Positive and negative spillovers must be understood, measured, and carefully managed since countries cannot achieve the SDGs if spillovers from other countries counteract their efforts. In a highly interdependent world, countries' actions can have positive or negative effects on other countries' ability to achieve the SDGs. International spillover effects occur when one country's actions generate benefits or impose costs on another country that are not reflected in market prices, and therefore are not "internalized" by the actions of consumers and producers. Such spillover effects can undermine other countries' efforts to achieve the SDGs.
Global supply chains and international financial flows can generate both negative and positive spillovers. Examples of negative international spillovers include demand for commodities (such as palm oil or osy) in one country that fuel deforestation in other countries. Tolerance for poor labor standards in international supply chains that harm the poor, particularly women, in many developing countries. Examples of negative financial spillovers include those related to investments or tax havens and banking secrecy which can inhibit other countries' ability to raise the public revenues needed to finance the SDGs. Official Development Assistance (ODA), partnerships (country to country & city to city) and knowledge transfers are examples of positive spillovers. Sustainable trade practices can also promote socio-economic progress, jobs and income globally, and in particular in poorer countries.
Our work on spillovers focuses on three major aspects:
- Put precise numbers on trade-related negative spillovers, building on Multi-Regional Input-Output Model and Consumption-based accounting.
- Explore policy and regulatory levers that can help curb negative international spillovers and promote comprehensive corporate reporting.
- Promote a science-based dialogue between Global North and Global South countries to maximize the positive impacts of international supply chains and minimize negative environmental and social spillovers.
