On December 1st, 2021, the Center for International Development (CID) hosted a virtual panel discussion on promoting inclusive economic growth. This was the third monthly panel event on CID’s moving Beyond COVID initiative, with each month representing different key dimensions of COVID response and recovery.
CID Director Asim Khwaja hosted a wide-ranging conversation with some of Harvard’s keenest economic minds, to discuss the evolving impact of the pandemic and future implications for inclusive growth around the world.
A key learning for Karen Dynan, former United States Assistant Secretary of the Treasury for Economic Policy and Professor of the Practice of Economics at Harvard University, is on pandemic technology adaptation. “Remote work can make people and society better off in various ways. It can increase the match between workers and firms, which is good for wages and good for productivity.” She highlighted the opportunities remote work offers to address affordable housing, air pollution, and traffic congestion.
Telework also holds opportunities for developing countries. As Ricardo Hausmann, Director of CID's Growth Lab and Professor of the Practice of Economic Development at Harvard Kennedy School observed: “Anything that can be done from home, can be done from abroad. And that means that now, developing countries can participate in tasks that used to be done in rich countries. That is going to likely create an opportunity for new kinds of service exports for developing countries.”
Professor Hausmann also identified green growth opportunities, to shift energy-intensive production to developing countries using low-carbon energy sources.
Of course the picture is far from rosy. The panel noted that there has been major divergence between countries. The United States has bounced back sharply, with growth in the medium term expected to outperform pre-COVID projections, largely due to aggressive countercyclical fiscal policy. European output, by contrast, is projected to remain beneath pre-COVID projections.
Many developing economies – which had limited fiscal space to increase spending during the crisis – are experiencing significant destruction of formal employment, and may face years of lost output. Professor Hausmann challenged participants, economic policymakers, and development practitioners to intervene to avoid this grim future.
Ludwig Straub, Assistant Professor of Economics at Harvard University, called attention to the research quantifying the amount of learning children have lost during the pandemic, as much as half a year in many countries. This could have dire social and economic impacts for years to come. Professor Straub: “The time to act on this issues is now. There are proposals to try to educate our kids over the next two summers, which some studies suggest could close most of this gap. That is a very timely problem that I think we should face right now, in order to avoid issues down the road.”
More generally, COVID has shown us that there is a need for better targeting of stimulus spending in the United States, to rethinking costly, draconian lockdowns in developing countries for little benefit in preventing transmission. Panelists called attention to the digital divide, within and between countries, which threatens to deepen inequalities if left unaddressed.
On a hopeful note, the panel reminded us that the global supply of jobs is not fixed, but can be expanded as countries and industries develop new business models responding to evolving social and economic trends. Inclusive growth is indeed possible if we learn the right lessons and think imaginatively beyond COVID.
Learn more about CID's Beyond COVID initiative on the Beyond COVID homepage, and gain further insights from experts by listening to CID’s Beyond COVID podcast and catching up on the Beyond COVID panel discussions.
CID Student Ambassador Author:
Mandla Isaacs, Mid-Career Master in Public Administration candidate and Mason Fellow at the Harvard Kennedy School