Nobel Laureates Joseph Stiglitz and Michael Spence are leading the push for immediate steps to assist developing countries in recovering from the economic impact of the coronavirus pandemic.

Nobel Laureates Joseph Stiglitz and Michael Spence are trying to lead calls for immediate action to help developing countries recover from the economic impact of the coronavirus pandemic, including vaccine equity, debt relief, and enhanced fiscal support for cash-strapped countries.

The recommendations were summarized in a new preliminary report published for New Economic Thinking's Commission on Global Economic Transformation, by Stiglitz and Spence, on Thursday, on the anniversary of the global pandemic.

“In extraordinary times, extraordinary measures are required,” Spence wrote in the report. If bold action is not taken, developing countries will lose decades of development in the post-pandemic world.

The report encourages countries to suspend or transform intellectual property rights for COVID-19 vaccines, drugs, experiments, and goods to speed up vaccine development and get more people to vaccinate faster, even in wealthy countries, and keep ahead of mutations. Many people in developing countries will not be able to get vaccines for years unless effective measures are taken.

Richer countries have blocked an attempt to temporarily waive intellectual property rights for COVID-19 vaccines at World Trade Organization this week. Opponents of such policies, such as the US Chamber of Commerce, contend that they would hamper the production and delivery of vaccines for future pandemics. Big Pharma companies have benefited from government funding to study and produce COVID-19 vaccines. At times, federal funds covered almost half of their research and development expenses by taxpayer’s fund.

What’s been seen in the last few months is a very unlawful vaccine grab by wealthy governments, which have practically secured 85 percent of the global vaccine supply for 2021. Jayati Ghosh, a member of the Commission on Global Economic Transformation and an economics professor at the University of Massachusetts Amherst, told reporters. Some developed countries did multiple booking for vaccines, hereby depriving the developing countries vaccines maybe till 2023-24.

However, it also highlights the big differences in the amount of fiscal weaponry deployed between countries. According to January figures from the International Monetary Fund, developed countries are planning to spend $9,836 per person as compared to $17 per person for the least developed countries.

The report states a broad issuance of Special Drawing Rights, a reserve asset (artificial currency) created by the IMF from a basket of currencies, to help poorer countries gain more “fiscal space” to tackle COVID-19 and its consequences.

The US has protested a plan to build new SDRs at the onset of the global pandemic in March 2020. Newly appointed US Treasury Secretary Janet Yellen, on the other hand, has endorsed a new issuance.

According to the report, this will immediately increase developing countries' reserves, enabling them to participate in much-needed public spending with lesser questions about the effect on the external balance. It may also provide a means of repayment for countries with substantial external debt.

According to the study, 120 low-income countries owe $3.1 trillion in external debt. It is shackling developing countries by limiting their ability to invest, including those whose debt repayments were manageable before the pandemic.

This disaster pushed them over the edge, said Stiglitz. The depth of the global economic downturn and in some of their economies, their debts are beyond their ability to pay.

The study recommends not just a debt prohibition but also increasing the debts owed by developed countries.