Reaffirming the International Development Targets
A second White Paper
The opportunities and risks of globalisation
Making globalisation work for the poor
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The UK Government will: · Work with others to manage globalisation so that poverty is systematically reduced and the International Development Targets achieved. · Promote economic growth
that is equitable and environmentally sustainable. |
1. One in five of the world's population - two-thirds of them women - live in abject poverty: on the margins of existence, without adequate food, clean water, sanitation or healthcare, and without education. That is 1.2 billion people whose lives are blighted by poverty, robbed of their dignity in a world of growing wealth and material plenty.
2. Three years ago the Government published its first White Paper on international development - Eliminating World Poverty: a Challenge for the 21st Century. After years in which development policy was subordinated to commercial and short-term political interests, the UK's development strategy is now focused on the reduction of abject poverty in the world.
3. At the heart of this agenda is a commitment to focus all of our development effort on the achievement of the International Development Targets - targets agreed by the governments of the world at a series of United Nations conferences in the 1990s (see box 1). As a first step towards the complete elimination of poverty, the targets include a reduction by one half in the proportion of people living in extreme poverty by 2015. As we move towards this, we will of course need to set further targets, in order to achieve the total elimination of extreme poverty.
4. In this Paper we strongly reaffirm the UK Government's commitment to the International Development Targets set out in our first White Paper. They remain absolutely central to our development strategy, including the policies we pursue through multilateral institutions. In three years we have made real progress in getting greater commitment to these targets across the international system.
5. The targets have been endorsed by the World Bank and the International Monetary Fund, by the European Union and by 77 African, Caribbean and Pacific countries as part of the Cotonou agreement and by the Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD). Most recently, many of the targets were also endorsed by 149 Heads of State at the UN Millennium Summit in New York. There is now an unprecedented international consensus around these targets.
BOX 1
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THE INTERNATIONAL DEVELOPMENT TARGETS The International Development Targets are: · A reduction by one half in the proportion of people living in extreme poverty by 2015. |
7. In the last few decades, there has been enormous progress in development. Since the 1960s, life expectancy in developing countries has risen from 46 to 64 years, infant mortality rates have halved, there has been an increase of more than 80 per cent in the proportion of children enrolled in primary school, and there has been a doubling of access to safe drinking water and basic sanitationi.
8. Over this period, we have learned a lot about what works in development - and about what does not. Our task is to apply these lessons on a larger scale in the context of globalisation. It is clear that development strategies must be adapted to local circumstances and must be nationally owned and nationally led by developing and transition countries.1 But we believe that globalisation creates unprecedented new opportunities for sustainable development and poverty reduction, and for progress against the targets.
1 In the rest of this Paper, where the term ‘developing countries’ is used, the analysis also applies to transition countries.
9. This White Paper stands alongside our first White Paper, and our Target Strategy Papers which set out how each of the International Development Targets can be met. Its purpose is to focus on the challenges of globalisation and to define a policy agenda for managing the process in a way that will systematically reduce poverty.
10. Encouragingly, in recent years we have seen the beginnings of a serious political debate about the equitable management of globalisation. Last year's Human Development Report and this year's reports by the UN Secretary General and by the World Bank have this as a core themeii.
11. As the Secretary General put it in his report to the Millennium Assembly, 'The central challenge we face today is to ensure that globalisation becomes a positive force for all the world's people, instead of leaving billions of them behind in squalor. Inclusive globalisation must be built on the great enabling force of the market, but market forces alone will not achieve it. It requires a broader effort to create a shared future, based upon our common humanity in all its diversity'iii.
12. Making globalisation work more effectively for the world's poor is a moral imperative. It is also in our common interest. Many of the world's contemporary challenges - war and conflict; refugee movements; the violation of human rights; international crime, terrorism and the illicit drugs trade; the spread of health pandemics like HIV/AIDS; and environmental degradation - are caused or exacerbated by poverty and inequality.
13. This mutual dependence is particularly clear in the case of population growth and environmental degradation. In the next 25 years around 2 billion people will be added to the world's population - 97 per cent of them in developing countries. There will be a further shift of population from the rural areas to the towns, with an estimated 61 per cent of the world's population living in urban areas by 2025iv.
14. These demographic changes will create huge new demands. Managed badly, this could lead to growing conflicts over scarce resources, particularly water, and new social tensions that could easily spill over national borders. There can be no secure future for any of us - wherever we live - unless we promote greater global social justice.
15. Progress is dependent on developing country leadership. But some of the resources needed will have to be provided by the international community. A sustainable global environment and effective vaccines against communicable diseases are just two examples of the global public goods that can and should be financed internationally.
16. The word globalisation is used in different ways. The contested nature of the concept is part of the explanation for the confusion of so much of the public debate. For some, globalisation is inextricably linked with the neo-liberal economic policies of the 1980s and early 1990s. For them, globalisation is synonymous with unleashing market forces, minimising the role of the state and letting inequality rip. They denounce the increasingly open and integrated global economy as an additional more potent source of global exploitation, poverty and inequality.
17. In fact, globalisation means the growing interdependence and interconnectedness of the modern world. This trend has been accelerated since the end of the Cold War. The increased ease of movement of goods, services, capital, people and information across national borders is rapidly creating a single global economy. The process is driven by technological advance and reductions in the costs of international transactions, which spread technology and ideas, raise the share of trade in world production, and increase the mobility of capital. It is also reflected in the diffusion of global norms and values, the spread of democracy and the proliferation of global agreements and treaties, including international environmental and human rights agreements.
18. Globalisation is characterised, too, by the growth of transnational companies, which now account for about a third of world output and two-thirds of world trade. Around a third of world trade takes place within transnationals, between subsidiaries of the same corporation based in different countries.
19. Managed wisely, the new wealth being created by globalisation creates the opportunity to lift millions of the world's poorest people out of their poverty. Managed badly and it could lead to their further marginalisation and impoverishment. Neither outcome is predetermined; it depends on the policy choices adopted by governments, international institutions, the private sector and civil society.
20. Globalisation brings with it rapid change. And this has generated uncertainty and anxiety amongst millions of people across the world. It has also raised legitimate public concerns, for example about the impact of globalisation on people's culture, the environment, inequality within and between countries, and the effect on the world's poorest people. If democrats and internationalists do not address these concerns, then those who advocate narrow nationalism, xenophobia, protectionism and the dismantling of multilateral institutions will gain in strength and influence with disastrous consequences for us all.
21. To many people, the most visible impact of globalisation is the near universal availability of the same consumer goods - such as soft drinks, hamburgers, popular music and television programmes. Some fear that this is leading to a single homogeneous culture dominated by western commodities and values.
22. However, throughout human history, exposure to outside influence has tended to enrich, rather than impoverish, individuals and societies. Globalisation has accelerated this process and produced elements of a 'global culture'. But it has also encouraged a re-assertion of local cultural identity and, in many cases, greater respect for diversity and pluralism.
23. English is emerging as a means of communicating internationally, but this does not pose a threat to the languages that are spoken in daily life in communities across the world. The risk of a global monoculture of values and aspirations is vastly greater if the developing world remains poor and marginalised rather than an equal and respected part of a rich international diversity of culture and language.
24. There is also concern that globalisation is damaging the global environment. It is certainly true that the global environment continues to deteriorate, and that many renewable resources - freshwater, forests, plant and animal species - are being exhausted at a rate beyond their natural recovery level. Seventy per cent of the world's fishing areas, for example, are over or fully fished, yet a billion people depend on fish as their main source of protein. It is also true that the consumption patterns of people in developed countries are the major source of global environmental degradation.
25. But this process was at work before global integration speeded up. Indeed openness and integration into the global economy can help countries to meet the new environmental challenges. Poverty and environmental degradation are often linked. Economic development gives countries improved access to new, less resource-intensive and less polluting technologies. Over the last fifty years, it has been more closed economies - such as the former Communist countries - that have had the worst record of industrial pollution and urban environmental degradation.
26. Stronger international institutions and a much stronger commitment to sustainable development at the national and the international level are needed to help the world shift to more sustainable patterns of production and consumption. But if the world remains deeply divided and the poorest countries believe that improved environmental standards will prevent or hinder their development, international agreement to protect global environmental resources will become impossible. A world commitment to sustainable development is dependent on the guarantee of development for the poor.
27. Many believe that globalisation causes rising levels of inequality and poverty. The best evidence to date suggests that there is no systematic relationship between openness and inequality, or between growth and inequalityv.
28. Take the question of inequality between countries. After increasing between 1960 and 1990, this has more recently started to fall. In 1960, the average real income in the countries containing the richest fifth of the world's population was 12 times greater than in the countries containing the poorest fifth; in 1990 it was 18 times greater; by the late 1990s this had fallen to 15 times greater2.
2 The figures for 1960 and 1990 are drawn from the 1996 UNCTAD Report on Least Developed Countries. The figures for the late 1990s have been estimated by DFID using World Bank Indicators 2000 data, and are adjusted to form a consistent time series. All these figures are based on purchasing power parity comparisons. Purchasing power parity (ppp) is essentially a hypothetical exchange rate which equalises the buying power of currencies. With a dollar converted to another country’s currency at the ppp exchange rate, you should on average be able to buy the same set of goods in that country as you could for one dollar in the USA.29. The explanation for these figures lies in differences in economic performance. The world's richest countries have continued to grow; the world's two biggest nations - India and China, containing huge numbers of the world's poor - have accelerated their growth rates over the last two decades; while many of the poorest countries in Africa have stood still, or experienced negative growth. Whether inequality between countries rises or falls in the years ahead depends on the policies that they pursue. If the poorest countries improve their economic performance then global inequality should fall; if they do not, it is likely to rise.
30. Similarly within countries, the evidence indicates that there is no systematic relationship between increased openness and changes in inequality - in some cases the poor gain more from trade than the average citizen; in other cases they gain less.
31. Everywhere it is clear that openness is a necessary - though not sufficient - condition for national prosperity. No developed country is closed. The initially poor countries that have been most successful in catching up in recent decades - the newly industrialising east Asian countries and China - seized the opportunity offered by more open world markets to build strong export sectors and to attract inward investment. This contributed, along with massive investment in education, to the largest reduction in abject poverty that the world has ever seen. In most east Asian countries the proportion of the population living in poverty is now under 15 per cent, down from around 40 per cent forty years ago.
32. There is no systematic relationship between economic growth and inequality. Over recent decades, inequality has risen in some cases and fallen in others, in both fast-growing and slower-growing economies.
33. Through expanding access to ideas, technology, goods, services and capital, globalisation can certainly create the conditions for faster economic growth. And the progress which has been made over the last few decades in reducing the proportion of people living in poverty has been largely the result of economic growth: raising incomes generally, including those of poor people. Economic growth is an indispensable requirement for poverty reduction.
34. But by itself it is not enough. Pro-poor development requires growth and equity. Poverty reduction is faster where growth is combined with declining inequality. And poverty reduction is also more easily achieved in less unequal countries - the lower the level of inequality, the larger the share of the benefits of growth that accrue to the poor.
35. In practice the impact of globalisation on poor people varies widely, both between countries and within them, depending on initial circumstances and on the policies that governments pursue. Within China, for example, poor people living in coastal provinces have benefited more from increased exports and foreign investment than those in inland provinces. In Ghana, the lowering of barriers to trade let in imports of low-priced garments, many of them from China, which benefited poor consumers but displaced workers from garment factories.
36. The reality is that all profound economic and social change produces winners and losers. The role of government in these circumstances is to help manage the process of change - to maximise economic opportunities for all, and to equip people, through education and active labour market policies, to take advantage of these opportunities.
37. We must not forget that many of the world's poor people, living in remote or inaccessible rural areas of Africa and south Asia, have so far not been much affected by globalisation one way or the other. For them, the real risk is that they will be marginalised from the new wealth that globalisation is creating. That is why it is so important to design economic strategies that recognise and respect countries' specific needs and circumstances, and to promote sustainable and inclusive economic and social development that spreads its benefits to all sections of society.
38. Globalisation also brings some systemic risks. For example, the damaging effects of financial volatility were vividly illustrated in the Asian crisis of 1997. Greater access to the global pool of savings through capital markets offers developing countries the chance to raise growth rates above the levels that can be supported from domestic savings alone. But the Asian experience indicates clearly that openness to short-term portfolio flows can be damaging in the absence of a sound macroeconomic position, adequate domestic regulation and transparency in relationships between companies and banks. Strong and effective regulatory systems are needed at the national and the international level.
39. The UK Government believes that, if well managed, the benefits of globalisation for poor countries and people can substantially outweigh the costs, especially in the longer term. The rapid integration of the global economy, combined with advances in technology and science, is creating unprecedented global prosperity. And this has helped to lift millions of people out of poverty. With the right policies, many millions more people can benefit in the years ahead.
40. The following chapters set out our analysis of the issues and some of the suggested policy responses to them. Two overarching themes run throughout the remainder of this document.
41. First, the importance of political will. It is not inevitable that globalisation will work well for the poor - nor that it will work against them. This depends on the policies that governments and international institutions pursue. We need developing countries, developed countries, international institutions, the private sector and civil society to rise to the challenges of globalisation, to exploit better its opportunities and minimise its risks. Developing countries must lead the effort for greater poverty reduction in their countries. But developed countries and international institutions must support them in this process.
42. Second, globalisation is reinforcing the need for a more integrated approach to policy-making. Policies no longer fit into neat sectoral boxes, and the distinction between domestic and international policy is increasingly blurred. Most 'domestic' policies such as taxation have international aspects, and most 'international' policies such as trade have domestic dimensions. The formulation of sustainable development strategies in a global economy requires that developed and developing countries have more joined-up and coherent policies.
43. There is a particular responsibility on developed countries. There is no sense, for example, in using development assistance to support countries, and then undermining this through trade restrictions and unfair subsidies. All developed country policies towards the world's poorest countries should be consistent with a commitment to sustainable development and poverty reduction.
44. If developing countries are to maximise the benefits of globalisation, they need effective systems of government and action against corruption; they need to ensure respect for human rights, and to promote security, safety and justice for all. They need to prevent violent conflict. And they need to make markets work better for poor people. These issues are the focus of Chapter 2.
45. To succeed in the new global economy, poor countries need healthy and well-educated people, and greater access to knowledge, ideas and new information and communication technologies. And to reduce poverty more quickly, there needs to be a shift in the global research effort. This is the focus of Chapter 3.
46. Private financial flows can help poor countries boost their levels of economic growth and reduce poverty. But large-scale and volatile flows can also produce financial instability that can be damaging to development. Strategies to attract greater flows to poor countries, to promote global financial stability and to encourage corporate social responsibility are the focus of Chapter 4.
47. Open trade has a vital role to play in helping countries to reduce poverty. But to maximise these benefits, poor countries need a rules-based international trading system, with continuing reductions in barriers to trade in both developed and developing countries. These issues are the focus of Chapter 5.
48. Sustainable use of the environment is essential for poverty reduction. But the global environment continues to deteriorate, putting at risk the resources on which poor people depend for their livelihoods. We need to manage globalisation in a way that is consistent with environmental sustainability. This is the focus of Chapter 6.
49. Development assistance is essential to enable countries to create the economic and social conditions necessary for poverty reduction. This is particularly important for the poorest countries which do not attract large-scale private flows. But aid resources need to be better used. Debt relief also needs to be linked to strategies for poverty reduction. These issues are the focus of Chapter 7.
50. Where there are no rules, the rich and powerful bully the poor and the powerless. In a globalising world, poor countries need effective, open and accountable global institutions where they can pursue their interests on more equal terms. This is the focus of Chapter 8.
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FIGURE 1.1
Progress towards the International Development Target: reducing the proportion of people living in extreme poverty by half between 1990 and 2015 Proportion of population living on less than $1 a day (%)
Changes in population living on less than US$1 a day |
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Regions |
Number of people living on less than $1 a day (millions) |
Proportion of people living on less than $1 a day (percent) |
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1990 |
1998 (est.) |
1990 |
1998 (est.) |
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East Asia and the Pacific |
452 |
278 |
28 |
15 |
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Eastern Europe and Central Asia |
7 |
24 |
2 |
5 |
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Latin America and the Caribbean |
74 |
78 |
17 |
16 |
|
Middle East and North Africa |
6 |
6 |
2 |
2 |
|
South Asia |
495 |
522 |
44 |
40 |
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Sub-Saharan Africa |
242 |
291 |
48 |
46 |
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Total Developing Countries |
1,276 |
1,199 |
29 |
24 |
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Note: All data are at 1993 purchasing power parities. See footnote 2. |
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FIGURE 1.2 Progress towards the other key International Development Targets Enrol all children in primary school by 2015 Although enrolment rates continue to rise, they have not risen fast enough. On current trends, more than 100 million school-age children will not be in school in 2015. Most of these children will be in Sub-Saharan Africa and South Asia. Other regions are much closer to the target - East Asia and the Pacific have almost achieved universal primary education.Eliminate gender disparities in primary and secondary education by 2005 The gender gap is narrowing, but girls’ enrolments remain persistently behind those of boys. Gender disparity is greatest in South Asia, closely followed by the Middle East and North Africa. In comparison, Latin America and the Caribbean has the greatest gender equality in both primary and secondary enrolment and in adult literacy.Reduce infant and child mortality rates by two-thirds between 1990 and 2015 Infant and under-5 mortality rates have fallen in all regions. But the fall is not enough to meet the target. Even in the best performing regions such as the Middle East and North Africa and Latin America and the Caribbean, there were major variations among countries. Overall, for every country that reduced infant and under-5 child mortality rates fast enough to reach the goal, ten lagged behind and another one moved backwards, often because of HIV/AIDS.Reduce maternal mortality rates by three-quarters between 1990 and 2015 Provision of skilled care during pregnancy and delivery can do much to avoid many of the half million maternal deaths that occur each year, but the proportion of births attended by skilled personnel rose slowly in the 1990s. Maternal mortality varies widely among the world’s regions - for instance, low in Latin America, but very high in Africa. |
