Adding extra ingredients to the MDGs

Development Policy17 Jun 2009Lawrence Bategeka

The eight MDGs could simply be summarized as a desire to reduce poverty (MDG 1) through addressing its various dimensions such as hunger, malnutrition, poor health (including addressing HIV/AIDS, malaria, and poor maternal health), lack of basic education, gender inequity, and environmental deterioration.

For two decades the World has witnessed an enriching debate on poverty reduction as the ultimate goal for interventions that are designed to cause development at country as well as global level. The debate revolved on several key aspects including: 1) understanding poverty – its dimensions, nature, and causes; 2) approaches to tackling poverty; 3) the relationship between poverty reduction and economic growth; 4) the role of the public sector in poverty reduction; and 5) the role of development partners in poverty reduction.

Development economics has thus focused on MDGs during the last two decades, especially after the declaration by the members of the United Nations in 2000 that prioritized achievement of the MDG targets by the year 2015. MDG 8 focused on strengthening partnerships between poor countries (aid receivers) and richer countries (aid givers) in the business of poverty reduction. The thinking was that poor countries needed massive injection of financial resources to reduce the poverty that inflicts them; that if the injected resources were utilized well, poverty reduction would be realized –sooner or later. Accordingly, a country’s failure to realize substantial improvements in human development after massive injection of foreign aid was attributed to poor utilization of aid resources. Then a debate on aid effectiveness followed, with donors pointing to poor governance in aid recipient countries, and aid recipient countries blaming the ineffectiveness of aid on donors for various reasons including conditionality, tying of aid, and unfavourable forms in which aid is extended (e.g. project aid). The parties involved reviewed these issues in various meetings (e.g. the Paris Declaration of 2003) with a view to improving effectiveness of aid on the ground in terms of achieving the intended development outcomes.

After following the MDGs development paradigm for slightly over two decades, we are now in a position to make some observations and begin to propose additional ingredients for the 2015 MDG-plus agenda. Mention can be made of the following:

  1. There is no doubt that the MDGs will still remain relevant. Any Government worth respecting should focus on improvement of the wellbeing of its people. In poor countries, many Governments have abdicated their primary responsibility (improvement of people’s well being) to donors, mainly on account of aid. Some poor countries could have obtained better development outcomes if they had utilized both aid and domestic revenue better.
  2. The aid approach to development can hardly cause sustainable economic growth and development mainly because it is weakly linked to utilization of a country’s human and natural resources. Accordingly, the growth some poor countries registered during the past two decades was driven mainly by aid and was hardly rooted in the fundamentals of the economy such as improvements in productivity, employment creation, utilization of technology, and utilization of natural resources (e.g. land)
  3. In most aid recipient countries a lot of aid was spent on non-tangible things like training/workshops – some civil servants have been trained from the start of their careers to their time of retirement without leaving them enough time to practice what they were being trained to do! More aid could have been channelled to enhancing the productive potential of economies such as investing in infrastructure development (e.g. transport infrastructure, power generation, telecommunication infrastructure etc.) with a view to lowering the cost of doing business and enhance the competitiveness of aid recipient countries.
  4. Unemployment characterizes aid recipient countries; there is excessively high unemployment for the uneducated and the well educated. In poor countries, the extent to which education improves employment opportunities seems to be very limited. Some few graduates migrate from their countries to Western economies in search of employment opportunities. Even the little capacity poor countries are building, they are losing it to western economies, which does not auger well for sustained development of those countries.
  5. Rising income inequality characterizes most aid receiving open economies, which could be a threat to political stability as well as to sustainable economic growth and development.

The above serves to illustrate that an MDG approach to development needs major refinement if it is to address the fundamental development challenges aid recipient poor countries face. Aid could play a significant role in the development process of recipient countries if the areas it should finance are limited to interventions that produce tangible results that improve a country’s capacity to service the loans in the short to medium term (the argument for long term is diversionary because, as Keynes said, in the long run all of us shall be dead!). Following frustration with aid, some poor countries are beginning to resist aid, which of course means that such countries would have to rely on their human and natural resources to cause development in their countries, which could take much longer time but hopefully produce sustainable development that is rooted in the economic fundamentals of such economies. However, such a route could be difficult to follow within the current global architecture. Increasingly, the global financial architecture is coming under attack and the World could witness more challenges akin to the Global Financial Crisis, which could make the realization of economic growth and human development an uphill task in the coming years, especially in poor countries.

A post 2015 MDG – plus agenda should continue to focus on human development but with refinement in approach especially the enhancement of individual as well as household capacity to emancipate themselves from poverty. Such approach would call for ensuring that every individual gets a decent job (the majority) or has access to productive assets (the few that can afford) that would enable him or her to earn a decent living (I am not preaching socialism here; the mode of production would still remain market based). The state would have to focus more on the provision of public goods, especially economic infrastructure. The state would continue to provide high quality social services especially education, health, and water, mainly to the poor (quality should be prioritized against quantity – if both could be achieved, the better). A post 2015 MDG Plus development agenda should prioritize utilization of a poor country’s natural as well as human resources; aid should play just a supportive role in this regard. Such approach calls for express focus on industrialization, development and utilization of technology in various fields, and value addition to raw materials that poor countries produce. This may call for revisiting of the international trade arrangements made between poor and rich countries, with a view to making it possible for poor countries to increase their share in world trade.

A focus on the measure of progress is something that is less desirable though important – both at national and global levels. While targeting of the vulnerable and the poor as an approach should continue to be used, the major emphasis should be more on participation by all in the economic growth process (inclusive growth of the vulnerable such as women, marginalized people, etc.). Poverty measurement, its merits notwithstanding, seems to have consumed more resources compared to the resources for fighting it. Such support should be on pure grant basis to poor countries – including support to statistical offices, and research institutions. Such institutions could continue to do a good job in poverty measurement – but funded by grants and not aid.