, so today we need to rethink how we define and measure economic success. As governments spend unprecedented sums to rebuild their economies after the pandemic, they must look beyond growth alone to prioritise the needs of people and planet,” he added.
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