1 Evolution of the MDGs: Progress and Problems Terry McKinley Director, Centre for Development Policy & Research School of Oriental and African Studies.

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Evolution of the MDGs: Evolution of the MDGs: Progress and ProblemsProgress and Problems

Terry McKinleyTerry McKinleyDirector, Centre for Development Policy & ResearchDirector, Centre for Development Policy & Research

School of Oriental and African StudiesSchool of Oriental and African StudiesPresentation at the LIDC Conference, Presentation at the LIDC Conference,

‘‘No Goals at Half-Time: What Next for the MDGs?’, No Goals at Half-Time: What Next for the MDGs?’, 5 November 20085 November 2008

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Outline of PresentationOutline of Presentation

1.1. A Short History of the MDGs and their A Short History of the MDGs and their RationaleRationale

2.2. Progress on Goal 8, the Development Progress on Goal 8, the Development Partnership: Partnership: A. ODAA. ODA

B. Debt Relief B. Debt Relief

C. Trade and DevelopmentC. Trade and Development

3.3. Current Challenges in light of the Financial Current Challenges in light of the Financial Crisis and Projected Economic Downturn Crisis and Projected Economic Downturn

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Some MDG BackgroundSome MDG Background

In September 2000, representatives of 189 In September 2000, representatives of 189 countries (and 147 heads of state) met in New York countries (and 147 heads of state) met in New York at the U.N. Millennium Summitat the U.N. Millennium Summit

The The agreed binding outcomeagreed binding outcome of the Summit was the of the Summit was the Millennium DeclarationMillennium Declaration

A U.N. working group later supplemented the A U.N. working group later supplemented the Declaration by devising a set of 8 Goals, which Declaration by devising a set of 8 Goals, which were eventually formulated as 21 Targets, which were eventually formulated as 21 Targets, which were measured by 60 Indicators were measured by 60 Indicators

Although widely accepted and endorsed, the Although widely accepted and endorsed, the targets are targets are non-bindingnon-binding on UN member states on UN member states

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Some MDG BackgroundSome MDG Background

The MDGs are, in a sense, a Global Social The MDGs are, in a sense, a Global Social Compact, based on mutual accountabilityCompact, based on mutual accountabilityDeveloping countries are held accountable for Developing countries are held accountable for outcomes, i.e., achievement of targetsoutcomes, i.e., achievement of targets

So rich countries are motivated to provide more supportSo rich countries are motivated to provide more support

Rich countries are held accountable for Rich countries are held accountable for providing greater support, i.e., scaling up ODA, providing greater support, i.e., scaling up ODA, providing more debt relief and allowing greater providing more debt relief and allowing greater access to their marketsaccess to their markets

So developing countries are motivated to adopt MDG So developing countries are motivated to adopt MDG development strategiesdevelopment strategies

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Advantages and DisadvantagesAdvantages and Disadvantages

The MDG frameworkThe MDG framework adopts a broad Human adopts a broad Human Development approach:Development approach: hunger,hunger, health, health, education, gender equity, environmental education, gender equity, environmental sustainability sustainability It accords a greater role to the public sector and public It accords a greater role to the public sector and public investment in particular (which had been lacking)investment in particular (which had been lacking)But ODA is emphasized as a part of a ‘Big Push’, But ODA is emphasized as a part of a ‘Big Push’, money-centric strategy of developmentmoney-centric strategy of developmentSome advocates regard global goals and targets as Some advocates regard global goals and targets as uniformly nationally applicable (fostering ambition)uniformly nationally applicable (fostering ambition)A tendency to adopt uniform interventions across A tendency to adopt uniform interventions across countries and stress ‘quick wins’ (e.g., bed nets)countries and stress ‘quick wins’ (e.g., bed nets)

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Some Recent HistorySome Recent History

The U.N. Millennium Project, led by Jeffrey Sachs, The U.N. Millennium Project, led by Jeffrey Sachs, has been instrumental in the MDG campaign (the has been instrumental in the MDG campaign (the Project is now part of UNDP)Project is now part of UNDP)It presented its report, It presented its report, Investing in DevelopmentInvesting in Development, as , as an input into the 2005 U.N. World Summitan input into the 2005 U.N. World Summit

Countries agreed to adopt ‘comprehensive national Countries agreed to adopt ‘comprehensive national development strategies’ to achieve the MDGs development strategies’ to achieve the MDGs (superseding World Bank PRSPs)(superseding World Bank PRSPs)

The dominant priority was to conduct a comprehensive The dominant priority was to conduct a comprehensive Needs AssessmentNeeds Assessment or costing exercise (determining the or costing exercise (determining the scale of additional resources needed to achieve the scale of additional resources needed to achieve the MDG targets across each sector)MDG targets across each sector)

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Some Recent HistorySome Recent History

The Costing exercises have tended to The Costing exercises have tended to dominate early activities at the national leveldominate early activities at the national levelProduction of an aggregate ‘development Production of an aggregate ‘development bill’ to attain the MDGs, which external bill’ to attain the MDGs, which external donors are expected to endorse.donors are expected to endorse.

A tendency to underplay the importance of domestic A tendency to underplay the importance of domestic resource mobilisation (e.g., taxation, savings)resource mobilisation (e.g., taxation, savings)

Many low-income countries are assumed to be stuck Many low-income countries are assumed to be stuck in a ‘poverty trap’ (thus, the need for an external ‘Big in a ‘poverty trap’ (thus, the need for an external ‘Big Push’.Push’.

Little real discussion of macroeconomic and Little real discussion of macroeconomic and structural adjustment policies or posing of economic structural adjustment policies or posing of economic policy optionspolicy options

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Are the MDGs Too Ambitious?Are the MDGs Too Ambitious?

At the At the global levelglobal level, they were , they were notnot set to be set to be exceedingly ambitiousexceedingly ambitious

1)1) They cover a long 25-year period (from 1990 to They cover a long 25-year period (from 1990 to 2015, not from 2000)2015, not from 2000)

2)2) Targets were set to be realistic, since they were Targets were set to be realistic, since they were based on trends prior to 1990based on trends prior to 1990

But as 2015 draws closer and progress in the 1990s But as 2015 draws closer and progress in the 1990s appears to have been too slow, targets do appear appears to have been too slow, targets do appear to be increasingly ambitiousto be increasingly ambitious

A sharp acceleration of progress is needed but a A sharp acceleration of progress is needed but a global economic downturn appears imminentglobal economic downturn appears imminent

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Progress on Goal #8:Progress on Goal #8:The Global Partnership for DevelopmentThe Global Partnership for Development

Few targets were set for Goal #8 Few targets were set for Goal #8 (because they (because they would have obligated rich countries):would have obligated rich countries):

General Injunctions:General Injunctions: Give more generous ODA for countries Give more generous ODA for countries

committed to poverty reduction: committed to poverty reduction: The ODA The ODA benchmark of 0.7% of rich-country GNI has remained benchmark of 0.7% of rich-country GNI has remained prominent though not explicitly a targetprominent though not explicitly a target

Deal comprehensively with the debt problems Deal comprehensively with the debt problems of developing countriesof developing countries

Develop an open, non-discriminatory trading Develop an open, non-discriminatory trading and financial systemand financial system

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Official Development AssistanceOfficial Development Assistance

Goal of 0.7% of GNI: Goal of 0.7% of GNI: only Denmark, only Denmark, Luxembourg, the Netherlands, Norway & SwedenLuxembourg, the Netherlands, Norway & Sweden

The weighted average of the 22 member The weighted average of the 22 member countries of the DAC of the OECD: 0.28%countries of the DAC of the OECD: 0.28%

Only Belgium, Ireland and the UK give at Only Belgium, Ireland and the UK give at least 0.15-20% of their GNI to Least least 0.15-20% of their GNI to Least Developed CountriesDeveloped Countries

Aid flows climbed steadily after 1997, a low Aid flows climbed steadily after 1997, a low point, until 2005, but dropped in 2006 & 2007point, until 2005, but dropped in 2006 & 2007

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Recent Declines in ODARecent Declines in ODA

Total ODA Trends

$107.1 $104.4 $103.7

$130.0

0

20

40

60

80

100

120

140

2005 2006 2007 2010

US

$ i

n B

illi

on

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Commitments on Raising ODA Commitments on Raising ODA

The 2002 World Summit on Sustainable The 2002 World Summit on Sustainable Development and the International Conference on Development and the International Conference on Financing for Development called for ‘concrete Financing for Development called for ‘concrete efforts towards the target of 0.7% of GNI’efforts towards the target of 0.7% of GNI’

G8 leaders at the 2005 Gleneagles Summit G8 leaders at the 2005 Gleneagles Summit committed to 1) providing an extra $50 billion in ODA committed to 1) providing an extra $50 billion in ODA by 2010 (compared to 2004) and 2) doubling ODA to by 2010 (compared to 2004) and 2) doubling ODA to Africa from $25 billion to $50 billion.Africa from $25 billion to $50 billion.

US net ODA in real terms fell by almost 10% in 2007, Japan net US net ODA in real terms fell by almost 10% in 2007, Japan net ODA fell by about 30% and EU-15 net ODA fell by about 6% ODA fell by about 30% and EU-15 net ODA fell by about 6%

In 2005-2006 Net ODA remained higher because of debt-relief In 2005-2006 Net ODA remained higher because of debt-relief initiatives for Iraq and Nigeria.initiatives for Iraq and Nigeria.

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Commitments on Raising ODACommitments on Raising ODA

The combined pledges of ODA implied an The combined pledges of ODA implied an increase from $80 billion in 2004 to $130 increase from $80 billion in 2004 to $130 billion in 2010.billion in 2010.But during 2004-2007 net ODA from DAC members But during 2004-2007 net ODA from DAC members increased annually by half of that amount.increased annually by half of that amount.So DAC net ODA would have to increase by at least So DAC net ODA would have to increase by at least $13 billion a year until 2010 to compensate for early $13 billion a year until 2010 to compensate for early shortfalls shortfalls (measured in constant 2004 $).(measured in constant 2004 $).

Net ODA to Africa would have to increase by over $6 Net ODA to Africa would have to increase by over $6 billion a year in order to double by 2010.billion a year in order to double by 2010.One positive sign: non-DAC members increased One positive sign: non-DAC members increased ODA from $1.5 billion in 2000 to $5.1 billion in 2006ODA from $1.5 billion in 2000 to $5.1 billion in 2006

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Progress on Debt ReliefProgress on Debt Relief

Important progress has been made on debt Important progress has been made on debt relief:relief:

23 of the 41 Heavily Indebted Poor Countries (HIPC) had 23 of the 41 Heavily Indebted Poor Countries (HIPC) had reached the completion point by mid 2008 and 10 others had reached the completion point by mid 2008 and 10 others had reached the decision pointreached the decision point

The average debt-service to export ratio fell from 13% in 2000 The average debt-service to export ratio fell from 13% in 2000 to 6.6% in 2006.to 6.6% in 2006.

This has been due, in part, to debt This has been due, in part, to debt cancellation:cancellation:

HIPC mandated debt reduction to HIPC mandated debt reduction to sustainable levels.sustainable levels. It had provided about $48 billion debt relief by 2006It had provided about $48 billion debt relief by 2006

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Progress on Debt ReliefProgress on Debt Relief

The G-8 Multilateral Debt Relief Initiative in 2005 The G-8 Multilateral Debt Relief Initiative in 2005 (World Bank, IMF, ADB and IDB): Provided (World Bank, IMF, ADB and IDB): Provided full debt full debt reliefrelief for eligible countries – about $21 billion in for eligible countries – about $21 billion in relief by 2006relief by 2006

Debt reduction has also been due to an export boom Debt reduction has also been due to an export boom in commodities and increased global growth.in commodities and increased global growth.

But 21 Heavily Indebted Poor Countries are But 21 Heavily Indebted Poor Countries are still considered to be at moderate-to-high still considered to be at moderate-to-high risk of falling back into debt distressrisk of falling back into debt distressThis risk is being heightened by the financial This risk is being heightened by the financial crisis, falling commodity prices and crisis, falling commodity prices and projected falling exports to rich countriesprojected falling exports to rich countries

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Improved Market Access for Improved Market Access for Developing-Country ExportsDeveloping-Country Exports

There has been little progress on broadening market There has been little progress on broadening market accessaccessThe collapse of the WTO Doha Round on Trade and The collapse of the WTO Doha Round on Trade and DevelopmentDevelopment

The share of rich-country imports from developing countries admitted The share of rich-country imports from developing countries admitted duty-free increased only marginally between 2000 and 2006duty-free increased only marginally between 2000 and 2006

Average tariffs on agricultural products imported into rich countries Average tariffs on agricultural products imported into rich countries remained virtually unchangedremained virtually unchanged

One factor alleged to be behind the food crisis affecting developing One factor alleged to be behind the food crisis affecting developing countries has been domestic agricultural subsidies and tariff countries has been domestic agricultural subsidies and tariff protection in rich countriesprotection in rich countries

Rich-country support to domestic agriculture stood Rich-country support to domestic agriculture stood at $372 billion in 2006—more than three times the at $372 billion in 2006—more than three times the ODA that they provided to developing countriesODA that they provided to developing countries

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Total ODA versusTotal ODA versusTotal Agricultural SupportTotal Agricultural Support

5479

104

323

388372

0

50

100

150

200

250

300

350

400

450

2000 2004 2006

Total ODA

Total agricultural support

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Confronting Financial Crisis Confronting Financial Crisis and Recessionand Recession

Assuming a recession in the US and Assuming a recession in the US and other OECD countries:other OECD countries:

What will be the effect on developing-country What will be the effect on developing-country growth, human development and poverty?growth, human development and poverty?

Example: earlier this year we modelled an Example: earlier this year we modelled an imminent US recession and continuing expensive imminent US recession and continuing expensive oil and made projections until 2015oil and made projections until 2015

The Results for 2008-2015The Results for 2008-2015: :

1.1. US yearly growth was -0.2%, W. Europe’s US yearly growth was -0.2%, W. Europe’s 1.4%, and Japan’s 2.2%1.4%, and Japan’s 2.2%

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Confronting Financial Crisis Confronting Financial Crisis and Recessionand Recession

2.2. China’s growth was 4.6%, India’s 3% China’s growth was 4.6%, India’s 3% and the rest of developing Asia 4.7%and the rest of developing Asia 4.7%

3.3. Latin America’s growth was 2.1%, the Latin America’s growth was 2.1%, the CIS’s (Russia’s) 2.5% and the Middle CIS’s (Russia’s) 2.5% and the Middle East’s 0.7%East’s 0.7%

4.4. S. Africa’s growth was 2.9%, low-S. Africa’s growth was 2.9%, low-income African oil exporters 1.5% and income African oil exporters 1.5% and low-income African oil importers a low-income African oil importers a negativenegative 1.2% 1.2%

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Confronting Financial Crisis Confronting Financial Crisis and Recessionand Recession

Hypotheses:Hypotheses: Asia will maintain some growth momentumAsia will maintain some growth momentum Regions tied closely to the US or reliant on Regions tied closely to the US or reliant on

oil exporting will grow much slower (they will oil exporting will grow much slower (they will also lose most in also lose most in relativerelative terms) terms)

Low-income Africa will suffer the mostLow-income Africa will suffer the most: : negative growth and rising poverty and negative growth and rising poverty and human deprivationhuman deprivation

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Maintaining Momentum Maintaining Momentum Against PovertyAgainst Poverty

A campaign to prevent the financial crisis A campaign to prevent the financial crisis from being used as an excuse to break from being used as an excuse to break promises on reducing global povertypromises on reducing global povertyOn October 17-19, across the globe almost 117 On October 17-19, across the globe almost 117 million people in over 2,000 events supported the million people in over 2,000 events supported the campaign ‘Stand Up and Take Action against campaign ‘Stand Up and Take Action against Poverty and for the MDGs’Poverty and for the MDGs’

In response to the ‘bail-out’ of financial In response to the ‘bail-out’ of financial institutions, a more redistributive focus is gaining institutions, a more redistributive focus is gaining broad support: protect low-income householdsbroad support: protect low-income households

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Maintaining Momentum Maintaining Momentum Against PovertyAgainst Poverty

The focus should remain on sub-Saharan The focus should remain on sub-Saharan Africa, where deprivation will be most severeAfrica, where deprivation will be most severe

Confronting the ‘trade-offs’ in allocating Confronting the ‘trade-offs’ in allocating tighter budgetary resources:tighter budgetary resources:

Giving the MDGs the highest budget priorityGiving the MDGs the highest budget priority Safeguarding gains on health and educationSafeguarding gains on health and education Accelerating debt relief Accelerating debt relief Reducing rich-country agricultural support, Reducing rich-country agricultural support,

which would benefit low-income countrieswhich would benefit low-income countries

Maintaining Momentum Maintaining Momentum Against PovertyAgainst Poverty

Making ODA more effectiveMaking ODA more effective::ODA remains greatly fragmented and sectoralODA remains greatly fragmented and sectoral

The need for more coordination and The need for more coordination and harmonisationharmonisation

The need for more cross-sectoral, integrated The need for more cross-sectoral, integrated initiatives, which will create synergies and initiatives, which will create synergies and externalitiesexternalities

This highlights the potential contribution of This highlights the potential contribution of LIDC’s workLIDC’s work

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