New global development agenda should shake the structures of impoverishment

Outi Hakkarainen
Kepa

Although the Millennium Development Goals will not be fully achieved by 2015 we should still work hard for them. Another global task is to critically assess the MDG process in order to lay a solid foundation for a better global development agenda. Several problems hindering the achievement of the MDGs are rooted in the structures of the global economic system which discriminates against developing countries and in other structural biases based on such things as gender or ethnicity. Setting up a new agenda will be a futile effort if structures of impoverishment are not addressed and proper development enablers identified and enhanced.[1]

Finland is a North European nation with its own socio-economic challenges, but globally it belongs to well-off countries responsible for engaging in the global development agenda. The Finnish government wants to be an accountable member of the international community, but its political will to be so does not always transpire. Finland won´t, for example, reach the 0,7 % target by 2015 which is a deadline year agreed in the EU. On the other hand Finland's current Development Policy Programme is positively founded on a human rights-based approach and democratic ownership [2]. The challenge for Finnish civil society is to compel the government to improve its international performance. There are several challenges in which Finland could be met to create a more active and courageous role in order to further global progress. Some of these challenges will be discussed in this article but first some thoughts on the MDGs.

Progress has been made towards the MDGs and development would most certainly have been slower without them. However, several shortcomings have been recognised, e.g. the absence of certain important themes, too modest objectives, narrow definition of poverty instead of focusing on the inequality gap, restricted attention on employment issues, limited perspectives on environmental and human rights, loose formulation of the goal of global partnership, lack of accountability mechanisms, and change towards a more equitable world pursued through a very limited toolbox, i.e. development cooperation.[3] In addition, the MDGs have not met the standards of existing international commitments. The target of halving the number of people living in poverty, for example, was less ambitious than the one agreed at the 1996 UN World Food Conference in Rome.[4] Other deficiencies have been a closed and donor-led formulation process, the impossibility to reduce broad structural problems into eight goals, the inability to take into account the special needs of fragile states, and the lack of formulating parallel goals for rich countries.

Emerging actors and limits of development cooperation

The world has changed since the Millennium Declaration and the geography of poverty has undergone a fundamental transformation. The fact that majority of people living on less than 1.25 US dollars a day live in middle-income countries need to influence the selection of tools to eradicate poverty after 2015. Development co-operation will continue to play an important role incountries with the highest levels of poverty and the lowest levels of domestic resources.

 But strong commitment from the BRICS countries (Brazil, Russia, India, China and South Africa) and other emerging economies is also required. It is essential to ask how to make their national development sustainable and to ensure that emerging business activities benefit the entire society. These countries are themselves responsible for their own development but international co-operation may help them. For example, support for democratization can be crucial as it usually correlates with fairer income distribution.

Another dilemma is their involvement in Africa where especially China, India and Brazil are creating South-South partnerships, asking for diplomatic support, and searching for resources and markets. The trade between the emerging actors and Africa has more than quadrupled from 2000 to 2009 and a similar growth surge is happening in investments and aid. Their share is still relatively moderate (e.g. 20% of the Africa’s foreign trade) but the reason why these actors have caused such a stir is the rapid and continuing rise of their engagement and negative influence they are commonly thought to have in the African societies by breaking deals with political elites with little attention paid to democracy, good governance, transparency, accountability or civil society participation, and their eagerness to exploit oil, land and other natural resources in the African continent.[5]

However, despite the drawbacks for example of China’s presence, its activities are often seen in Africa as more positive than Europe’s long involvement in their continent. For example the research on China, southern Africa and extractive industries argues that there can be a ‘win-win partnership’ if southern African governments' policies are based on achieving long-term socio-economic and development goals. In the case of the extractive industry this kind of impact could mean effective mining public administration, competencies to run extractive industries, appropriate tax regimes, functional linkages between the extractive industries and local economies and social responsibility demands for Chinese companies.[6] Finland and other donor countries should support the African governments in achieving these objectives and such cooperation with any foreign actor which do not hinder the development of the African societies. Crucial is also to acknowledge the role of multinational corporations which are increasingly shaking the playground. There is an urgent need for comprehensive corporate accountability rules.

Sustainable policies for lending, trade and tax collection

The turn of the millennium was characterised by debates about the debt problems of developing countries, the loan terms and conditions used by development finance institutions and the unfair rules of international trade. Nevertheless, progress has remained modest. International trade rules still fail to support the reduction of global poverty and effective long-term solutions to the debt problems of developing countries have not been found, despite promises. The new global framework should be equipped with incentives for sustainable lending policies and for trade policies supportive of developing countries. It is especially crucial to ensure coherence between these goals and the politics of international trade, investments and taxes. In the investment politics it is essential to take into consideration the special needs of the poorest countries and to create explicit and binding rules for the private sector as in addition to the state as it has lot of influence on developing countries and ecological carrying capacity of our planet.

The significance of taxation to financing developing countries is being gradually understood in the international community. Research has revealed a strong correlation between successful tax collection and human development. States dependent on tax revenue fare usually better when measured by good governance and democracy when compared with developing countries living on revenue from oil, for example.[7] The terms and conditions of loans granted by the International Monetary Fund (IMF) and the World Bank have contributed to bringing about a situation where developing countries have been forced to shift the focus of taxation towards consumption taxes in recent decades, as customs revenue has plummeted as a result of trade liberalisation.
People have also come to realise that curbing tax evasion practised by major companies plays a key role as developing countries try to get rid of their dependence on aid. The revenue lost by developing countries due to tax evasion by major companies may even exceed the amounts they gain in the form of development assistance many times over.[8] Taxation of foreign companies is also a key issue for middle-income countries. The taxes payable by companies bring needed revenue to the efforts of these states and enabling them to carry out their own development plans. The sustainability and fairness of tax systems should be included as part of the new development agenda. Internationally, it is crucial to control the tax havens and uproot tax avoidance, and to develop tax administration nationally and enhance the decrease of aid dependency.

Climate justice

The current economic growth model does not rest on a sustainable foundation. The biggest problem to the Earth’s carrying capacity [9] is posed by rich countries, which bear the brunt of responsibility for climate and environmental protection, and by big companies which cause the majority of man-made emissions. Environment and climate aspects should be integrated into the new development agenda so that they force rich nations to pay attention to their consumption habits and companies to be ecologically responsible. Furthermore, the new agenda should demand sustainable use of natural resources, include both global and national goals according to each country's responsibilities and capabilities, respect developing countries' right to development and emphasize climate justice. To achieve these objectives, developing countries need international support, such as climate finance, for their mitigation and adaptation activities. Climate finance should be new and additional to current ODA commitments.

In addition to supporting ambitious global goals Finland should enact a strong national climate law. A coalition of civil society actors has fought for an ambitious, just and forward-looking climate law since 2008. In June 2014 the government introduced Finland's first Climate Change Act, which sets a legally binding target to cut greenhouse gas emissions by at least 80 per cent by 2050. The bill is yet to be proposed to the parliament, but is expected to be passed in 2015.

Challenging the growth imperative

The development discourse is largely based on seeing economic growth as an undisputed condition for development although growth-driven economic policies have not shown to be a way to ensure decent livelihood for all, the trickle-down does not happen. Critical voices and alternative visions are rising up in different corners of the world. Approaches of 'buen vivir' (living well) and the solidarity economy have, for example, emerged especially in Latin America while commons-thinking and de-growth discourse are widening largely in the global North. These all challenge the simplified growth paradigm and enhance people-centred economics.[10]

The concept of the green economy is another story as it has been adopted so widely that its definitions are even contradictory. In the very best-case scenario, it may promote fair and just trade relations, help developing countries to skip the fossil fuel industry stage and raise the prices of dwindling natural resources to match their real value but in practice the use of the concept has widely caused suspicion. Some developing countries have expressed fears that more stringent environmental standards may exclude high-emission products from Western markets or may open a door to making aid and debt relief conditional. Quite different concerns rise from the people's movements, which are not able to see how the label of the green economy makes a difference to current unsustainable economic practices, and estimate the concept primarily as a tool for “green-washing”. These different approaches need to be recognized when formulating the new global development agenda and the social movements' voices based on local experiences to be carefully listened.

The debate on economic growth is also linked to the criticism on the gross domestic product (GDP) as an adequate indicator. Complementary instruments include e.g. the Human Development Index (HDI) and the Genuine Progress Indicator (GPI) that notice human and environmental well-being more broadly. Indicators such as the ecological footprint draw attention to consumption habits. For the new global development agenda, it is imperative to ensure that the benefits of different indicators can be used instead of making them compete against each other.

Towards another world

Despite the enormous problems and injustices we currently face in the world, we should continue to believe that another world is possible. We can reduce poverty and boost social development either by burdening or preserving the environment. The key question is how to get future goals to acknowledge the structures of impoverishment.

In the light of current knowledge, it is possible to provide the poorest part of the world’s population with adequate food, energy and subsistence in a sustainable manner. For instance, bringing electricity to the almost one fifth of the world’s population currently without it could be achieved with less than a 1% increase in global CO2 emissions. Providing the additional calories needed by the world’s population facing hunger would require just 1% of the current global food supply.[11]

Furthermore, we can combat inequality in its multiple manifestations. Child benefits, pension schemes, health care accessible to everyone and other instruments of comprehensive social policy have been the cornerstones of poverty reduction for decades in rich countries, in particular in Finland and in the other Nordic countries. However, it has taken a long time for comprehensive social policy to break through onto the development agenda.

It is important that Finland will continue working on the themes which have successfully been at the core of its agenda, e.g. gender equality, but as underlined at the beginning, it is time for Finland to make a bigger difference and putting also its own house in order, for example by achieving sustainable consumption and production and by giving up harmful subsidies In the context of new development agenda Finland should contribute to ensuring that the agenda is prepared in a fair, equitable and inclusive manner. Responsibility for the goal-setting process should rest with the UN and its member states as the UN is the only body with broad enough representation and acceptance for this purpose. Planning should be co-ordinated between states, local governments and civil society, and here the dilemma of enabling environment for civil societies needs to be acknowledged.

Other dilemmas are policy coherence between policy sectors and securing the resources for implementing the new development agenda. The old promise of 0.7 % target of development financing must be kept and in addition new public sources of financing are needed. Besides more resources these sources may contribute to reducing carbon emissions, such as greenhouse gas taxes, or reducing harmful short-term speculation like the financial transaction tax.

The most important challenge for Finland and the entire international community is to fight against inequality. Global inequality has increased during recent decades so hugely that both extreme poverty and extreme levels of wealth hinder egalitarian and stable development of the world. In order to diminish inequality we need to address both poverty and wealth in their structural terms.

Notes:

[1] See Kepa's publications: What Kind of World Do We Want to Live In? – From the Millennium Development Goals to the Post 2015 development agenda, Kepa Current Issues Report 14 (November 2013). http://www.kepa.fi/tiedostot/julkaisut/kepa_ajankohtaiskatsaus_2013_en_f.... Is development sustainable? – The world beyond the Millennium Development Goals, Kepa Current Issues Report  10 (March 2012). <http://www.kepa.fi/tiedostot/julkaisut/is-development-sustainable.pdf>

[2] Ministry for Foreign Affairs, Finland's Development Policy Programme (Helsinki: 2012), <http://formin.finland.fi/public/default.aspx?contentid=251855&nodeid=15452&contentlan=2&culture=en-US>

[3] See, for example: A. R. Khan, Employment and Millennium Development Goals: Analytics of the Linkage in the Context of an Accelerated Effort to Achieve the MDGs (2007), <www.azizkhan.net/EmploymentMDG.pdf>; S. Amin, the Millennium Development Goals: A Critique from the South, Monthly Review 2006, Volume 57, Issue 10. <http://monthlyreview.org/2006/03/01/the-millennium-development-goals-acritique-from-the-south>; Amnesty International, From Promises to Delivery: Putting Human Rights at the Heart of the Millennium Development Goals (Amnesty International Publications 2010).

[4] M. Loewe, Introduction: What is good about the MDGs and what is bad… A seminar paper presented at the Millennium Goals and Beyond: Reflections on an International Development Policy Agenda after 2015 seminar held in Bonn, 21–22 November 2011, <http://www.die-gdi.de/CMS-Homepage/openwebcms3_e.nsf/(ynDK_contentByKey)/MPHG-8JB9BB?OpenDocument&nav=active:Ver anstaltungen%5CMPHG-8JB9BB>

[5] J. Nuutinen, China and other emerging actors in Africa, Kepa's Working Papers n:o 34 (2012) www.kepa.fi/tiedostot/julkaisut/china-and-other-emerging-actors.pdf; I. Taylor, China’s New Role in Africa. (Boulder: Lynne Rienner Publishers Inc, 2009).

[6] G. Shelton and C. Kabemba (eds.), Win-Win Partnerships? China, Southern Africa and the Extractive Industries, (Johannesburg: Southern Africa Resource Watch SARW 2012), <downloadable at www.sarwatch.org>

[7] J. Marshall, One Size Fits All? IMF Tax Policy in Sub-Saharan Africa, Christian Aid Occasional Paper No. 2, April 2009), <http://www.christianaid.org.uk/images/imfoccpaper.pdf>

[8] Kepa, Laiton pääomapako kehitysmaista: ”Kehitysapua” köyhiltä rikkaille, <http://www.kepa.fi/tiedostot/julkaisut/laiton-paaomapako.pdf> [Illegal capital flight from developing countries: ‘Development assistance’ from the poor to the rich. English translation available at: http://www.kepa.fi/tiedostot/julkaisut/illegal-capital-flight.pdf]; D. Kar and S. Freitas, Illicit Financial Flows from Developing Countries Over the Decade Ending 2009, (Global Financial Integrity: 2011), <http://www.gfintegrity.org/storage/gfip/documents/reports/IFFDec2011/illicit_financial_flows_from_developing_countries_over_the_decade_ending_2009.pdf>

[9] WWF International, Living Planet Report 2010: Biodiversity, biocapacity and development (2010), <http:// www.worldwildlife.org/sites/living-planet-report/WWFBinaryitem18260.pdf>

[10] See, for example, M. Ulvila and J. Pasanen, Sustainable Futures. Replacing Growth Imperative and Hierarchies with Sustainable Ways (Helsinki: Ministry for Foreign Affairs, 2009). <http://www.ymparistojakehitys.fi/susopapers/Sustainable_Futures.pdf>

[11] K. Raworth, A safe and just space for humanity: Can we live within the doughnut?, (Oxfam discussion papers, February 2012), <http://policy-practice.oxfam.org.uk/publications/asafe-and-just-space-for-humanity-can-we-live-within-the-doughnut-210490>