“Freeing the entire human race from want” David Steven

November 1, 2011 | More on Economics and development, Key Posts | 2 comments

The MDGs are so over

Having just been rude about one World Bank report, here’s a positive review of another – the Global Monitoring Report 2011, which the Bank produces jointly with the IMF.

The GMR updates progress against the Millennium Development Goals – targets that were set as the culmination of a push throughout the 1990s to take poverty to the centre of the international agenda.

For a long time, it seemed that the MDGs were going to be an embarrassing failure. In 2009, as the UN prepared for the 2010 MDG review conference, Kofi Annan rang the alarm:

We have been moving too slowly to meet our goals. And today, we face a global economic crisis whose full repercussions have yet to be felt. At the very least, it will throw us off course in a number of key areas, particularly in the developing countries. At worst, it could prevent us from keeping our promises, plunging millions more into poverty and posing a risk of social and political unrest. That is an outcome we must avoid at all costs.

The MDGs’ many critics felt vindicated. In particular, Bill “just asking that aid benefit the poor” Easterly was over the moon. “Let’s face it: it’s over,” he wrote. “The MDGs will not be met.” Idealistic development campaigners had wasted their time on a set of arbitrary and poorly designed goals. Africa had been deliberately made to look like a failure, in what was an unforgiveable set up.

The 2010 MDG summit was a somewhat sombre affair. Sir Bob Geldof (seen saluting the troops, above) demanded that all 189 leaders who agreed the Millennium Declaration should be pulled out of retirement (or the ground, if applicable) to issue a personal apology to him, and the world’s poor. [OK – I made that bit up.]

But wait a minute…

Then something unexpected happened. The Great Recession largely spared the developing world (so far at least) and, far from slowing down, the decline in poverty accelerated. According to the GMR, the headline target – halving the proportion of people living in poverty by 2015 – is not just going to be met, it’s going to be smashed.

In 1990, 41.7% of the world’s population lived on less than $1.25 a day (this figure has been endlessly restated, which is a story in and of itself – see graphs below). That’s dropped to 25.2% in 2005, less than five percentage points above the 2015 target of 20.9%. By 2015, the IMF and World Bank project it will be down to 14.4% – a reduction of nearly a third.

At this point, it’s more or less obligatory to point out that this is all down to China (with a small contribution from India), and that ‘real’ poverty – in Africa – hasn’t been touched. Except that’s not the whole story.

China has seen an astonishingly rapid progress – poverty was down almost fourfold by 2004, and is projected to be cut 12.5 times by 2015. India is also seeing accelerating improvements and is projected to have reduced poverty by more than half by the target date.

But Africa isn’t expected to do as badly as many people think. Its poverty rate was 57.6% in 1990, had fallen to 50.9% in 2005, and is projected to be 35.8% in 2015. That’s still ten percentage points above the target, but if attained, it would be far from an abject failure (180m fewer Africans in poverty in 2015 than would have been the case with no reduction in the proportion of the poor).

Progress on non-income MDGs has been much less impressive. In 2009, hunger was down only 4 percentage points (to 16%), and seems highly unlikely to halve by 2015. In the same year, 11% of kids were not in primary school, against a universal enrolment target for 2015.

The news on health is a bit better. Infant mortality was down by a third in 2009, when it is supposed to drop by two thirds. And maternal mortality has fallen by 35% when the target is three quarters. But, over the past few years, the corner seems to have been turned on HIV/AIDS, TB, and malaria – with deaths from all three diseases now past their peak.

Ending Poverty

But let’s go back to the poverty MDG. In 1990, there were 1.8 billion poor people (in a world of 5.3bn people). If the IMF/Bank projections pan out, by 2015, there’ll be 882.7m poor people left (in a world of 7.3bn). That represents real progress in both relative and absolute terms.

Here’s a thought. In the debate about what should succeed the MDGs, one obvious option is simply to extend the current set of goals and focus harder on the challenges facing the 15% of the world’s population that will still be below the poverty line in 2015.

If poverty does indeed fall by a billion between 1990 and 2015, then there’s no reason why it shouldn’t fall as fast over the next fifteen years, even as the global population grows by another billion. In other words, having halved absolute poverty, leaders could commit to abolishing it by 2030.

Here are some thoughts on the implications of an attempt to abolish poverty.

First, much depends on whether the Bank and IMF’s projections hold up for the speed of poverty reduction between now and 2015. The key factor is the speed of growth we see between now and then. The GMR expects 6-7% annually in emerging and developing economies between 2012 and 2014, including 5.7% annually in Africa.

There’s no reason for this not to happen. The Bank and IMF continue to be confident that the twin track recovery (boom times everywhere but in the West) will continue. I am less sure, though, that developing countries can avoid trouble indefinitely if Europe and America continue to head deeper into the mire.

Second, much will depend on the nature and quality of growth that is generated, and whether we will continue to see the worrying divorce of income growth from human development (health, education, gender, etc.).

The GMR has an interesting box on poverty in Brazil, which was one of the most unequal countries in the world in 1990, but has seen both growth and a sharp decline in inequality since 2003:

The 1990s marked the expansion of social safety nets in Brazil. Public social expenditure, including conditional cash transfers such as the Bolsa Família, targeted to poor families rose from 17.6 percent of GDP in 1990 to 26.0 percent of GDP in 2008—an increase of almost 50 percent in education, health, housing, and social security. Recent evidence suggests that this increase in social spending and better targeting contributed much to reducing poverty and inequality.

The Bank and IMF believe that these policies took an additional 17.5 million people out of poverty, bringing the absolute poverty rate down by 9 percentage points more than if inequality had stayed high.

Back in 1990, the World Development Report started the push to put poverty at the top of the international agenda. It said there were two secrets to effective poverty reduction: labour intensive growth and greater investment in the provision of basic services to the poor.

That was true then, and it’s true now. That’s why we need a big push on the non-income MDGs in advance of 2015, and extensive use of social protection is needed to boost the impact of growth on the quality of life of the poor.

Take education – 67 million children are still out of primary school and 70% of them live in just 10 countries. With political will, this is a relatively easy problem to fix, and in a way that improves quality, rather than eroding it. It’s also a vote winner, if politicians can be persuaded that they’ll see results within an electoral cycle.

Third – and assuming, we’re down below 900m poor people in 2015 – a great deal will ride on what happens in Africa, which will be home to 40% of the poor (another 30% will live in India).

I am quite bullish about Africa’s prospects. After 50 years of terrible demography (loads and loads of children), Africa is now swimming with the demographic tide, as its baby boom generation hits the workforce in larger numbers, and its dependency ratio drops (more adults relative to children and young people).

With similarly favourable demography, Asia has seen strong growth as more adults support children and the elderly. In the 2020s, we could be talking about an African ‘economic miracle’, but only if the continent creates jobs for the 7-10 million young people entering its labour market each year, and makes sure that at least some of them have skills tailored to the continent’s comparative advantage.

There are obvious bear traps. Unemployment and underemployment are already far too high. At the moment, the average Nigerian only produces more than he or she consumes for an average of 30 years of their life, compared to 34 years in Indonesia, 35 years in India, and 37 years in China. This intensifies the need for a greater focus on human development and on the distribution of growth.

Fourth, political instability – and, above all, conflict – will be obvious deal breakers for the post-2015 poor.

Unsurprisingly, lower income countries are making the slowest progress on poverty. While two thirds of countries are on target, or close to target, for all MDGs, only six out of forty LICs are on track to meet MDG1 (poverty) and just one is on target to meet MDG5 (maternal mortality).

Almost all of these countries have very weak institutions, and many of them have experienced repeated cycles of conflict. Although the number of civil and interstate wars has fallen in recent decades, many countries remain locked in cycles of repeated violence.

According to the 2011 World Development Report, “for every three years a country is affected by major violence (battle deaths or excess deaths from homicides equivalent to a major war), poverty reduction lags behind by 2.7 percentage points… fragile and conflict-affected states and those recovering from conflict and fragility, account for 47% of the population [of developing countries], but they account for 70% of infant deaths, 65% of people without access to safe water, and 77% of children missing from primary school.”

This is not just a problem for the poorest countries, of course, but for highly unstable middle income countries such as Pakistan and Nigeria, which are guaranteed to be on the frontline of the fight against poverty post-2015.

Fifth, an attempt to abolish poverty will become harder as it progresses, not easier, as poor people are targeted who face multiple obstacles preventing development.

Despite all the money that is spent on international development, we still know far too little about poverty in countries where problems are most deep-seated.

In Africa, 2005 poverty estimates were based on data for less than 70% of the population. Many countries have either not completed household surveys in recent years, or have not collated the results.  It is still common to find donors supporting huge programmes in countries where they cannot even be sure, say, how many children are not in school.

Voices of the Poor – the World Bank’s survey of 60,000 poor people is still spoken of with reverence, but it’s over ten years old. Few countries have the detailed, shared data sources – and accompanying analysis – on the drivers of poverty that are needed to underpin any effort to reach the poorest.

And sixth, much will depend on how resilient developing countries prove to a range of new threats.

Resource scarcity is clearly a game changer, both for poor countries that have extensive natural resources, and which risk an intensification of their ‘resource curse’, and for those that don’t.

Food and energy inflation has a disproportionate impact on the poor, as incomes grow but fail to keep pace with the cost of living. Progress against hunger was stalled even before the food crisis. The IEA projects no decline in energy poverty levels (cooking on biomass and/or no electricity) by 2030.

The poor also have few reserves in the face of famine, floods, droughts, earthquakes, etc. 20-40% of GDP of African countries comes from agriculture – every percentage point loss in the sector due to a natural disaster knocks off a quarter of percentage point, with a more pronounced impact on poor households.  Population pressures, and climate change, will intensify these risks.

The news here is not necessarily bad. In an era of higher food prices, a rural renaissance is possible, if agricultural investment gets down to the grassroots and those living in the countryside are rewarded for the ecosystem services they provide.

Ideally, urban and rural development policy need to be rethought together. All population growth is now in the towns and cities of the developing world, which will struggle to secure the resources they need to support their populations.

Some of the world’s biggest cities look pretty fragile to me (Karachi, for instance – 15 million people in 2015, probably 20 million by 2030), while I also wonder whether trouble is growing in the ‘long tail’ of countless smaller towns where roughly a quarter of the world’s population resides.

Post-2015 Development

If we take out the crystal ball, what are the prospects for development post-2015? We could categorise countries according to the challenges ahead of them (and the poverty reduction strategies that will be most effective).

(i) Development’s A-List: stable middle income countries with a reasonable or strong commitment to inclusive growth, investment in social development, and other pro-poor policies.

(ii) Rising stars: Low income countries with comparatively strong institutions and increasing growth and poverty reduction potential.

(iii) Tough nuts: Middle and low income countries with fragile and/or failing institutions, and endemic problems with conflict/violence.

I then see three broad scenarios post-2105, all of which assume that the Bank/IMF projections hold out for the new few years (this is a big if).

• More of the same: progress on poverty is concentrated in less fragile states. The proportion of the poor continues to drop, but absolute numbers fall slowly, if at all.
• Backwards step: conflict, macroeconomic or political instability, or new risks (scarcity) see one or more large countries drop out of the A-list.
• Tough nuts cracked: progress accelerates in a growing number of fragile states, while more inclusive growth reaches the poorest in all poor and middle income countries.

I’d also expect (or hope) to see:

• An early commitment from governments to ending poverty, allowing development of a roadmap for ending poverty that can be implemented from 8 September 2015, the anniversary of the Millennium Declaration.
• The commitment to ending poverty to be part of any broader package of sustainable development goals, but in a way that ensures resources are ring fenced and the post-2015 poverty agenda is insulated from the (likely) failure to agree SDGs.
• Tailored strategies for ending poverty in key regions (Africa) and groups of countries (e.g. conflict-afflicted), for achieving results on specific MDGs (e.g. the 10 countries where 70% of the kids out of school live), and for an integrated response that releases the potential of catalytic groups (e.g. women).
• A renewed commitment from international development agencies to focus on the very poorest, and to bring together disparate existing bilateral and multilateral development strategies into an integrated approach to the post-2015 agenda.
• Development assistance (and especially development expertise) to be very heavily focused on the ‘tough nuts’, with upwardly-mobile middle income countries largely left to fend for themselves (and to export their models to poorer countries), and a continued provision of budgetary support to any ‘rising star’ able to cope with it.

Conclusion

In the Millennium Declaration, the world’s leaders described the world’s central challenge as ensuring “globalization becomes a positive force for all the world’s people” and promised to “spare no effort to free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty.”

They were committed, they said, to “freeing the entire human race from want.”

With poverty in retreat, I think we should be doubling down on that commitment, and moving from halving poverty by 2015, to ending it by 2030. It’s a stretching target, especially if contagion from the economic crisis finally hits developing countries, and especially as the last of the poor will find it hardest to escape from poverty.

But it also seems to be a target that could be achieved. What do you think? Am I wrong?