Evolution of the MDGs: Progress and Problems

1. Evolution of the MDGs: Progress and Problems Terry McKinley Director, Centre for Development Policy & Research School of Oriental and African Studies Presentation at the LIDC Conference, ‘No Goals at Half-Time: What Next for the MDGs?’, 5 November 2008

2. Outline of Presentation • A Short History of the MDGs and their Rationale • Progress on Goal 8, the Development Partnership: A. ODA B. Debt Relief C. Trade and Development • Current Challenges in light of the Financial Crisis and Projected Economic Downturn

3. Some MDG Background • In September 2000, representatives of 189 countries (and 147 heads of state) met in New York at the U.N. Millennium Summit • The agreed binding outcome of the Summit was the Millennium Declaration • A U.N. working group later supplemented the Declaration by devising a set of 8 Goals, which were eventually formulated as 21 Targets, which were measured by 60 Indicators • Although widely accepted and endorsed, the targets are non-binding on UN member states

4. Some MDG Background • The MDGs are, in a sense, a Global Social Compact, based on mutual accountability • Developing countries are held accountable for outcomes, i.e., achievement of targets • So rich countries are motivated to provide more support • Rich countries are held accountable for providing greater support, i.e., scaling up ODA, providing more debt relief and allowing greater access to their markets • So developing countries are motivated to adopt MDG development strategies

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

6. Some Recent History • The U.N. Millennium Project, led by Jeffrey Sachs, has been instrumental in the MDG campaign (the Project is now part of UNDP) • It presented its report, Investing in Development, as an input into the 2005 U.N. World Summit • Countries agreed to adopt ‘comprehensive national development strategies’ to achieve the MDGs (superseding World Bank PRSPs) • The dominant priority was to conduct a comprehensive Needs Assessment or costing exercise (determining the scale of additional resources needed to achieve the MDG targets across each sector)

7. Some Recent History • The Costing exercises have tended to dominate early activities at the national level • Production of an aggregate ‘development bill’ to attain the MDGs, which external donors are expected to endorse. • A tendency to underplay the importance of domestic resource mobilisation (e.g., taxation, savings) • Many low-income countries are assumed to be stuck in a ‘poverty trap’ (thus, the need for an external ‘Big Push’. • Little real discussion of macroeconomic and structural adjustment policies or posing of economic policy options

8. Are the MDGs Too Ambitious? • At the global level, they were not set to be exceedingly ambitious • They cover a long 25-year period (from 1990 to 2015, not from 2000) • Targets were set to be realistic, since they were based on trends prior to 1990 • But as 2015 draws closer and progress in the 1990s appears to have been too slow, targets do appear to be increasingly ambitious • A sharp acceleration of progress is needed but a global economic downturn appears imminent

9. Progress on Goal #8:The Global Partnership for Development • Few targets were set for Goal #8 (because they would have obligated rich countries): • General Injunctions: • Give more generous ODA for countries committed to poverty reduction: The ODA benchmark of 0.7% of rich-country GNI has remained prominent though not explicitly a target • Deal comprehensively with the debt problems of developing countries • Develop an open, non-discriminatory trading and financial system

10. Official Development Assistance • Goal of 0.7% of GNI: only Denmark, Luxembourg, the Netherlands, Norway & Sweden • The weighted average of the 22 member countries of the DAC of the OECD: 0.28% • Only Belgium, Ireland and the UK give at least 0.15-20% of their GNI to Least Developed Countries • Aid flows climbed steadily after 1997, a low point, until 2005, but dropped in 2006 & 2007

11. Recent Declines in ODA

12. Commitments on Raising ODA • The 2002 World Summit on Sustainable Development and the International Conference on Financing for Development called for ‘concrete efforts towards the target of 0.7% of GNI’ • G8 leaders at the 2005 Gleneagles Summit committed to 1) providing an extra $50 billion in ODA by 2010 (compared to 2004) and 2) doubling ODA to Africa from $25 billion to $50 billion. • 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% • In 2005-2006 Net ODA remained higher because of debt-relief initiatives for Iraq and Nigeria.

13. Commitments on Raising ODA • The combined pledges of ODA implied an increase from $80 billion in 2004 to $130 billion in 2010. • But during 2004-2007 net ODA from DAC members increased annually by half of that amount. • So DAC net ODA would have to increase by at least $13 billion a year until 2010 to compensate for early shortfalls (measured in constant 2004 $). • Net ODA to Africa would have to increase by over $6 billion a year in order to double by 2010. • One positive sign: non-DAC members increased ODA from $1.5 billion in 2000 to $5.1 billion in 2006

14. Progress on Debt Relief • Important progress has been made on debt relief: • 23 of the 41 Heavily Indebted Poor Countries (HIPC) had reached the completion point by mid 2008 and 10 others had reached the decision point • The average debt-service to export ratio fell from 13% in 2000 to 6.6% in 2006. • This has been due, in part, to debt cancellation: • HIPC mandated debt reduction to sustainable levels. • It had provided about $48 billion debt relief by 2006

15. Progress on Debt Relief • The G-8 Multilateral Debt Relief Initiative in 2005 (World Bank, IMF, ADB and IDB): Provided full debt relief for eligible countries – about $21 billion in relief by 2006 • Debt reduction has also been due to an export boom in commodities and increased global growth. • But 21 Heavily Indebted Poor Countries are still considered to be at moderate-to-high risk of falling back into debt distress • This risk is being heightened by the financial crisis, falling commodity prices and projected falling exports to rich countries

16. Improved Market Access for Developing-Country Exports • There has been little progress on broadening market access • The collapse of the WTO Doha Round on Trade and Development • The share of rich-country imports from developing countries admitted duty-free increased only marginally between 2000 and 2006 • Average tariffs on agricultural products imported into rich countries remained virtually unchanged • One factor alleged to be behind the food crisis affecting developing countries has been domestic agricultural subsidies and tariff protection in rich countries • Rich-country support to domestic agriculture stood at $372 billion in 2006—more than three times the ODA that they provided to developing countries

17. Total ODA versusTotal Agricultural Support

18. Confronting Financial Crisis and Recession • Assuming a recession in the US and other OECD countries: • What will be the effect on developing-country growth, human development and poverty? • Example: earlier this year we modelled an imminent US recession and continuing expensive oil and made projections until 2015 • The Results for 2008-2015: • US yearly growth was -0.2%, W. Europe’s 1.4%, and Japan’s 2.2%

19. Confronting Financial Crisis and Recession • China’s growth was 4.6%, India’s 3% and the rest of developing Asia 4.7% • Latin America’s growth was 2.1%, the CIS’s (Russia’s) 2.5% and the Middle East’s 0.7% • S. Africa’s growth was 2.9%, low-income African oil exporters 1.5% and low-income African oil importers a negative 1.2%

20. Confronting Financial Crisis and Recession Hypotheses: • Asia will maintain some growth momentum • Regions tied closely to the US or reliant on oil exporting will grow much slower (they will also lose most in relative terms) • Low-income Africa will suffer the most: negative growth and rising poverty and human deprivation

21. Maintaining Momentum Against Poverty • A campaign to prevent the financial crisis from being used as an excuse to break promises on reducing global poverty • On October 17-19, across the globe almost 117 million people in over 2,000 events supported the campaign ‘Stand Up and Take Action against Poverty and for the MDGs’ • In response to the ‘bail-out’ of financial institutions, a more redistributive focus is gaining broad support: protect low-income households

22. Maintaining Momentum Against Poverty • The focus should remain on sub-Saharan Africa, where deprivation will be most severe • Confronting the ‘trade-offs’ in allocating tighter budgetary resources: • Giving the MDGs the highest budget priority • Safeguarding gains on health and education • Accelerating debt relief • Reducing rich-country agricultural support, which would benefit low-income countries

23. Maintaining Momentum Against Poverty • Making ODA more effective: • ODA remains greatly fragmented and sectoral • The need for more coordination and harmonisation • The need for more cross-sectoral, integrated initiatives, which will create synergies and externalities • This highlights the potential contribution of LIDC’s work