For EAP (for example, Vietnam), the World Bank recently estimated additional financing needs for adaptation measures at 4.5-5.4 percent of GDP per year (World Bank 2022a). Small island states in EAP and LAC have particularly large investment needs to strengthen their resilience to the rising frequency of severe weather events and to address challenges from rising sea levels.

SAR and SSA are particularly vulnerable to climate-induced increases in poverty, disease, child mortality, and food prices. Half of SAR’s population live in areas expected to become climate hot spots and rely heavily on agriculture for employment (Amarnath et al. 2017; Hallegatte et al. 2016; Jafino et al. 2020; Mani et al. 2018). Fragile states in SSA are particularly at risk because their governments often lack the institutional capacity needed to respond effectively to climate challenges (Maino and Emrullahu 2022).

Rebuilding following conflict. The war following Russia’s invasion of Ukraine in early 2022 has dramatically expanded investment needs in ECA. Preliminary assessments for recovery and reconstruction needs in Ukraine across social, productive, and infrastructure sectors total $349 billion—more than 1.5 times the country’s 2021 GDP (World Bank 2022b). The conflict has also dramatically worsened near-term prospects for investment in Russia and Belarus, in part because of international sanctions. In MNA, there is continued need to replace private and public capital destroyed during wars in the Syrian Arab Republic, the Republic of Yemen, and Iraq. In Syria, the cost of rebuilding infrastructure damaged or destroyed was estimated in 2016 to be in the range of $100-200 billion—more than ten times the country’s 2015 GDP (Gobat and Kostial 2016). Iraq too faces large infrastructure investment needs, increased by conflict. It has been estimated that some $200 billion in 2018 prices would be needed to restore “hard” infrastructure to pre-ISIS levels in Iraq, almost equal to the country’s 2018 GDP (Gunter 2018). In the Republic of Yemen, recovery and reconstruction costs are estimated at $20-25 billion cumulatively over a five-year period, equivalent to 1.1-1.3 times the country’s 2020 GDP (World Bank 2020a).

Education and health investment. Beyond investment in infrastructure and physical capital, the COVID-19 pandemic has underscored the need to invest in health and education. This is especially urgent in SSA, as it remains well behind other regions in human capital development, but also in ECA, LAC, and MNA to ensure that education systems provide the skills needed for productive employment.

LAC spends more as a proportion of GDP on education and healthcare than any other EMDE region, but outcomes suggest that better value could be derived from these investments. Educational attainment is highly unequal across income levels, and the region on average attains only mediocre Programme for International Student Assessment (PISA) scores.

In ECA, despite above-average levels of education, learning outcomes, as measured by PISA scores, have deteriorated over the past decade in some economies. There have also been substantial learning losses from the pandemic. With regard to healthcare, since 2000