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Millennium Goals Need Development, Not Charity

Gustavo Capdevila

GENEVA, May 28 2010 (IPS) - The Millennium Development Goals (MDGs) came into existence in the right place, the United Nations, but at a most unpropitious time, in September 2000, when ideas about the invincibility of market forces still held sway in the world.

This fact has to a great extent determined the outcome of the MDGs, conceived to eliminate or reduce, by 2015, various social and economic evils such as extreme poverty, hunger, illiteracy and gender inequality, which prevent the construction of more advanced and egalitarian societies.

In spite of this failing, the United Nations Conference on Trade and Development (UNCTAD) recognises that the MDGs are the best development policy that the U.N. has devised in its 65 years of existence.

The MDGs are “a wonderful thing,” UNCTAD Secretary-General Supachai Panitchpakdi said Friday.

However, UNCTAD experts maintain that the MDGs are based only on the market creed that was dominant in the 1980s and 1990s, as laid down in the economic policy prescriptions of the so-called Washington Consensus, which call for minimal government intervention and maximum freedom for market forces.

The MDGs were based on the belief that in economic matters, the market would solve everything, Supachai said.

The assumption was: “If you do the right thing, if you behave, if you put your budget in order and you trade well, you’ll be rewarded,” said the secretary-general. “But that has not happened.”

Markets cannot determine the direction of development, he said. And market forces cannot deliver growth and distribution, job creation or social protection.

Only two out of the eight MDGs clearly address economic issues: the first is to halve the proportion of people living on less than one dollar a day in 1990, by 2015.

Pressure from the International Labour Organisation (ILO) led to the later addition to this goal of a commitment to achieve full, productive and decent employment for all, including women and young people.

The eighth MDG is to “develop further an open, rule-based, predictable, non-discriminatory trading and financial system,” and contains provisions favourable to least developed countries and other marginalised and indebted nations.

The rest of the MDGs tackle social aspects, such as primary education, gender equality and empowerment of women, and basic health issues, as well as the goal of ensuring environmental sustainability.

In the 1980s and 1990s, it was assumed that deregulated markets would take care of economic development, and the social issues could be left to the U.N. and the MDGs.

That is why allocation of official development assistance (ODA) shifted away from economic activities, like productive investment in agriculture, industrialisation and infrastructure, and towards social areas.

“This was not wrong. What was wrong was that there was no balance; there was a total shift away from economic activity,” Supachai said.

At its Jun. 8-9 annual session, UNCTAD’s governing body, the Trade and Development Board, will analyse a report setting out UNCTAD’s position on the MDGs.

The document will be presented to a high-level meeting of the U.N. General Assembly that will assess progress towards the MDGs in September.

Supachai said the MDGs have made a positive difference in areas like enrolment in primary schools and gender equity. In Asia, he noted, there has been definite improvement in poverty reduction.

In Africa, poverty was declining until the global financial crisis broke out. Now, with at least 30 million more people unemployed, Africa is moving backward again, he said.

UNCTAD’s analysis of some countries, mostly in Asia, shows that the ones that have made inroads into poverty are countries that have invested not only in social areas but also in productive activities, he said.

Based on these findings, experts conclude that the MDGs may have missed the mark in one important way: they lack economic growth and employment targets.

“If you go for all kinds of social goals without having growth targets or employment targets, how are you to finance all this?” Supachai asked.

“This means that poor countries have to depend on handouts from donors, but these are not forthcoming,” he said. In 2005 the Group of Eight (G 8) most industrialised countries (Canada, France, Germany, Italy, Japan, Russia, the UK and the US) meeting in Gleneagles, Scotland made a commitment to specific ODA funding levels, but have been accumulating a deficit of about 20 billion dollars a year.

The shortfall is now in the hundreds of billions of dollars, and it will not be made up in the near future, Supachai predicted.

Instead, aid will be reduced, “because of the cyclical behaviour of ODA,” whereas countercyclical ODA spending is needed, triggered automatically when there is a recession, he said.

Another of UNCTAD’s recommendations is that public and private investment as well as monetary and fiscal policies “must be guided towards productive investment, because they need to be linked with employment creation.”

The U.N. agency is very concerned with the issue of economic inequality. In areas that have experienced growth, inequality has deteriorated so badly that it may lead to social unrest, Supachai warned.

UNCTAD would like the MDGs to be viewed now in the light of inclusive growth and what experts term “virtuous circles”, that can be encouraged by investment in economic activities that will lead to social investments, and so on.

Otherwise, the MDGs are unlikely to be met, the experts say.