The COVID-19 pandemic has been a wake-up call for governments on the vulnerability of our economic and social systems, and the ability of the machinery of government to be able to process rapidly changing, cascading impacts into policy, programmes, financing decisions and continuous feedback and review. We know that other threats such as climate change and automation loom large on the horizon, with an ever-shortened window to be able to mitigate their impact. So how do democratic nations build the capabilities to deal with the long-term and cascading global challenges of the next twenty years?
As explored in ‘A Way Forward’: Governing in an Age of Emergence’, a previous collaboration between UNDP and Dark Matter Labs, over the next 20 years, governments around the world will be facing critical choices on climate, digital and democratic transition for their economy and society - or what we term “human, machine and ecological transition”. We are living in a global age of long, interlinked emergencies. Climate change1, biodiversity loss2, pandemics3, antibiotic resistance4, migration5 and human development6 are just some of the challenges, whose impact falls most heavily on the world’s most vulnerable people7.
How do democratic nations build the capabilities to deal with long term and cascading global challenges of the next twenty years? Each one of these challenges can have devastating economic and social consequences - as has been laid bare by the COVID-19 pandemic. It is also evident that no government would be able to tackle all of these challenges on its own by top-down solutions, but would rather need to enable and incentivise other actors in society to embrace the policy mandate and play their part in affecting change. Fundamentally, this requires not only new innovative policy but a transformation of the machinery of government in how to formulate, disseminate and implement policy and the types of tools and methods that it uses. It requires new institutions, new ways of financing, an acceleration towards digital and analytical capability to ensure real-time evaluation against cascading risks, and the building of new capabilities not only across government but also society, and in a way that disseminates learning across society.
Finally, the question we are posing in this blog is how do we create a framework for a National Development Strategy that builds the nation’s capabilities for adaptation and resilience so that the whole of society is able to meet the future and the scale of adaptation required, and not with fear, but with renewed optimism to truly “build back better”?
Five Strategic Shifts For A New Way Forward
Human, machine and ecological transition requires us to develop strategic and critical responses that orient structural transformation towards long-termism and consideration for future generations. How we decide to use our land and resources today has long-term implications, yet our current systems are struggling to make sense of decisions that impact across multiple time horizons (from political cycles to fiscal budgets). We must ‘break the tragedy of the horizon’8, as Mark Carney, former Governor of the Bank of England, so eloquently stated in a much-cited speech at Lloyd’s of London in 2015.
The transition calls for a revision of our relationships with: (1) The economy, challenging the way we assign value to certain contributions over time9; (2) The environment, addressing the increasing uninhabitability of our environment; and (3) Society, challenging ageing populations and demographic slowdown10. The transition also demands a new pathway for countries and importantly a new lens through which to see the nation-state. There is an inherent limitation in seeing the nation-state purely as a bounded territory. A border defines the geographic territory of a country over which its government can enact legislation, but it is redundant when dealing with the constant flows in and out of a country that impact everything from the economy to the environment, or when dealing with the prevention or mitigation of any one of the interconnected global challenges set out above.
In conceptualising a framework for a National Development Strategy in North Macedonia, we have embraced five strategic shifts for a new way forward:
1. Re-imagine statecraft for an age in which we see the nation as a system. We are moving from seeing the nation as a bounded territory to seeing the nation as a knotted system of flows impacted by transnational behaviours. The level of uncertainty inherent in the nation system means we cannot accurately predict or plan for the long-term future; nor can we silo and compartmentalise interventions because when you change something in any one space, you will be creating cascading impacts throughout the whole system (See Figure 1). We can no longer have a one-to-one, “action–reaction” response to deal with strategic risks, but rather it requires a network approach consisting of a number of parallel processes involving multiple actors.
The COVID-19 pandemic can be understood as a warning sign, a probe into the structural weaknesses of our existing systems11. It shows how futile it is to address 21st-century challenges with the institutions and methods of 20th-century governance. It will not be enough to simply respond to crises, we need to scaffold the transition to a new human contract with the world around us.
2. Build a more inclusive democracy and one in which we act as custodians for future generations. Governments are waking up to the urgent need to build the capacity of the whole of society to care about, and take decisions on, the impact that we have on our planet and future generations.
In this age of complexity, top down government is neither sustainable given the scope and scale of interventions required, nor effective given the range of actors involved in our interconnected nation system. Moreover, the increased risks faced by the nation system need bold interventions that require building legitimacy across society for such actions. One way to build legitimacy is by fostering more inclusive, transparent and accountable policy making and programmes implementation12. We also need to reinforce the multi-party democratic system. Not only is parliamentary debate and scrutiny essential, but it becomes imperative to take a cross-party collaborative approach and to be mindful of those who would try to game the system of democracy. Issues such as climate change need to go beyond party politics and a political system that continuously rewards one party for another’s failure.
The unprecedented future that countries are facing requires a level of citizen participation that can drive collaborative rather than centralised innovation. Future imagining and collective but distributed decision making will be central to this development13. Our current mechanisms for democratic participation struggle to incorporate meaningful deliberation. We need to design deliberative processes, planning systems, policy and regulatory frameworks, better markets, and the ability to “contract” for the future14. Simultaneously, nations need to prioritise investment in the rebuilding of societal trust so that different non-governmental actors are ready to listen, engage with and support the policy making and programmes implementation function of government.
3. Build antifragility15 for nation states to adjust, learn and deeply grow16 in an age of long emergencies (as illustrated by the currents of uncertainty in the Deployment Framework Diagram in Figure 2 below). Antifragile systems are more than simply resilient and adaptable. They do not merely bounce back from shocks, or respond effectively in the wake of shocks, but thrive and improve because of such shocks. We need to build the capabilities for a nation to thrive in uncertain environments so that we are not always planning for the next crisis, whilst repairing the damage from the last one17. Our collective strategy of renewal to “build back better” ought to be premised on a systemic response built on emergent, discursive, contingent processes of perpetual learning and self-renewal.
4. Transition as fast as possible to a “safe zone of operation” by using the Doughnut Framework by Kate Raworth18 as the "guard rail" in our transition journey, whilst recognising the divergent development cycles of different nations.
The Doughnut is a visual “safe and just space” framework that sets the goal of operating within safe planetary boundaries and social boundaries, acting as a compass for human progress. In terms of transition strategy, it can be used to identify interconnected risks and potentials over a time horizon and is therefore an evaluation tool or framework from which human, machine and ecological development can emerge.
The Doughnut Framework is not a set of policies and institutions, but rather principles for humanity to thrive in the 21st century. It is to be noted that one of these principles is moving from the goal of endless GDP growth to thriving in the doughnut where everyone’s needs are met. For middle income and low income countries that still need to develop and grow their economy, but want to adopt aspects of the Doughnut Framework, we have pursued the idea of deep growth.
5. Embrace a new thesis of human-machine-ecological deep growth, recognising a new human economy from care to creativity, unleashed by a new machine economy revolution of automation, AI, and structured on a new foundation of ecological regeneration, repair and biomaterial circularity.
Whilst many countries are seeking growth strategies alongside an improvement in quality of life. UNDP’s Human Development Index19 scores, and the adjusted Planetary pressures–adjusted Human Development Index20 present another type of growth measure, beyond GDP. Any meaningful National Development Strategy needs to adopt a new theory of growth that fundamentally integrates the new human-machine-ecological economy as a virtuous system of both maintaining and expanding economic potentialities, and not see technological advancement as a threat or ecological preservation as a constraint.
Human-machine-ecological deep growth is:
- Growth that accounts for all the negative externalities that result from the economic activity causing that growth;
- Growth that is sustainable to the ecological, human and machine systems from which it draws inputs and to which it contributes;
- Growth that maximises the potential of those systems by regenerating and augmenting them;
- Growth that is the result of a regenerative economy, which is not only extracting natural resources, but maintains the natural ecosystem in which society is embedded and helps it thrive;
- Growth that supports the development of foundational antifragility;
- Growth that focuses on developing 21st century human, machine and ecological capabilities;
- Growth that shifts the aim from a winner takes all mentality in structures that hitherto had defined parameters and goals and a foreseeable set of variables, to one where success in an uncertain and interconnected world is assessed on mutual advancement, self-sufficiency and maintenance. In other words, growth that focuses on infinite games instead of finite games21.
National Development Strategy for a 21st Statecraft
Designing for the 21st Century
How does the nature of the transition inform how a National Development Strategy is created?
A National Development Strategy is a comprehensive umbrella policy for a country that sets a medium to long term vision not only for economic development but also considers economic, social, political and environmental dimensions in combination. It ensures synergy among various policies and programmes that contribute towards stated national priorities, with a view to achieving defined objectives within a given timeframe, and thus becomes a tool to measure ‘progress and success’.
However, the uncertainty and complexity inherent in transition presents a challenge for development strategies that aim to set defined objectives within set timeframes. Another challenge is how to move towards genuine long-termism in such strategies where, in terms of transition, a responsibility is borne to future generations?
A strategy needs to be designed in a way that enables it to stay relevant and a distributed driver for change over the time period that it is meant to guide. It cannot become outdated in 4 to 5 years’ time when there has been a change of government with new priorities, in 10 years’ time when long term trends such as migration or rural displacement have changed the social and economic fabric of regions in a country, or in 20 years’ time when the average temperature rise of the planet has created both predictable and additional, unknowable consequences.
What are the strategic principles that can guide the long term planning needed for transition?
We have identified a set of principles that are crucial to enable a twenty-year transition:
1. Long-Termism22. A development strategy needs to be embedded in long-termism and build the social covenant necessary to scaffold large scale change. A development strategy needs to build cross-societal agreement about structural transition, as well as civic resilience against the inevitable disruptions in an age of long emergencies, such as loss of jobs as a result of large scale degenerative business models or automation.
2. Systems Approach23. The transition required is systemic. We know climate change is fundamentally a symptom of a structural problem in how we govern and how our relationships in the world are governed. In terms of transition policy, we need to be mindful of our relationship with the future, our relationship with the natural and material world, and our relationship with each other.
3. Embedding Adaptability24. It is impossible to accurately predict every required policy response to all future challenges. Flexibility needs to be at the heart of any National Development Strategy. We have proposed that a development strategy needs to be a living document (as opposed to a static document) that is able to adjust to real-time data, feedback and evaluation. It needs to be parametric in scope and engineered with contingent capabilities for an unknown world.
4. Capability Building25. We are living in a global age of long, interlinked emergencies, with interconnected challenges faced by all actors in society (government, academia, industry and civil society). The dynamic and linked nature of these emergencies will require governments to become enablers for society to work together, building horizontal strategies and collaborative capabilities.
Any development plan needs to be focused not only on one-to-one, action-reaction responses to strategic risks but build the capabilities of a nation (See Figure 3). Some design questions include:
How do we build a shared language and contextual framework of the future, i.e. a whole of society approach?
How do we bring more sections of society into political decision-making in an age of long emergencies (from how we decide to use our land and resources today to acting in a crisis tomorrow)?
How do we build capacity for an agile, democratic state when all our institutions are designed for linear, waterfall orchestration26?
How do we create and regulate markets for infinite games (for the purpose of maintaining) as opposed to finite games (for the purpose of gaining/winning)?
How do we build the imagination, invention and innovation capacity of the whole of society?
How do we build the distributed and decentralised sense making capacity of the whole of society?
How do we build new public accounting capacity for long-termism, which uses methods and practices informing such liabilities, and thereby invite appropriate investment theses?
5. Funding. Traditional public finance frameworks rely heavily on ex-ante cost-benefit analysis27, leaving little room for dynamic spillover analysis (i.e. a policy intervention can have ripple effects throughout the system, beyond what any direct cost-benefit analysis could estimate). Equally, these frameworks are stuck in annual budget cycles, struggling to unlock long-term patterns of behaviour and fundamental shortfalls in capital provision for the challenges ahead. Critical sectors such as education and health deliver outcomes with significant spillover effects, and these require sustained financing.
Key considerations for any National Development Strategy geared for transition are:
Building the fundamental financial innovation capacity to address the scale of challenge that we face such as enabling investment in and accounting for intangible asset creation;
Addressing the bias towards short-termism in financing. As ecological degradation and technological risks become a reality, we no longer have the luxury of time to treat the future as a distant outpost. How can we create new instruments, mechanisms and vehicles that can invest over longer time frames, maintain the flexibility to adapt to new information, invest in the institutional deep code experimentation necessary, invest vertically in portfolios spanning deep culture change to new institutional infrastructures to accelerate the transition?
Building the capacity for the decentralised capital formation necessary to address society’s complex nature of needs. We also need to simultaneously tackle the disbursement of central government funding to municipal authorities, an the issue that most nations demonstrate an over-reliance on;
Building the institutional capacity to code and recode - a 21st century form of capital for operating with uncertainty, inclusion and sustainability;
Building new capacities and protocols of decision making;
Enabling investment in and accounting for intangible asset creation (such as trust, mental health and social cohesion). The transition requires us to build new capabilities for resilience, adaptability, creativity, self-learning, self-development and self-renewal. Outcomes-based funding still struggles to capture the intangible benefits of programmes, and the conditions attached to funding needs to create the space for this.
Building new mechanisms of inclusive governance and transparency attached to funding to ensure integrity and accountability;
Building the transition pathways to gradually shift donor funding to more sustainable and longitude means of financing.
Background and Further Information
The Government of North Macedonia started the preparations for the development of 2021-2041 National Development Strategy in early 2021, supported by a project implemented by the UNDP in coordination with RCO North Macedonia. UK GGF funding was secured for this process. Within this project, UNDP North Macedonia has been working with Dark Matter Labs to develop a new statecraft for the development of national strategy to deal with transition, in line with the 2030 Agenda and national development and strategic priorities. For further information about this project, and wider issues of how to deal with issues of transition, please contact:
Resident Representative, UNDP North Macedonia
Co-Founder, Dark Matter Labs
UNDP has long been at the forefront of this practice from Dr Albert Winsemius first visiting Singapore as the leader of a UNDP mission in October 1960 and delivering a report that proved to be a roadmap for Singapore’s development.
Special thanks to Meggan Collins (Dark Matter Labs) & Hyojeong Lee (Dark Matter Labs) for support on visual communication in this blog.