The Millennium Development Goals: Raising the Resources to Tackle World Poverty
This volume provides an up-to-date and detailed tour d'horizon of the exciting diversity of new proposals and mechanisms currently being discussed in order to raise the necessary financial resources to make the achievement of the Millennium Development Goals a reality by 2015. If the MDGs to halve global poverty and significantly improve the conditions of life of the world's poor are to be met on schedule, putting in place the requisite funding is an essential component. The economists in this volume from WIDER, UNDP, and other leading institutions have contributed their analyses as part of the Helsinki Process on Globalisation and Democracy - a high-level multi-stakeholder initiative to develop new approaches to global problem-solving, a global economic agenda and human security.

Key resource flows examined include ODA, foreign direct investment, remittances by migrants, commodity export prices, and new ideas to secure sustainable debt relief, including SDRs, debt cancellation, revaluation of IMF gold reserves, debt arbitration, and other proposals. The statistically rich analyses are presented in the context of the complicated trends in global inequality, the incidence of poverty, and the impacts of globalisation. The editors conclude with a thought-provoking set of ideas about the political requirements for effective global economic governance aimed at achieving the MDGs that the world community set itself at the start of the new millennium.

The empirical data in this volume and survey of key new ideas for resource mobilisation will be invaluable to all those concerned with global economic governance, including scholars, diplomats, NGO lobbyists, and students studying development economics.
"1112709906"
The Millennium Development Goals: Raising the Resources to Tackle World Poverty
This volume provides an up-to-date and detailed tour d'horizon of the exciting diversity of new proposals and mechanisms currently being discussed in order to raise the necessary financial resources to make the achievement of the Millennium Development Goals a reality by 2015. If the MDGs to halve global poverty and significantly improve the conditions of life of the world's poor are to be met on schedule, putting in place the requisite funding is an essential component. The economists in this volume from WIDER, UNDP, and other leading institutions have contributed their analyses as part of the Helsinki Process on Globalisation and Democracy - a high-level multi-stakeholder initiative to develop new approaches to global problem-solving, a global economic agenda and human security.

Key resource flows examined include ODA, foreign direct investment, remittances by migrants, commodity export prices, and new ideas to secure sustainable debt relief, including SDRs, debt cancellation, revaluation of IMF gold reserves, debt arbitration, and other proposals. The statistically rich analyses are presented in the context of the complicated trends in global inequality, the incidence of poverty, and the impacts of globalisation. The editors conclude with a thought-provoking set of ideas about the political requirements for effective global economic governance aimed at achieving the MDGs that the world community set itself at the start of the new millennium.

The empirical data in this volume and survey of key new ideas for resource mobilisation will be invaluable to all those concerned with global economic governance, including scholars, diplomats, NGO lobbyists, and students studying development economics.
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The Millennium Development Goals: Raising the Resources to Tackle World Poverty

The Millennium Development Goals: Raising the Resources to Tackle World Poverty

The Millennium Development Goals: Raising the Resources to Tackle World Poverty

The Millennium Development Goals: Raising the Resources to Tackle World Poverty

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Overview

This volume provides an up-to-date and detailed tour d'horizon of the exciting diversity of new proposals and mechanisms currently being discussed in order to raise the necessary financial resources to make the achievement of the Millennium Development Goals a reality by 2015. If the MDGs to halve global poverty and significantly improve the conditions of life of the world's poor are to be met on schedule, putting in place the requisite funding is an essential component. The economists in this volume from WIDER, UNDP, and other leading institutions have contributed their analyses as part of the Helsinki Process on Globalisation and Democracy - a high-level multi-stakeholder initiative to develop new approaches to global problem-solving, a global economic agenda and human security.

Key resource flows examined include ODA, foreign direct investment, remittances by migrants, commodity export prices, and new ideas to secure sustainable debt relief, including SDRs, debt cancellation, revaluation of IMF gold reserves, debt arbitration, and other proposals. The statistically rich analyses are presented in the context of the complicated trends in global inequality, the incidence of poverty, and the impacts of globalisation. The editors conclude with a thought-provoking set of ideas about the political requirements for effective global economic governance aimed at achieving the MDGs that the world community set itself at the start of the new millennium.

The empirical data in this volume and survey of key new ideas for resource mobilisation will be invaluable to all those concerned with global economic governance, including scholars, diplomats, NGO lobbyists, and students studying development economics.

Product Details

ISBN-13: 9781848137356
Publisher: Bloomsbury Publishing
Publication date: 07/18/2013
Sold by: Barnes & Noble
Format: eBook
Pages: 256
File size: 2 MB

About the Author

Fantu Cheru is a professor at the School of International Service, The American University, Washington DC.

Colin Bradford is a visiting fellow at the Brookings Institution.

Read an Excerpt

The Millennium Development Goals

Raising the Resources to Tackle World Poverty


By Fantu Cheru, Colin Bradford Jr

Zed Books Ltd

Copyright © 2005 Helsinki Process on Globalisation and Democracy, Ministry for Foreign Affairs of Finland
All rights reserved.
ISBN: 978-1-84813-735-6



CHAPTER 1

Global Inequality, Poverty and Justice: Empirical and Policy Issues

RAIMO VÄYRYNEN


The relevance of inequality

Observations about degrees of trends in global inequality have both conceptual and empirical dimensions. In addition, these dimensions of inequality have political, institutional and normative aspects that obtain added significance through their links with the process of globalisation. In fact, inequality has become a major issue in the debates concerning globalisation and its effects on individuals, social groups, regions and nation states. The merits of globalisation are assessed, to a large degree, on the basis of whether it enhances or diminishes poverty and inequality.

In effect, poverty and inequality have become major yardsticks of the legitimacy of the globalisation process. This is evident in the Millennium Declaration and the Millennium Development Goals (MDGs) enunciated by the UN General Assembly in 2000. A similar benchmark for the success of globalisation has been set up by the World Commission on the Social Dimension of Globalisation in its recent report.

Our primary concerns are that globalisation should benefit all countries and should raise the welfare of all people throughout the world. This implies that it should raise the rate of economic growth in poor countries and reduce world poverty, and that it should not increase inequalities or undermine socioeconomic security within countries. (WCSDG 2004)


The Commission accepts inequality as a fact of life, but is opposed to its increase as a result of the opening up of national markets.

Most social theories consider equality as a necessary condition of the good life, or at least regard marked inequality as a hindrance to it. Obviously, in particular in liberal theory, equality is often confined to the political sphere, while the market system is expected to produce economic efficiency through some degree of inequality. In the past, social theories have focused primarily on the essential badness (but sometimes on the essential goodness) of inequality. Beitz (2001) notes this level of preoccupation with inequality as offering direct reasons for asserting fundamental ethical requirements. On the other hand, he speaks of derivative reasons that treat inequality as a bad thing, not in itself but because of its adverse consequences. It appears that, in recent debates, derivative reasons have assumed a central position. This ties in with the debates on globalisation, in which (in)equality is clearly a derivative reason that reflects the expansion of the market to most spheres of society.


Conceptual and ethical issues

The first issue to be addressed here is conceptual in nature: how terms such as inequality, polarisation, poverty and justice relate to each other. Inequality is a measure of how various assets are distributed within a given system of units: as a rule, the greater the share of the rich, the smaller the share of the poor; and the weaker the middle category, the greater the degree of inequality as measured by the Gini index and similar formulas. It should be borne in mind, however, that the same value of the Gini index can be obtained from different kinds of income distribution that may, moreover, have different political connotations. In addition, the Gini index, measuring aggregate inequality, is unable to detect changes in the underlying income distribution. Therefore, it can sometimes be justified to use simpler measures, such as the ratio of total income going to the richest and the poorest 20 per cent of the world population.

Polarisation comes close to the concept of inequality, although one can make a distinction between them by saying that polarisation seems to focus more on the upper end of the distribution of assets. The concept refers literally to a pole that constitutes a central point in the system around which assets are accumulated and other actors are organised. In that sense, polarisation is akin to the concept of accumulation that, though a collective term, singles out certain dominant actors that have been able to amass power and wealth. Polarisation, however, also refers more specifically to the lower end of the distribution, where resources have remained limited despite being shared by a large number of people.

Inequality, polarisation and accumulation are collective or contextual concepts; they cannot be applied to a single individual or group. This means that they are systemic concepts and have system-wide consequences. On the other hand, poverty is an individual concept; for instance, every single individual living on less than a dollar or two a day can be described as poor. Such an individualisation of poverty should not be taken too far, however. Poverty is also a systemic concept as it affects the entire community; the rich and poor cannot avoid their interdependence. This view has significant political and policy implications: poverty cannot be eradicated without considering the functions that poor people have in society and touching upon the privileges of the richest strata (Oyen 1996).

A focus on inequality also brings in the ethical dimension. Inequality hints at exploitation, an asymmetric transaction between parties in different power positions. The ethical approach refuses to accept the point that 'inequality is nobody's fault and cannot be fixed in our lifetime' (Birdsall 1998). In particular in the study of poverty, power relations are often neglected as they would raise the issue of guilt, pointing at those responsible for the prevailing state of affairs. For this reason, the problem of power may be easier to deal with if the starting point is inequality instead of poverty, as this approach seems to focus more clearly on unfair and exploitative social relations.

Ultimately, the ethical-political perspective leads one to ask whether global inequality is, in the last instance, the mere reflection of a comprehensive Western hegemony in international relations or a natural state of affairs. Seen from this perspective, the practical struggle for global justice entails the development of feasible mechanisms by which, gradually, the superiority of industrialised countries can be diluted (Miller 1999; Dalmayr 2002; Goodin 2003).

It nevertheless appears that, while the justification of inequality can be debated, it is difficult to present a high degree of polarisation and lopsided accumulation as morally acceptable conditions. The terms of the debate easily lead to the identification of 'robber barons' and 'filthy rich' who are condemned, often not without reason, as being 'bloodsuckers' on the common people. This primitive political comment leads to the perennial issue of justice in debates concerning inequality, poverty, polarisation and their mutual relationships.

Recent policy debates have focused heavily on poverty and its reduction. One can even speak of an anti-poverty norm that has come to dominate international debates (if it has not been so conspicuous in actions). Moreover, there are extensive empirical data available on the number and percentage of people living below the poverty line, which has usually been defined as having less than one or two dollars a day available for personal consumption. In particular, the World Bank and the United Nations Development Programme (UNDP) have been active since the 1990s in dealing with the issue of poverty and means to reduce it (World Bank 2001; UNDP 2000)

In other words, many but not all people are poor because others are rich; poverty is not a natural state of affairs, but a function of deep inequities in the national and global systems. The poor and the rich may be physically segregated from each other, but there is a systemic connection between them. Obviously, this connection is both politically and empirically complex as both poverty and inequality are multidimensional concepts and phenomena that are difficult to define and measure (Nederveen Pieterse 2002; Alkire 2002).


The choice of methods

The results of any inquiry involving inter-country comparisons are critically affected by the choice between different methods and measures. Deaton (2004) speaks with justification about the mixture of science and politics in the study of poverty. One choice needs to be made between average per capita figures and those weighted by population, purchasing-power parity (PPP) and actual exchange rates. The choice between these alternatives depends on the premises and purposes of analysis. If the main concern is the development of economic power relations between countries, and thus the distribution of power among the nation states, the choice of these states as units of analysis and the unadjusted real GDP per capita can be justified. This approach is consistent with the traditional power-politics model of international relations.

On the other hand, if the target of the study is to explore relative welfare conditions of people living in various countries, the methodological choices should be different. First, the experiences of each country should be weighted by population size, as we are interested primarily in the welfare of the people and not in the economic power of states. Second, we should pick up PPP versions of the GDP per capita, as these figures reflect different price levels of individual countries. In poorer countries, available income usually provides access to a bigger bundle of goods and services. In other words, standard GDP per capita understates the true income of least-developed countries. Presumably the choice of this approach results in a somewhat lower degree of inequality than the alternative method (Wade 2001).

Perhaps the biggest controversy concerns the choice between the estimates of poverty derived from the national accounts, and thus income figures, on the one hand, and consumption data based on household surveys on the other. The reliance on direct household surveys leads to much higher rates of poverty, and their lower decline, than the use of national accounts. One of the reasons for this is that even poor people might be able to save something and hence consumption figures result in a higher poverty rate (Economist 2004).

It is important to bear in mind that empirical results depend on methodological premises and choices; therefore, there are no absolute truths about poverty and inequality. All too often, the analysis deteriorates into litanies of evil inequality derived from secondary analyses, where measures and methods are mixed up without much concern for their underlying differences (Pieterse 2002; Weissmann 2003). This is not to say that the world is not an unequal place, and often grotesquely so, but that effective policy-making requires more thorough and thoughtful analyses.

Another choice to be made in empirical studies is whether income differences should simply be measured between countries, or whether intracountry differences should also be considered. A common finding in several empirical studies is that, in overall global inequality, inter-country variations play a much greater role than intra-country differences. In other words, it is more decisive for your social position whether you were born in a poor or rich country than whether you were born to a poor or rich family (Bourguignon and Morrisson 2002).

No doubt, different aspects of being an underdog reinforce each other. The worst economic fate, determined by an almost complete lack of opportunities, is to be born to a poor family in a poor country. However, the point remains that global and domestic inequalities are different phenomena and should not be conflated. In fact, some of the richest countries, especially the UK and the US, are among the most unequal in the world, while some poorer countries can be relatively equal.

This raises the perennial issue of how the domestic distribution of assets and income is associated with the structure of the global order. Structuralists tend to see domestic conditions as reflections of global inequality, because national elites are usually associated with the global economy and its benefits, even though subordinated to its operation. On the other hand, the poor, especially in the rural areas, are disconnected from the global system and, therefore, are doubly discriminated against. Thus, some empirical studies have divided China and India internally into two different 'countries', urban and rural, with markedly uneven average incomes. This raises another perennial issue: whether association with or separation from the world economy is conducive to low incomes and poverty (more on this later).


A historical perspective

The traditional model leads one to ask how the average income of different countries has developed over time. Maddison (2001) has done the most detailed and reliable research on this matter, covering the last two millennia. One of his main points is that the year 1820 was a major turning point, after which economic development, while obviously fluctuating, has become much more dynamic. In 1820, the GDP per capita, measured in 1990 US dollars, was about US$1,200 dollars in Western Europe and North America, and roughly half that in Eastern Europe, Asia and Latin America. The figure for Africa was a little over US$400 dollars and remained essentially unchanged at that level from 1000 AD to the early twentieth century (the same is true for much of Asia over an even longer period of time).

The marked divergence started in the second half of the nineteenth century. In 1950, Western Europeans had reached the average income of US$4,500 dollars – though there were major country-to-country variations – while the North Americans had double that average income. Latin America had reached the per capita income of US$2,500, Eastern Europe US$2,100, and Japan US$1,900 dollars, while the rest of Asia languished at US$635 and Africa at US$850 dollars. By 1998, per capita income differences had grown even more steeply. North America was still leading the league at US$27,000 dollars, while Western Europeans and the Japanese were earning US$18–20,000. East Europeans and Latin Americans had fallen far behind, with an average income of some US$5,500, and most of Asia and Africa were even further back, with per capita incomes of US$3,000 and US$1,350, respectively (Maddison 2001).

The big picture emerging from these statistics is clear: during the last two hundred years or so, there has been a major divergence in the average income levels of main regions. As a result, global income inequality has been growing historically. This growth has not been even, of course, but several countries and regions have been going through spurts of growth in per capita terms, including the US in the nineteenth and twentieth centuries, the Soviet Union from the 1930s to the 1970s, Japan after the 1950s, and China and India even more recently. On the other hand, Africa in particular has been a victim of slow development through the entire past two centuries. Thus, in the main, the West has been the victor in the global competition for economic welfare, while the leading Asian economies have staged a certain comeback, moving closer to the leading position they held in the fifteenth century.

Long-term intra-country distributions of income are extremely difficult to obtain, but Williamson's work (1996; 1998) provides some insights into this question. At the turn of the twentieth century, large flows of migrants critically shaped the degree of equality in the Atlantic economy. Inequality decreased dramatically in the European countries that were the main source of these emigrants, while it increased in the receiving countries such as Australia, the US and Canada. These changes resulted from the convergence of factor prices, as predicted by conventional trade theory. With deglobalisation, protectionism and economic crises, especially in the 1930s, convergence in income levels ceased and inequality increased sharply, in particular in poorer countries.


(Continues...)

Excerpted from The Millennium Development Goals by Fantu Cheru, Colin Bradford Jr. Copyright © 2005 Helsinki Process on Globalisation and Democracy, Ministry for Foreign Affairs of Finland. Excerpted by permission of Zed Books Ltd.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Table of Contents

Introduction - Fantu Cheru and Colin Bradford Jr
1. Global Inequality, Poverty and Justice: Empirical and Policy Issues - Raimo Vayrynen (Finnish Academy of Science)
2. Development Finance through ODA: Trends, Financing Gaps, and Challenges - Tony Addison, George Mavrotas and Mark McGillivray (WIDER)
3. Making Sense of MDG Costing - Jan Vandermoortele and Rathin Roy (UNDP)
4. Foreign Direct Investment, Innovative Sources of Development Finance and Domestic Resource Mobilisation - Tony Addison and George Mavrotas (WIDER)
5. Remittances by Emigrants: Issues and Evidence - Andres Soimano (WIDER&ECLA)
6. The Commodities Crisis and the Global Trade in Agriculture: Present Problems and Some Proposals - Martin Khor (Third World Network)
7. Globalization, Debt and the 'Hoover Effect': International Structural Changes that Have Led to the Poor Financing the Rich - Ann Pettifor (Jubilee Research/new economics foundation)
8. Beyond HIPC: Secure, Sustainable Debt Relief for Poor Countries - Nancy Birdsall and Brian Dees (Centre for Global Development)
9. Debt Workout Mechanisms; Debt Arbitration - Kunibert Raffer (University of Vienna)
10. Achieving Healthy Urban Futures in the Twenty-first Century: New Approaches to Financing Water and Basic Sanitation - David Tipping, Daniel Adom and Anne Tibaijuka (UN-Habitat)
11. A Political Agenda for Global Economic Governance - Colin Bradford Jr and Fantu Cheru
Index
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