Friday, April 25, 2014
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Maximizing Minimal Development Goals

PARIS – With only one-sixth of the European Financial Stability Facility’s €780 billion ($958 billion) in guarantee commitments, the lives of the world’s poorest people could be significantly improved. While the international community is not ready for such a leap, it is clear that by committing some resources, extreme poverty can be addressed effectively worldwide.

According to the recently published United Nations’ 2012 Millennium Development Report, achieving the Millennium Development Goals (MDGs) – the global agenda set in 2000 to improve the living standards of the world’s poorest by 2015 – will be a challenge, but is within reach. This should not come as a surprise, because the MDGs – which critics have called “Minimal Development Goals”– were deliberately based on global trends in order to make them accessible.

Indeed, despite the global financial crisis, which caused many to doubt whether the world would reach the MDG targets, the goals remain attainable – but only with the right mix of sound policies and additional financial resources. A new study by the OECD Development Center concludes that pro-poor policy reforms are the right approach, and estimates that an additional $120 billion annually would suffice to achieve development targets.

Many of the best and brightest in the development field are busily plotting the post-2015 framework that will replace the current MDG mandate. But efforts to support the world’s poorest must not be put on hold while the international community awaits new marching orders. Long-term success requires that current financing and policy gaps are confronted without delay.

Emerging and advanced economies must pursue more inclusive and redistributive growth models, while developing countries must improve the reach and quality of public services. Better policies and better coordination of spending across sectors are essential to getting more value for public money. For example, a new road or railway linking a mine to a harbor should also address food shortages and improve access to health services and education.

Likewise, countries should take a broader look at how policies damage or mutually reinforce each other, especially in deciding which policies should be implemented and when – what technocrats call “policy coherence” and “policy sequencing” – to reduce poverty and support development.

Fortunately, much progress has been made already. According to the World Bank, the MDG target of cutting the rate of extreme poverty (defined as income below $1.25 per day) to half its 1990 level by 2015 was achieved five years ahead of schedule. This achievement owes a lot to growth in East Asia, especially China.

In fact, outside China, there has been limited progress on poverty reduction, with some 35 countries expected to fall short of the MDG target, and more than one billion people still living in extreme poverty worldwide. Even those who have moved above the threshold of extreme poverty remain poor and vulnerable: the number of people living on less than $2 per day – the median poverty line for developing countries – has decreased only negligibly, from 2.5 to 2.47 billion.

But the UN’s encouraging report should not be discounted. Rather, global efforts should be ratcheted up to cross the finish line. According to the OECD study, countries that have yet to achieve poverty-reduction targets would need less than $5 billion annually to set up needed welfare programs. Moreover, given that school attendance has increased markedly over the past decade, less than $9 billion annually would suffice to achieve universal primary education by 2015.

Similarly, while there has been some impressive progress on health goals, an estimated $60 billion is still needed annually to cut mortality among children under five by two-thirds, reduce the maternal mortality rate by three-quarters, and lower the incidence of AIDS, malaria, and other major diseases. Progress is also needed on employment, nutrition, gender equality, the environment (including access to sanitation), and the establishment of global partnerships for development.

In sum, the MDGs can be met, but only with feasible efforts by stakeholders. Unfortunately, after increasing by more than 63% during the last decade, official development assistance fell by nearly 3% in 2011. And pressure on public budgets, owing to global financial instability, means that this trend is likely to continue.

But reducing development assistance is a shortsighted approach. Development cooperation is an investment in our common future, and has often played a counter-cyclical role for developing countries. Indeed, properly implemented development assistance can catalyze additional funding and improve access to other resources.

Considering the scale of resources needed, all available and potential funding sources should be pursued. Last November’s Fourth High-Level Forum on Aid Effectiveness in Busan, Korea, confirmed that diverse sources of financing are important: the public and private sectors, nonprofit and commercial organizations, traditional donors, emerging economies, and developing countries.

In addition to securing funding, developing countries must strengthen their tax-collection systems and focus their policies and public expenditure on poverty reduction. For example, the redistributive impact of taxation and the quality of public spending in Asia, Africa, and Latin America can be significantly improved.

Beyond 2015, improving the lives of the world’s poorest and most vulnerable people will require renewed cooperation and coordination, both within and between countries and sectors. To this end, any framework that succeeds the MDGs must result from an inclusive consultation process, and space should be made for sharing knowledge and experiences in order to increase the effectiveness of needed public policies.

Successful reform demands that all countries review their development strategies and policies, especially when it comes to managing and coordinating public spending across sectors within a sustainable budget. Only with increased coordination, cooperation, and adaptation will the world’s poorest and most vulnerable people have the opportunity to build a better life.

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