|
In a ten-year review of the Millennium Development Goals, the UNDP's annual development report card calls for swift and dramatic changes in international aid and trade policies, and better conflict resolution methods to fulfil the promises made by world leaders at the Millennium Summit five years ago
 The stark consequences -- which include millions of preventable deaths in the next decade -- of missing out on globally agreed to development targets form the backbone of the United Nations’ ‘2005 Human Development Report’. HDR 2005, whose theme is aid, trade and security in an unequal world, focuses on the social challenges of the next ten years through a series of projections, and highlights what the governments of rich nations can do to address these challenges.
The report calls for swift and dramatic changes in global aid, trade and security policies to fulfil the promises made by the international community when world leaders gathered to sign the Millennium Declaration in Johannesburg in 2000.
While overall poverty may have declined in the past decade, global inequalities have risen. Many countries will not be able to achieve most of the Millennium Development Goals by the 2015 deadline, warns this latest status report on global development, which uses data from the year 2003.
The UNDP report notes that in the 1990s:
- 130 million people lifted out of extreme poverty
- 2 million fewer child deaths a year
- 30 million more children in school
- 1.2 billion people gained access to clean water
However,
- 2.5 billion people still live on less than US$ 2 a day, and poverty reduction slowed in the 1990s
- 10 million preventable child deaths take place every year
- 115 million children are still out of school
- More than 1 billion people still have no access to safe water; 2.6 billion lack access to sanitation
Using the latest country-level data, the annual report, prepared by the United Nations Development Programme (UNDP) shows that human development is improving but at a rate that is too slow to ensure the delivery of the MDGs. HDR 2005 notes that a number of countries have actually slid backwards on many social indicators in the past ten years, after making commendable progress in the 1980s.
Among the key findings are:
• Fifty countries with a combined population of almost 900 million are falling backwards on at least one of the MDGs. Twenty-four of these countries are in sub-Saharan Africa.
• Another 65 countries, with a combined population of 1.2 billion, risk failing to meet at least one MDG until after 2040. In other words, they may miss the target by an entire generation.
• In 2015, based on current trends, there will be 827 million people living in extreme poverty (less than US 4 per day) -- 380 million more than if the internationally-agreed target to eradicate extreme poverty were reached. Another 1.7 billion people will be living in poverty, or on US$ 2 a day.
• On current trends, the goal to reduce the deaths of children under five years of age by two-thirds will be met in 2045, not 2015. That’s 30 years later. Over the next decade, the cumulative human cost of missing the target will translate to 41 million more child deaths.
•In 2015, 47 million children will still be out of school, 19 million of them in sub-Saharan Africa, thus missing the MDG of ensuring universal primary education.
• The goal of improving access to clean water and sanitation will also be missed -- instead of halving numbers of the 1 billion people who currently lack access to fresh drinking water, based on current trends, in 2015 there will still be 210 million people who do not have this basic necessity. More than 2 billion will still lack proper sanitation in 2015, mostly in sub-Saharan Africa.
Reversals in human development
HDR 2005 shows that 18 countries, with a total population of 460 million people, have moved backwards on the Human Development Index (HDI) -- a compendium of key indicators such as income, life expectancy at birth and education, etc, -- since 1990, when the first Human Development Report was published.
- Of the 18 countries, 12 are in sub-Saharan Africa. The other six countries are in the Commonwealth of Independent States, nations of the former Soviet Union.
- Southern Africa was hit hardest, in a downturn driven primarily by the HIV/AIDS pandemic. South Africa fell 35 places in the HDI in the 1990s; Zimbabwe, 23; and Botswana, 21.
- Tajikistan fell 21 places; Ukraine, 17; and the Russian Federation, 15. Declining life expectancy combined with economic disruption after the fall of the Soviet Union were the main factors. Russia’s life expectancy ranking plunged 48 places since 1990.
Progress on some fronts
- There has been progress in many other nations, however. Over the past 15 years, people in developing countries have on average become healthier, better educated and less impoverished -- and they are also far more likely to live in a multi-party democracy.
- Life expectancy in developing countries has increased by two years, while 2 million fewer child deaths occur annually.
- 30 million fewer children are out of school.
- More than 100 million people have escaped extreme poverty.
- Over the last decade, 1.2 billion people gained access to clean water, while literacy increased in developing countries from 70% to 76% in the past decade.
Extreme income inequality slows social progress
The ‘2005 Human Development Report’ contends that extreme inequality is putting the brakes on progress towards the MDGs and other human development goals. The report highlights the scale of the international wealth divide -- the poorest 40% of the world’s population, or the 2.5 billion people who live on less than US$ 2 a day, account for just 5% of all global income.
The report’s authors note that inequalities within countries also weaken the link between economic growth and poverty reduction, and that in very unequal societies, growth may have little impact on poverty. Economic growth alone will be insufficient to enable most countries to achieve the goal of halving poverty; far more attention should be paid to creating conditions under which the poor can increase their share of future national income gains.
“Anybody questioning whether income distribution matters might reflect on the fact that the poorest 10% of Brazilians are poorer than their counterparts in Vietnam, a country with a far lower average income,” said Kevin Watkins, lead author of the report.
HDR 2005 also highlights the interaction between inequalities based on income, rural-urban divisions, ethnicity and gender. In India, for instance, the death rate among under-fives is 50% higher for girls than it is for boys. Along with inequalities among the various Indian states, this gender gap is one of the major obstacles that needs to be overcome for India to convert economic success into human development success, the report notes.
“This Human Development Report presents us with a clear warning. We know that the MDGs are attainable, but if we continue with business as usual, the promise of the Millennium Declaration will be broken,” said the UNDP’s Kemal Derviş. “That would be a tragedy above all for the world’s poor -- but rich countries would not be immune to the consequences of failure. In an interdependent world our shared prosperity and collective security depend critically on success in the war against poverty.”
The authors emphasise that development is ultimately up to the governments of developing countries -- to tackle inequality, respect human rights, encourage investment and root out corruption. But the report focuses on the role richer countries must play to defeat poverty, in three vital areas -- aid, trade and security.
International aid: Increasing the amount, improving the delivery
While international aid is one of the most effective weapons in the war against poverty it is underused, inefficiently targeted and in urgent need of reform, says HDR 2005. Reforming the international aid system is a fundamental requirement for getting back on track for the MDGs.
HDR 2005 lists three conditions for effective aid:
- First, it has to be delivered in sufficient quantity to support human development take-off. Aid provides governments with a resource for making the multiple investments in health, education and economic infrastructure needed to break cycles of deprivation and support economic recovery, and the resource needs to be commensurate with the scale of the financing gap.
- Second, aid has to be delivered on a predictable, low transaction cost, value-for-money basis.
- Third, effective aid requires “country ownership”. Developing countries have primary responsibility for creating the conditions under which aid can yield optimal results. While there has been progress on increasing the quantity and improving the quality of aid, none of these conditions has yet been met.
During the 1990s, aid budgets were subject to deep cuts, with per capita assistance to sub-Saharan Africa falling by one-third. The Monterrey Conference on Financing for Development in 2001 marked the beginning of a recovery in aid. Since Monterrey, aid has increased by 4% a year in real terms, or $ 12 billion (in constant 2003 dollars).
Rich countries collectively now spend 0.25% of their gross national income (GNI) on aid -- lower than in 1990 but on an upward trend since 1997. The European Union’s commitment to reaching a 0.51% threshold by 2010 is especially encouraging.
However, even if projected increases are delivered in full, there remains a large aid shortfall for financing the MDGs. That shortfall will increase from $ 46 billion in 2006 to $ 52 billion in 2010. The financing gap is especially large for sub-Saharan Africa, where aid flows need to double over five years to meet the estimated costs of achieving the MDGs. Failure to close the financing gap through a step increase in aid will prevent governments from making investments in the social infrastructure to improve welfare and support economic recovery on the scale required to achieve the MDGs.
While rich countries publicly acknowledge the importance of aid, their actions so far have not matched their words. The G8 includes three countries -- Italy, the United States and Japan -- with the lowest shares of aid in GNI among the 22 countries on the Organisation for Economic Cooperation and Development’s development assistance committee. On a more positive note, the United States, the world’s largest aid donor, has increased aid by $ 8 billion since 2000 and is now the world’s largest donor to sub-Saharan Africa.
Since 1990, increased prosperity in rich countries has done little to enhance generosity: per capita income has increased by $ 6,070, while per capita aid has fallen by $ 1. Such figures suggest that the winners from globalisation have not prioritised help for the losers, even though they would gain from doing so, notes HDR 2005.
The chronic under-financing of aid reflects skewed priorities in public spending. While collective security depends increasingly on tackling the underlying causes of poverty and inequality, for every $ 1 that rich countries spend on aid they allocate another $ 10 to military budgets. Just the increase in military spending since 2000, if devoted to aid instead, would be sufficient to reach the long-standing UN target of spending 0.7% of GNI on aid.
Failure to look beyond military security to human security is reflected in under-investments in addressing some of the greatest threats to human life. Current spending on HIV/AIDS, a disease that claims 3 million lives a year, represents three day’s worth of military spending.
Tied aid remains one of the worst abuses of poverty-focused development assistance. By linking development assistance to the provision of supplies and services provided by the donor country, instead of allowing aid recipients to use the open market, aid tying reduces value for money. Many donors have been reducing tied aid, but the practice remains widely prevalent and under-reported. HDR 2005’s conservative estimate of the costs of tied aid for low income countries is US$ 5-$ 7 billion. Sub-Saharan Africa pays a “tied aid tax” of $ 1.6 billion.
In some areas the “new partnership” in aid established at the Monterrey conference still looks suspiciously like a repackaged version of the old partnership. There is a continuing imbalance in responsibilities and obligations. Aid recipients are required to set targets for achieving the MDGs, to meet budget targets that are monitored quarterly by the International Monetary Fund (IMF), to comply with a bewildering array of conditions set by donors and to deal with donor practices that raise transaction costs and reduce the value of aid.
The donors themselves do not set the targets but offer instead broad, non-binding commitments on aid quantity (most of which are subsequently ignored) and even broader and vaguer commitments to improving aid quality. Unlike aid recipients, donors can break commitments with impunity. In practice, the new partnership has been a one-way street. What is needed is a genuine new partnership in which donors as well as recipients act on commitments to deliver on the promise of the Millennium Declaration.
The key requirements for reforming development assistance include:
• Set a schedule for achieving the aid to GNI ratio of 0.7% by 2015 (and keep to it). Donors should set budget commitments at a minimum level of 0.5% for 2010 to bring the 2015 target within reach.
• Tackle unsustainable debt. The G8 summit in 2005 produced a major breakthrough on debt owed by heavily indebted poor countries (HIPCs). However, some problems remain, with a large number of low-income countries still facing acute problems in meeting their debt service obligations. Final closure of the debt crisis will require action to extend country coverage and to ensure that debt repayments are held to levels consistent with MDG financing.
• Provide predictable, multi-year financing through government programmes. Building on the principles set out in the Paris Declaration on Aid Effectiveness, donors should set more ambitious targets for providing stable aid flows, working through national systems and building capacity. By 2010, at least 90% of aid should be disbursed according to agreed schedules through annual or multi-year frameworks.
• Streamline conditionality. Aid conditionality should focus on financial responsibility and transparency of reporting through national systems, with less emphasis on wide-ranging macro-economic targets and a stronger commitment to building institutions and national capacity.
• End tied aid. There is a simple method for tackling the waste of money associated with tied aid. Aim to stop it in 2006.
International trade: The perverse taxation of the poor
International trade too has the potential to be a powerful catalyst for human development. However, the potential for social progress inherent in trade is diminished by a combination of unfair rules and structural inequalities within and between countries. The overall effects of agricultural protectionist measures and subsidies in wealthy countries, the report estimates, cost developing countries close to $ 72 billion a year --an amount equivalent to all official aid flows in 2003.
International trade has been one of the most powerful motors driving globalisation. Trade patterns have changed. There has been a sustained increase in the share of developing countries in world manufacturing exports -- and some countries are closing the technology gap. However, structural inequalities have persisted, and in some cases widened, says HDR 2005.
Sub-Saharan Africa is one example of the potential for marginalisation because of globalisation and international trade -- today, the region, with 689 million people, accounts for a smaller share of world exports than Belgium, with 10 million people. If sub-Saharan Africa enjoyed the same share of world exports as in 1980, the foreign exchange gain would represent about eight times the aid it received in 2003. Much of Latin America is also falling behind.
From a human development perspective, trade is a means to development, not an end in itself. Indicators of export growth, ratios of trade to GNI and import liberalisation are not proxies for human development. Unfortunately, this is increasingly how they are treated.
Participation in trade offers real opportunities for raising living standards. But some of the greatest models of openness and export growth -- Mexico and Guatemala, for example -- have been less successful in accelerating human development. Export success has not always enhanced human welfare on a broad front. The evidence suggests that more attention needs to be paid to the terms on which countries integrate into world markets.
In the last round of world trade negotiations, rich countries promised to cut agricultural subsidies. Since then, they have increased them. They now spend just over $ 1 billion a year on aid for agriculture in poor countries, and just under $ 1 billion a day subsidising agricultural overproduction at home!
To make matters worse, rich countries’ subsidies are destroying the markets on which smallholders in poor countries depend, driving down the prices they receive and denying them a fair share of the benefits of world trade. Cotton farmers in Burkina Faso are competing against US cotton producers who receive more than $ 4 billion a year in subsidies -- a sum that exceeds the total national income of Burkina Faso. Meanwhile, the European Union’s extravagant Common Agricultural Policy (CAP) wreaks havoc in global sugar markets, while denying developing countries access to European markets.
Rich country consumers and taxpayers are locked into financing policies that are destroying livelihoods in some of the world’s poorest countries. In some areas, World Trade Organisation (WTO) rules threaten to systematically reinforce the disadvantages faced by developing countries and to further skew the benefits of global integration towards developed countries. An example is the set of rules limiting the scope for poor countries to develop the active industrial and technology policies needed to raise productivity and succeed in world markets. The current WTO regime outlaws many of the policies that helped East Asian countries make rapid advances.
WTO rules on intellectual property present a twin threat -- they raise the cost of technology transfer and, potentially, increase the prices of medicines, posing risks for the public health of the poor. In the WTO negotiations on services, rich countries have sought to create investment opportunities for companies in banking and insurance while limiting opportunities for poor countries to export in an area of obvious advantage: temporary transfers of labour. It is estimated that a small increase in flows of skilled and unskilled labour could generate more than $ 150 billion annually -- a far greater gain than from liberalisation in other areas.
Even the best trade rules will not remove some of the underlying causes of inequality in world trade, however. Persistent problems such as weak infrastructure and limited supply capacity need to be addressed. Rich countries have developed a “capacity-building” aid agenda. Unfortunately, there is an unhealthy concentration on building capacity in areas that rich countries consider strategically useful.
Some longstanding problems do not even figure on the international trade agenda. The deep crisis in commodity markets, especially coffee, is an example. In Ethiopia, falling prices since 1998 have reduced the average annual income of coffee-producing households by about $ 200. The emergence of new trading structures poses new threats to more equitable trade in agriculture. Supermarket chains have become gatekeepers to agricultural markets in rich countries, linking producers in developing countries to consumers in rich countries. But smallholder farmers are excluded by the purchasing practices of some supermarkets, weakening the links between trade and human development.
The upcoming Hong Kong Ministerial Meeting of the WTO, in December 2005, is an opportunity to start the exercise of strengthening the link between human development and trade reform.
Among HDR 2005’s key benchmarks for assessing the WTO talks:
• Deep cuts in rich country government support for agriculture and a prohibition on export subsidies. Agricultural support, as measured by the producer support estimates of the OECD, should be cut to no more than 5%-10% of the value of production, with an immediate prohibition on direct and indirect export subsidies.
• Deep cuts in barriers to developing country exports. Rich countries should set their maximum tariffs on imports from developing countries at no more than twice the level of their average tariffs, or 5%-6%.
• Compensation for countries losing preferences. While rich country preferences for some developing country imports deliver limited benefits in the aggregate, their withdrawal has the potential to cause high levels of unemployment and balance of payments shocks in particular cases. A fund should be created to reduce the adjustment costs facing vulnerable countries.
• Protection of the policy space for human development. Multilateral rules should not impose obligations that are inconsistent with national poverty reduction strategies. These strategies should incorporate best international practices adapted for local conditions and shaped though democratic and participative political processes. In particular, the right of developing countries to protect agricultural producers against unfair competition from exports that are subsidised in rich countries should be respected in WTO rules.
• A commitment to avoid “WTO plus” arrangements in regional trade agreements. Some regional trade agreements impose obligations that go beyond WTO rules, especially in areas such as investment and intellectual property. It is important that these agreements not override national policies developed in the context of poverty reduction strategies.
• Re-focusing of services negotiations on temporary movements of labour. In the context of a development round, less emphasis should be placed on rapidly liberalising financial sectors and more on creating rules allowing workers from developing countries improved access to labour markets in rich countries.
Violence, insecurity weakens progress towards human development
HDR 2005 also examines armed conflict as a critical development problem that must be addressed together with aid and trade reforms. For many people in rich countries, the concept of global insecurity is linked to threats posed by terrorism and organised crime. While these threats are real, the absence of freedom from fear is most marked in developing countries. The interaction between poverty and violent conflict in many developing countries is destroying lives on an enormous scale -- and hampering progress towards the MDGs.
Failure to build human security by ending this interaction will have global consequences. In an interdependent world, the threats posed by violent conflict do not stop at national borders, however heavily defended they may be. Development in poor countries is the front line in the battle for global peace and collective security.
The problem with the current battle plan is an overdeveloped military strategy and an underdeveloped strategy for human security. Most of the victims in today’s wars are not soldiers but innocent civilians.
There are fewer conflicts in the world today than in 1990, but the share of those conflicts occurring in poor countries has increased. The human development costs of violent conflict are not sufficiently appreciated. In the Democratic Republic of the Congo, deaths attributable directly or indirectly to conflict exceed the losses sustained by Britain in the First World War and Second World War combined. In the Darfur region of Sudan, nearly 2 million people have been displaced because of conflict. The immediate victims of these and other conflicts periodically merit a mention in the international media.
But the long-run human development impact of violent conflict is more hidden. Conflict undermines nutrition and public health, destroys education systems, devastates livelihoods and retards prospects for economic growth. The great majority of countries in the ‘low’ human development category --22 of 32, according to the report -- have experienced violent conflict since 1990.
Countries that have experienced violent conflict are heavily over-represented among the group of countries that are off track for the MDGs in the HDR 2005 projections for 2015. Of the 52 countries that are reversing or stagnating in their attempts to reduce child mortality, 30 have experienced conflict since 1990.
One of the most effective ways in which rich countries could address the threats to human development posed by violent conflict is by supporting regional capacity. The crisis in Darfur could have been diminished, if not averted, by the presence of a sufficiently large and well equipped African Union peacekeeping force -- especially if that force had a strong mandate to protect civilians. During the peak of the crisis, there were fewer than 300 Rwandan and Nigerian troops monitoring what was happening to 1.5 million Darfuris in an area the size of France. Building regional capacity remains a pressing requirement for human security.
If prevention is the most cost-effective route to addressing the threats posed by violent conflict, seizing opportunities for reconstruction runs a close second. Peace settlements are often a prelude to renewed violence -- half of all countries coming out of violent conflict revert to war within five years. Breaking this cycle requires a political and financial commitment to provide security, oversee reconstruction and create conditions for the development of competitive markets and private sector investment over the long haul.
Among the key requirements for reducing the threat of global conflict are:
• A new deal on aid. Starving conflict-prone or post-conflict states of aid is unjustified. It is bad for human security in the countries concerned -- and it is bad for global security. As part of the wider requirement to achieve the aid target of 0.7% of GNI, donors should commit themselves to a greater aid effort, with greater predictability of aid through long-term financing commitments. Donors should be more transparent about the conditions for aid allocations and about their reasons for scaling down investments in conflict-prone countries.
• Greater transparency in resource management. As parties to the natural resource markets that help finance conflict and, in some cases, undermine accountable government, transnational companies involved in mineral exporting should increase transparency. The international legal framework proposed by the UK-sponsored Commission for Africa to allow for the investigation of corrupt practices by transnational companies overseas -- as already practised under US law -- should be developed as a priority.
• Cutting the flow of small arms. The 2006 Small Arms Review Conference provides an opportunity to agree on a comprehensive arms trade treaty to regulate markets and curtail supplies to areas of violent conflict.
• Building regional capacity. For sub-Saharan Africa an immediate priority is the development, through financial, technical and logistical support, of a fully functioning African Union standby peacekeeping force.
• Building international coherence. The UN secretary-general’s report calls for the creation of an international peace-building commission to provide a strategic framework for an integrated approach to collective security. As part of that approach, a global fund should be created to finance on a long-term and predictable basis immediate post-conflict assistance and the transition to long-term recovery.
InfoChange News and Features, September 2005
|
