“The World Is Completely Connected”

January 26, 2021

By John Donnelly

Afsaneh Beschloss, Founder and CEO of the investment firm RockCreek, has been Treasurer and Chief Investment Officer at the World Bank, an economist at Oxford, and a partner at the Carlyle Group. She also sits on the Board of GAVI–The Global Alliance for Vaccines and Immunizations–giving her a front-seat view to vaccine distribution worldwide.

In this far-ranging interview, edited for length and clarity, Beschloss shares her perspective on several consequential issues facing the world today: prospects for more foreign investment in emerging markets; how to achieve more equitable distribution of vaccines for all; and the chances for the rise of multilateralism in the near future.

Q: What’s your 2021 forecast for the global economy – what sectors do you see bouncing back and what areas will continue to struggle?

A: I think this year is going to have a lot of surprises, positive and negative. My thought process right now is that a few things are going to be dramatically different. One is that the big political changes in the U.S. and in some other countries, including in some emerging markets, will certainly impact their economies and markets positively especially given the scale of planned stimulus. More importantly, you have had this incredible trend of outflows of assets out of emerging markets in 2019 and part of 2020. And I think that is changing right now, as there are going to be a lot more flows into emerging markets in 2021 – though much is going mainly to northern Asia and not evenly across all regions.

Q: Why are you expecting more investments into emerging markets?

A: A couple of reasons. One is obviously if you look at the P/E [price-to-earnings] ratios, emerging markets are an incredible value compared to other markets. There is a lot of liquidity sitting in global markets and long-term investors are looking to take a little more risk for higher return. And some emerging markets have demonstrated that they can leapfrog ahead with new technology applied to health and education, innovations in finance and new climate-related investments. What you're seeing in the new growth projections from the World Bank, IMF, and at RockCreek as well, is, for example, China's growth forecast is around 7 percent this year. That’s almost double many OECD countries. If you look at the growth rate for the developed world, you're seeing that rate closer to between 3 and 4 percent, though U.S. growth could exceed expectations if the new U.S. leadership can get its programs implemented.

Q: What are your expectations for bringing COVID-19 more under control this year?

A: I think we are in a very complex part of the development of both the disease and of the vaccination as distribution is coming in relatively slowly in most countries. We are also learning more about the new mutations in COVID. What I think is really important is what COVID has done to impact the most vulnerable populations of fragile nations. The inequality, which existed pre-COVID, has worsened post-COVID.

The number one issue with COVID now is there needs to be much faster and more equitable distribution of the vaccine. There will be a greater push to help lower-income and fragile economies to acquire and distribute vaccines more equitably. We already are seeing since January 20, the limited access of the emerging world expand. We have great organizations like GAVI and the COVAX facility working incredibly hard with other multilateral organizations to make vaccines available to the lowest-income countries, raising financing and creating risk mitigation systems to ensure access for the most fragile countries. Getting more vaccines faster to the emerging world will have a significant economic impact.

This is the time for the World Bank Group to become a much more significant investor given the scale of resources needed, and also to participate in knowledge-sharing to expand investing in climate, access to hard infrastructure as well as internet access, financial inclusion, health, and technology. The World Bank Group can use its history of innovation to assist member countries in financing and risk mitigation to ensure low-income countries have access to vaccines while helping low-income and middle-income countries leapfrog to a more equitable and prosperous world.

Q: Please build the case for a more global, equitable strategy for distributing COVID-19 vaccines, especially because nations are very much concerned now with making vaccines available to their citizens.

A: COVID has shown that everyone all over the world is completely connected. And until the last person is vaccinated, and is immune, we are not safe. That is why it's really important to move away from the past competitive approach we saw with PPEs [personal protective equipment] and vaccines as local communities, hospitals, and countries all competed for limited supplies rather than cooperate to distribute limited supplies, and, more importantly, create new supplies faster. And what we saw in 2020 with the vaccine, but also with PPEs, was literally each person having to look after themselves, to 2021 moving to new multilateral cooperation.

In past crises, you've seen a lot of cooperation among countries and multilateral organizations. That was mainly absent in 2020. That is why I think the role of the World Bank Group and the role of other multilateral and international institutions is key in making sure we move away from individualistic thinking.

I'm optimistic because a number of new vaccines are coming very fast, and the problem of supply will move to ensuring efficient and equitable distribution. I remember studying development economics at Oxford with Nobel Prize winner Amartya Sen and reading his famous writings on famines, which showed that famines in India were due to an urban economic boom and the poor not being able to afford food as well as the inequalities inherent in the food distribution system. So I think what we need to do—whether it is somebody like Jeff Zients, who is President Biden’s COVID-19 Coordinator, GAVI, and others working closely together—is to get the vaccine to as many people as possible, as fast as possible.

Q: So are you saying that science has the potential to save us from this competition?

A: What has been really interesting and different in this crisis is that scientists, who also often compete, came together much more than in the past. There's been a lot more cooperation between different groups to create the vaccines—AstraZeneca and Oxford worked closely, while other vaccines were developed by Pfizer, Moderna, and Johnson & Johnson, among others. Among scientists, there has been cooperation, and there has been unbelievable progress over a very short time as they used technology in new ways to tackle large data and new medical breakthroughs.

Q: In what ways can the private sector, by working with governments, help accelerate the distribution of vaccines?

A: With COVID and with all pandemics, the role of the private and public sector working hand in hand is critical. What the private sector has been doing and will continue to do is help raise financing needed to continue scientific research to stay ahead as the vaccine mutates and in order to help expedite and deploy new technologies. Technology can help improve health data sharing and contact tracing while still having strong privacy controls. This will help with this virus as well as future pandemics to make sure we all get vaccinated in an equitable manner.

Q: What do you want to see in terms of the multilateral development banks (MDBs) and their role in helping countries during the pandemic?

A: This is the time where you need more innovation at the World Bank Group, which has a long history of innovation to increase resources commensurate with the needs of low-income and middle-income countries today and to be a leader in global public goods.

MDBs need to work even more closely together and leverage resources. It's important not only to generate more financial resources, but to disburse them much faster. Because of COVID, as we have heard from [World Bank Chief Economist] Carmen Reinhart, it is not business as usual and it is very important to create a much bolder plan to ensure low-income countries don’t lose a decade. Building infrastructure is incredibly important, including social infrastructure, education, and health. These are equally important for multilaterals to be working together on. Ensuring we move from 50 percent of world citizens to all citizens having access to the internet is another area for multilateral joint strategies. Financial inclusion, and access to finance for the world’s poor, is a typical area for the World Bank Group and other multilaterals to work together.

Q: What about the role of impact investing? What’s your forecast?

A: There's going to be a huge push toward impact investing, with more investing in ESG [environmental, social, and governance] and sustainable areas than we have seen in the past. It is really interesting to see the COVID pandemic leading to greater impetus to invest in impactful ways in the Sustainable Development Goals. COVID has led to leapfrogging, particularly in emerging markets, in many fields including in telemedicine. The scale of providing education, including long-distance learning, is really growing. I remember many years ago when [former World Bank President] Jim Wolfensohn started advocating for long-distance learning, people used to think it didn’t make sense. COVID has shown that there is a place for long-distance learning. In 2021, I'm very optimistic that we are going to see a lot more investments in areas such as clean energy, health, education, financial inclusion, and affordable housing.

Q: So impact investing will take off this year?

A: Absolutely. A lot of talk has been going on. But now I think impact investing is going to become much more mainstream.

Published in January 2021