UNCTAD’s Global Policy Model (GPM)

UNCTAD’s Global Policy Model (GPM) will be extended to an expanded range of developing countries, in particular focusing on the macroeconomic and financial conditions of selected developing countries in Africa, Asia and Latin America. The analysis will include up to 40 countries by Phase 3, and applied to sub-groups of developing countries with similar macroeconomic features. In this way, the ‘flexible geographical disaggregation’ capability of the GPM will be leveraged.

Related research

Achieving Global Carbon Neutrality Together with Economic Development

8 April 2021

In this paper we use the United Nations Global Policy Model (GPM) to make projections to 2030 in order to help clarify some of the likely major Economic and Environmental challenges facing Developing Economies in their efforts to achieve the Sustainable Development Goals. The paper also describes the dynamics and potential impact on Developing Economies of changes that could help the world to make substantial progress by 2040 in reaching the ambitious, but absolutely necessary, target of Zero Net Carbon Emissions by midcentury. This paper’s policy recommendation is to undertake massive direct Public Investment in low-carbon infrastructure and technology. Such an undertaking should, of course, provide a substantial stimulus to Economic Growth and Development. But this welcome benefit has to be combined with the dominant incentive to propel dramatic environmental change.

The Economic and Social Impact of COVID-19 in Zambia - The August 2020 Update - Background Study for UNCTAD

30 June 2021

The analysis in this study attempted to show the macroeconomic and social effect of the COVID-19 pandemic on GDP and sectoral GDP growth, including the external sector, on a small mineral dependent economy in Africa -Zambia. The analysis has shown that for small countries that are dependent on a single (or a few) primary commodities, the recovery of the global economy is very crucial for their recovery. It also addresses the policy response of both the government and the private sector, as well as the potential implications of a global demand-led recovery policy option, as proposed by the UN Global Policy Model (GPM) in its analysis in UNCTAD Trade and Development Report 2020, for resource dependent economies such as Zambia. Finally, the paper discusses the scope for demand led recovery in Zambia and examines the socio-economic effect of the pandemic, including its gender dimension. The conclusion draws policy implications for a sustainable economic recovery in Zambia.

The Macroeconomic and Social Impact of COVID-19 in Ethiopia in the Global Context - Background Study for UNCTAD

30 June 2021

This paper focuses on the effect of the pandemic on economic growth, sectoral value-added, the external sector both from Ethiopia and global perspective based on the UN Global Policy Model analysis. Three scenarios were envisaged, in which the effect of COVID-19 is compared to what would have been the economic condition without COVID-19. The analysis shows that the macroeconomic effect of COVID-19 in Ethiopia is to reduce growth, exports, imports and public revenue. It will also lead to an increase in public expenditure, public deficit, external debt and debt-service ratio. The combined effect of all these may lead to macroeconomic instability that includes inflation, shortage of foreign exchange and a pressure on balance of payment in 2020/21 unless it is wisely managed. The macroeconomic balance of the country is already in a precarious condition before the pandemic’s effect. The paper also discusses possible socio-economic effect of COVID-19 by focusing on unemployment and poverty that includes its gender dimension and then draws on general policy implications for economic recovery.

 

Achieving Global Carbon Neutrality Together with Economic Development - Technical Note

2 July 2021

This note reports work to prepare a baseline scenario and two alternative scenarios for analysis of finance and development issues facing developing countries in the aftermath of the COVID19 crisis. The scenarios have been prepared using an updated version of the world databank (WD 13.3) covering the period 1970 to 2019 and a modified version of the UN Global Policy Model (GPM 6.82) expanded to represent eleven developing countries that are not members of the G20.  The databank and model have been updated to reflect estimates of the economic and financial impact of the pandemic as of end-November 2020.[1]

The baseline assumption, here described as 'Business As Before', reflects established pre-COVID trends and impacts of the COVID crisis on trade, investment, employment, budget deficits and debt on the assumption that governments strive to recoup budget losses and bring debt down towards pre-crisis levels through the 2020's.

The first alternative scenario adds major policy changes aimed at achieving a global carbon-neutral transformation by mid-century. Innovations in this scenario, 'Market-Driven Decarbonization', include accelerated trends of energy efficiency and reduced carbon-intensity with taxes and other regulatory mechanisms cutting demand for fossil fuels (which are the main source of emissions) to a level at which production would scarcely remain profitable.

The third scenario, here termed the 'Alternative Development Scenario', includes three elements that in combination could help to overcome development problems associated with the first two scenarios.

(i)         Concerted Decarbonization through a programmed transition to achieve an orderly reduction in fossil fuel extraction and distribution, based on stable producer prices. The aim of this initiative is to match reductions in demand and supply of fossil fuels without violent fluctuations in the price at which fossil fuels are traded.

(ii)           Regional Development, which promoting closer economic cooperation among economies in five geographic regions (South America, Africa, South-East Asia, West and Central Asia, and South Asia). The purpose is to advance development-oriented ‘de-globalization’, reducing economic and financial dependence on developed economies.

(iii)          Containment of Financialization to avoid destabilizing build-up of external financial liabilities as growth of developing economies recovers and goes forward in coming decades.

To facilitate evaluation of longer-term consequences the scenarios have been extended to 2040, allowing time for implementation of policy changes that have far-reaching consequences for business and daily life and taking account of delayed, S-curve responses as people and institutions take advantage of new products and services and costs fall.

 


[1] Initial updates of the databank and model with historical data for 1970 to 2019 and projected outcomes for 2020 and 2021 were prepared in July 2020 under a prior contract.

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