Rich nations urged to keep pledges to meet Millennium Goals

The developed world must meet its financing commitments if poor countries are to see a rise in living standards in accordance with a set of internationally endorsed development targets, the UNDP’s Human Development Report asserts.

by Kanaga Raja

GENEVA: Unless rich countries keep their pledges to deliver on financing for development to the developing countries, the Millennium Development Goals (MDG) will not be met, the United Nations Development Programme’s (UNDP) Human Development Report 2003 (HDR-2003) warns.

The report says that despite the promises by the wealthy countries to eradicate extreme poverty, developing countries still need more aid, fairer terms of trade and meaningful debt relief.

The HDR found that 59 priority countries, 38 of them in sub-Saharan Africa, would not meet the MDG unless urgent action is taken. The report finds that 21 countries experienced an unprecedented decline in their rankings on the Human Development Index (HDI), a summary measure of ranking based on healthy long life, education and decent standard of living.

The 147 world leaders at the UN’s Millennium Summit in 2000 adopted a set of eight specific cross-cutting goals, the Millennium Development Goals, and these were reaffirmed at the Monterrey Conference on Financing for Development in 2002.

The first seven goals are specific commitments by developing countries to reverse the spread of poverty and disease, among others, by 2015. They are backed by an action plan with quantifiable targets to combat poverty, hunger, disease, illiteracy, environmental degradation and discrimination against women.

The eighth goal is aimed at rich countries and their commitment to respond to developing countries’ political and economic reforms with increased economic assistance, lowered import barriers and the reduction or elimination of unsustainable debts.

The HDR complains that these commitments are not being met by the rich countries and says that unless these pledges to deliver financing for development are kept, the MDG will not be achieved.

The challenges for developing countries to achieve the first seven goals are already great. More than a billion people still struggle on less than $1 a day. Globally, one child out of five does not complete primary school. Nearly 800 million, or 15% of the world’s population, suffer from chronic hunger.

The pledges by world leaders to lift hundreds of millions out of poverty can be met only if the poor nations pursue wide-ranging reforms and the rich respond with improved trade terms and aid.

Asked why the HDR has hopes that the MDG can be realized when virtually every other agency warns that the goals cannot be met if present trends continue, the lead author, Sakiko Fukuda-Parr, said that the point of a report like the HDR is to provide information, diagnosis and tools so that those who are arguing and acting will actually change their policies.

Development crisis

The HDR identifies 59 priority countries - 31 “top priority” and 28 “high priority” - where unless urgent action is taken, the MDG will not be met. 38 of these countries are in sub-Saharan Africa.

In the 1990s, these countries faced many crises. In 19 of these countries, more than one person in four is going hungry and in 21 the hunger rate increased; in 14, the below-five mortality rates increased; in nine countries, more than one person in four does not have access to safe water; and in 15 countries, more than one person in four does not have access to adequate sanitation. In 12 of the priority countries, primary-school enrolments are shrinking and in 34 countries, life expectancy has fallen. Such reversals in survival were previously rare, the report noted.

In the 1990s, average per capita income growth was less than 3% in 125 developing and transition countries, and in 54 of them average per capita income fell. Of the 54 that became poorer, 20 are from sub-Saharan Africa, 17 from Eastern Europe and the CIS, six from Latin America and the Caribbean, six from East Asia and Pacific and five from the Arab states.

A further sign of the development crisis has been the decline of the HDI in 21 countries, most of them from Central and Eastern Europe and the CIS. The others are in Africa: Botswana, Burundi, Cameroon, Lesotho, Kenya, Tanzania, the Democratic Republic of Congo, Congo, Zambia, South Africa and Zimbabwe.

This, said Fukuda-Parr, is unprecedented and denotes “a very, very dramatic development crisis.” In the previous decades, virtually no country had a decline in the HDI.

The HDI ranks 175 countries for 2001, the most recent year of available data. Almost all of the 34 “low human development” countries at the bottom of the index are in sub-Saharan Africa. In that region, the devastation wrought by the HIV/AIDS pandemic is mostly responsible for the declines in the HDI.

At the current pace, sub-Saharan Africa would not reach the goals for poverty until 2147, for child mortality until 2165, and for universal primary education until 2129. Half the population lives on less than $1 a day and the poverty rate rose in the 1990s, adding 74 million poor people to the total. Aid per capita also fell by one-third in the 1990s.

Sub-Saharan Africa is the only region that will not meet any of the MDG by 2015 if current trends continue, the report stresses.

The HDR says that these are not the sort of obstacles that sub-Saharan Africa can overcome merely through prudent macroeconomic policy, better governance and mobilization of domestic resources. The region needs a fairer trade environment, meaningful debt relief and a large inflow of aid per capita. Faster and deeper debt relief than the currently offered Heavily Indebted Poor Countries (HIPC) initiative is also needed.

The HDR points out that between 2001 and 2002, farmers from the US, EU and China received cotton subsidies worth an estimated $4.9 billion. These subsidies cost Benin, Burkina Faso, Chad, Mali and Togo $250 million a year in lost export earnings.

In the past decade, East and South Asia made huge strides towards meeting the MDG but there are glaring inequalities in how the benefits of development are distributed. East Asia will meet the goals on hunger and poverty well before the 2015 deadline. China has lifted 150 million people out of poverty. South Asia’s progress on water and sanitation means that this goal is within reach by 2015.

However, overall progress has been driven by strides in specific areas, while other major parts of these regions are being left behind. In China for instance, the coastal regions are far more prosperous than the inland regions.

The development challenge is still immense in this region. South Asia is home to the largest number of poor people in the world and one in three survive on less than $1 a day. In India alone, there are 50 million children out of school. South Asia comes last or second from last in six of the MDG that apply to developing countries.

For Latin America and the Caribbean, the 1990s was a decade of stagnation. Slow growth has undermined efforts of the region to meet many of the MDG. However, it is the only region that will meet the education goal if current trends persist.

Wealth in the region is very unevenly distributed. In Brazil, the richest 10% have 70 times the income of the poorest 10%. In Mexico, inequality has worsened, with the richest 10% garnering 35 times more than the poorest 10%. This region does not need a massive injection of aid but good development policies and the North opening their markets to the region, the report advises.

Action plan

The report advocates a new plan of action for both the developing and developed countries, the Millennium Development Compact, to help achieve the MDG. The developing countries should adopt pro-poor policies that reinforce each other and are targeted to the goals, while developed countries should back these reforms with more resources and trade opportunities. Both the rich and poor nations should put the MDG at the centre of national and global decision-making, says the HDR.

While all poor countries should formally analyze whether they are on target to meet the MDG, the rich countries too should be subject to the same scrutiny and should monitor their progress in delivering on their commitments and prepare reports on their progress, says the HDR.

To achieve sustainable growth, countries facing the steepest development challenges must attain basic thresholds in the key areas of governance, health, education, infrastructure and access to markets. If they fall below the threshold in any of these areas, then they can fall into a “poverty trap”.

Policy responses to help countries break out of the “poverty trap” include, among others, investing early and ambitiously in basic health and education; increasing productivity of small farmers in unfavourable environments; improving basic infrastructure; developing an industrial development policy; promoting democratic governance and human rights; and ensuring sound environmental sustainability and urban management.

While the poorest countries need significant external resources to achieve substantial levels of human development, the poor countries also need to mobilize domestic resources, strengthen policies and institutions and combat corruption and improve governance, says the HDR.

Policy changes are also required in the developed world, on aid, debt, trade and technology transfers.

   *   More and effective aid is needed. The long decline in official aid flows was halted last year and aid rose to $57 billion (from $52.3 billion in 2001). Yet this falls far short of the estimated need of about $100 billion a year. Of the 49 least developed countries (LDCs), 31 receive less aid today (8.5% of their average GDP) than in 1990 (12.9%).

   *  There need to be new approaches to debt relief. By early 2003, the HIPC initiative had benefited 26 countries. Eight countries have reached their completion points and another 18 their decision points. Yet, the pace of relief is neither fast nor deep enough, the HDR notes. According to the original HIPC initiative schedule, 19 countries should have reached completion point.

   *  An expansion of market access to help countries diversify and expand trade is needed. Trade policies in rich countries remain highly discriminatory against developing-country exports, especially of agriculture and textiles, the HDR says. Average OECD tariffs on manufactured goods from developing countries are more than four times those on goods from other OECD countries. The agricultural subsidies of the rich countries are more than $300 billion a year - nearly six times official development assistance (ODA).

The report also warns that a timeframe for the eventual elimination of agricultural export subsidies is essential if the Doha Declaration is to have any meaning. In other areas, the rich countries should also implement provisions friendly to public health under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and exempt basic social services from progressive liberalization under the General Agreement on Trade in Services (GATS).

The HDR notes that while the 2001 Doha Ministerial meeting of the World Trade Organization (WTO) resolved to agree by December 2002 on how countries without adequate manufacturing capacities could access medicines, the deadline has come and gone, with no resolution in sight.

The report calls on the developed countries to set concrete targets and deadlines on, among others, increasing ODA to fill financing gaps estimated to be at least $50 billion; removing tariffs and quotas on agricultural and textile and clothing products from developing countries; removing subsidies on agricultural exports from developing countries; financing deeper debt reduction for HIPCs that reached completion points; agreeing on what countries without sufficient manufacturing capacity can do to protect public health under the TRIPS Agreement; and introducing protection and remuneration of traditional knowledge in the TRIPS Agreement.

The HDR also urges the international financial institutions, including the World Bank and the International Monetary Fund, to put the MDG at the centre of their analytical, advisory and financing efforts for every developing country. The Poverty Reduction Strategy Papers (PRSPs) do not adequately support the MDG, the HDR said. When preparing PRSPs, governments are advised to be realistic, and as a result, PRSPs fall short of identifying the resources required to meet the goals.

Asked about the involvement of the IMF and the World Bank and the policies they advocate to developing countries, Fukuda-Parr said that the HDR did not go into the actions of specific institutions, but she stressed the role of the Bretton Woods institutions in making the goals work. What the IMF and World Bank should be asking is whether the macroeconomic policies they are promoting are on target to achieve the MDG, she said.

Fukuda-Parr also emphasized public investments and intervention. Before getting economic growth going, one needs to invest pretty heavily in education, health, infrastructure and agriculture technology to improve productivity. These are basically public interventions and are necessary to set the preconditions for economic growth, she added. (SUNS5380)