Middle Income Countries can drive greater sustainable development and peace the world needs

Remarks by Kanni Wignaraja, UN Assistant Secretary General and Director of UNDP's Regional Bureau for Asia and Pacific

September 21, 2023

Excellencies, colleagues

It is a pleasure to join you at this dialogue on behalf of UNDP. Let me start by standing in solidarity with the people of Morocco at this time due to the devastating impact of the earthquake.

The elephant in the middle-income country (MIC) room is a conversation around the fairness and scale of flows of development finance. MICs confront the challenge of rapidly decreasing ODA and concessional finance, while being home to about five hundred million people living in poverty. Even those MICs that made significant gains in eradicating poverty in the past decades, now find their populations vulnerable to downward spirals in the event of complex shocks. Conflicts, COVID and climate adversity working together have been effective in eroding human development gains.

UNDP’s Report on “SDG Insights: Unlocking the Future” shows that in the last three years, carbon emissionsincreased in two-thirds of the countries. And poverty increased in 62 out of 95 countries.

Across Middle Income Countries, we see a growing gap between the development that many countries want – one that is good for both people and planet -- and the growth they get. This gap is growing with fiscal and financial constraints. The trillions needed to fill the gap exist, but as we know, it goes elsewhere.

So, as we make the case for redefining the MIC space, through using multidimensional poverty and vulnerability indices, we observe three trends which we hope can be taken up in your deliberations:

First, the patterns of evolving social dynamics and trust. 

Shifts in social expectations and trust levels have lasting effects on governance, social cohesion and conflict resolution. These issues were already heightened before the onset of the COVID-19 pandemic across regions and are now at breaking point in many countries, not least in those experiencing violence and coups.

Our collective efforts need to expand and align more deeply with the principles of the rule of law, justice and equality, and rights-based approaches to draw out new social contracts between states and people. There is much to be learnt across MICs here.

Second, the transitioning of development pathways.

MICs are increasingly moving towards sustainable practices, with a focus on accelerated energy transitions and nature-based solutions. This transformation involves repurposing fossil fuel subsidies, introducing carbon pricing mechanisms, and growing positive nature-based investments and innovations. New financial instruments and fostering partnerships with the private sector that can grow a sustainable economy while protecting and managing the middle-income world’s natural asset base, is therefore, a must. And some are doing better than others in this regard and can be shared.

Third, debt challenges and fiscal pressures are not going away without the radical redrawing of the lines on access to finance.

Identifying and using potential sources of fiscal leeway will be critical if MICs hope to accelerate SDG progress. Safeguarding the most vulnerable segments of their population and reducing inequalities, while expanding economic opportunity by greening growth can happen with the right policy and investment mix. But MICs need more capital options beyond the way all this was defined decades ago.

UNDP, with the International Financial Institutions and UN partners, is supporting integrated national financing assessments to support countries in this effort. This needs changes in both domestic and global financial markets on the rules of the game, to ensure countries and not creditors are the winners.

To close on the SDGs, let me share with you a piece of evidence from our recent analysis on “SDG Insights”. Investment in four SDG targets – decent jobs, resilient infrastructure, sustainable cities & effective institutions – have the most interlinkages across the SDGs to provide a multiplier effect across all the Goals in middle-income countries.

And let me reaffirm UNDP’s continued support to advancing this agenda. Thank you.