We are now in a one-year countdown to establish a new approach to globalization. In September 2005, world leaders will meet at the UN to review the progress made since the Millennium Assembly in September 2000, when they pledged to support a set of ambitious objectives — the Millennium Development Goals — to help the world’s poorest people escape poverty, hunger, disease, and illiteracy.
Setting goals was the easy part. When they return next fall, world leaders must decide on how to achieve them. Fortunately, a proposal by UK Chancellor Gordon Brown might provide the needed global breakthrough.
Here is the problem: globalization offers people everywhere the chance to escape extreme poverty, but it is not working in many parts of the developing world. While China and India grow rapidly, most of Africa is stagnating. Similarly, large parts of Latin America and Central Asia are experiencing rising, not falling, rates of poverty.
In most cases, geography plays an important role in success or failure. The big development success stories are places like Shanghai, port cities with ready access to world markets. The biggest development failures tend to be in rural areas far from the coast. Communities living in mountainous areas, such as in the Andes, or Central Asia, or the highlands of East Africa, are especially isolated.
Geographical isolation is even more extreme if the country is landlocked, like Bolivia, Afghanistan, Ethiopia, or Burkina Faso. In addition to isolation, other problems include droughts in Africa, where farmers depend on rainfall rather than irrigation, and high disease burdens in tropical countries suffering from malaria, dengue fever, and other killer diseases.
All of these problems are solvable, but they are not being solved in many places. Instead of hearing more lectures from the IMF about cutting budgets, poor countries need larger budgets to pay for the required investments — roads, power supplies, ports, schools, and health clinics — to jump-start economic growth. The IMF should spend less time telling the poorest of the poor to cut their spending, and more time telling rich countries to give more money to help the poor meet their investment needs.
Rich countries have promised more help for years, but continue to renege. Thirty-five years ago, they promised to give 0.7% of their GNP to poor countries as development aid. Instead they give 0.25% — a shortfall that amounts to $120 billion per year.
The United States causes half the total shortfall. If the US lived up to its pledge of 0.7% of GNP in donor aid, it would be giving $75 billion per year. Instead, it gives around $15 billion.
The US could easily afford to do more. The Bush administration gave $250 billion per year in tax cuts to the richest Americans, raised military spending by $150 billion per year, and then turned to the poorest people of the world and told them that there is no money available to meet America’s promise.
None of this makes sense for global security, or even for the financial interests of donor countries. The failures of economic development in the Andes, Central Asia, and Africa contribute to global instability, local insurrections and violence, drug trafficking, and bases for terrorism. Military approaches alone will not work, because the root of the problem is the vulnerability of poor, hungry people to the prophets of hate.
If donors keep giving only a little bit of help, but not enough to solve the problems of the poorest countries, these countries will never escape poverty’s grip. By financing a much higher level of investment in the next few years, rich countries would give poor countries the chance to achieve economic growth — promising an eventual end to further aid.
Chancellor Brown’s proposal — an initiative called the International Finance Facility (IFF) — does precisely this. The idea of the IFF is to guarantee that donor countries double their aid levels during the next decade, so that well-governed poor countries can make the investments they need to achieve the Millennium Development Goals. Brown is exactly right: let’s put Africa and other impoverished regions on a path of sustained economic growth by frontloading the aid during the period until 2015.
Great Britain has made the Millennium Development Goals, and hence the IFF, the centerpiece of the G-8 Summit, which will be held in Scotland next July. French President Jacques Chirac has joined Blair and Brown in a bold call for rich countries to honor their promises to the poor. The richest countries — the US, Germany, and Japan — must join this vital initiative. Building a more peaceful and prosperous world is in everyone’s best interest.
Jeffrey D. Sachs is Professor of Economics and Director of the Earth Institute at Columbia University.
