This policy brief has been shared with iAffairs by its authors, Marshall Palmer, Kevin Budning and Paxton Mayer, who are PhD students at the Norman Paterson School of International Affairs (NPSIA).

This brief is one of the recent winners announced for the 2020 International Policy Ideas Challenge.

The brief was made possible with funding from the International Policy Ideas Challenge, run by Global Affairs Canada (GAC) in collaboration with the Social Sciences and Humanities Research Council (SSHRC). This report represents the views of the authors only and not those of any external body, including GAC or SSHRC. The authors take full responsibility for any errors.

Read the full brief here

Executive Summary

COVID-19 has imposed a ‘double squeeze’ on the Global South.

Particularly, middle-income countries face a common challenge posed by collapsing demand for exported goods, high rates of unemployment, and political instability. Moreover, recipients of official development assistance are likely to get hit again by post-pandemic budget cuts in donor nations, as seen in the United Kingdom in 2020 (Citowicki, 2020). The social and humanitarian consequences of this squeeze are likely to be severe. Put simply, the need for foreign aid is drastically increasing just as the provision of that assistance is likely to be reduced. This brief seeks to describe the problem and suggest how Canada can best contribute to reducing the impact of COVID-19 on middle-income countries through international assistance.

We constructed a “vulnerability index” that identifies the countries that are at high risk of this double squeeze. Using this index, we selected Ecuador, Lebanon, and the Philippines for further study. As three vulnerable middle income countries, impacted in different ways by the crisis, they serve as typical case types from which general conclusions can be drawn. Ecuador, for example, is heavily dependent on natural resource markets. Lebanon suffers from a high COVID-19 infection rate and, with massive government debts, has limited fiscal capacity to address societal needs. The Philippines is heavily dependent on remittances, manufacturing, and tourism. Moreover, the crisis could negatively affect the fragile democratic institutions in each country.

Why should Canada have an interest in these countries and in the developing world more broadly? First and foremost, there is the need to contain and eradicate COVID-19 globally as soon as possible. Outbreaks abroad create and exacerbate outbreaks at home. Second, there is the question of global financial stability. Like viruses, an outbreak of defaults overseas can reduce demand for Canadian exports, especially for hydrocarbons, in addition to hurting Canadian foreign investment. Lastly, there are moral and humanitarian obligations. These apply to everyone, but are, of course, especially felt by Canada’s many diaspora communities, who retain social links to their countries of origin and families still abroad.

Having chosen these countries and made a preliminary identification of their strategic challenges, we reached out to dozens of experts, such as academics, subject-matter specialists, diplomats, and civil-society actors within the countries in question. The purpose of these interviews was to better understand the nature of the crisis and, more importantly, identify the tools at Global Affairs Canada’s disposal to address it. Our key recommendations include:

  • Increasing the ratio of bilateral to multilateral international assistance spending.
  • Decentralizing decision-making on aid distribution from Ottawa to embassy personnel.
  • Committing to lengthier development projects that are resilient to changes in government.
  • Retaining Canada’s commitment to the Feminist International Assistance Policy (FIAP) and continuing to abide by the SDGs as outlined by the United Nations.

References

Asian Development Bank. 2020. ‘Philippines and ADB’. Asian Development Bank. https://www.adb.org/countries/philippines/economy.

Cevallos-Valdiviezo, Holger, Allan Vergara-Montesdeoca, and Gema Zambrano-Zambrano. 2020. ‘Measuring the Impact of the COVID-19 Outbreak in Ecuador Using Preliminary Estimates of Excess Mortality, March 17-October 22, 2020’. International Journal of Infectious Diseases.

Citowicki, Philip. 2020. ‘The UK’s Unwelcome Foreign Aid Cut’. Relief Web. https://reliefweb.int/report/united-kingdom-great-britain-and-northern-ireland/uk-s- unwelcome-foreign-aid-cut.

Donor Tracker. 2020. ‘Donor Tracker Canada’. https://donortracker.org/country/canada. Embassy of Canada to Ecuador. 2019. ‘Canada Announces Humanitarian Assistance Funding for

Partners in Ecuador’. Embassy of Canada to Ecuador. https://www.canadainternational.gc.ca/ecuador-equateur/highlights-faits/2019/2019-07- 19-assistance.aspx?lang=eng.

Global Affairs Canada. 2017. ‘Canadian International Assistance in the Philippines’. Global Affairs Canada. https://www.international.gc.ca/world-monde/issues_development- enjeux_developpement/priorities-priorites/where-ou/philippines.aspx?lang=eng.

Global Affairs Canada. 2020. ‘Canada’s Middle East Strategy’. Global Affairs Canada. https://www.international.gc.ca/world-monde/international_relations- relations_internationales/mena-moan/strategy-strategie.aspx?lang=eng.

Kharas, Homi, and Meagan Dooley. 2020. ‘COVID-19’s Legacy of Debt and Debt Service in Developing Countries’. Washington D.C.: Brookings Institute. https://www.brookings.edu/wp-content/uploads/2020/12/COVID-19-legacy-of- debt_final.pdf.

Nolan, Patrick D., and Gerhard Lenski. 1985. ‘Technoeconomic Heritage, Patterns of Development, and the Advantage of Backwardness’. Social Forces 64 (2): 341–58.

Our World in Data. 2021. ‘Lebanon, Coronavirus (COVID-19) Deaths’. Oxford Martin School. https://ourworldindata.org/covid-deaths?country=~LBN.

PwC. 2020. ‘Impact of Covid-19 on the Philippine Tourism Industry’. PwC. https://www.pwc.com/ph/en/publications/tourism-pwc-philippines/tourism-covid- 19.html.

Trading Economics. 2019. ‘Lebanon Government Debt to GDP’. https://tradingeconomics.com/lebanon/government-debt-to-gdp.

UNDESA. 2014. ‘Recipients and Contributors: Middle income countries and the future of development cooperation.’ https://www.un.org/esa/desa/papers/2014/wp135_2014.pdf

UNFPA. 2020. ‘Significant Rise in Maternal Deaths and Unintended Pregnancies Feared Because of COVID-19, UNFPA and UPPI Study Shows’. United Nations Population Fund. https://philippines.unfpa.org/en/news/significant-rise-maternal-deaths-and- unintended-pregnancies-feared-because-covid-19-unfpa-and.

UNWTO. 2020. ‘Impact Assessment of the COVID-19 Outbreak on International Tourism’. United Nations World Tourism Organization. https://www.unwto.org/impact-assessment- of-the-covid-19-outbreak-on-international-tourism.

Wolf, Martin. 2020. ‘Covid-19 Will Hit Developing Countries Hard’. Financial Times, 9 June 2020. https://www.ft.com/content/31eb2686-a982-11ea-a766-7c300513fe47.

World Bank. 2020a. ‘Labor Force, Total – Philippines’. World Bank. https://data.worldbank.org/indicator/SL.TLF.TOTL.IN?locations=PH.

———. 2020b. ‘Global Economic Prospects : June 2020’. World Bank Group. https://www.worldbank.org/en/publication/global-economic-prospects.

———. 2021. ‘Global Economy to Expand by 4% in 2021; Vaccine Deployment and Investment Key to Sustaining the Recovery’. Washington D.C.: World Bank. https://www.worldbank.org/en/news/press-release/2021/01/05/global-economy-to- expand-by-4-percent-in-2021-vaccine-deployment-and-investment-key-to-sustaining-the- recovery.

Banner image by Kevin Paes, courtesy of Unsplash

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