Growth, Inequality, and Global Development: Who is Being Left Behind? 
Author : Kemal Dervis
Date : October 3rd, 2007
Comments : 22
Global Growth and Income Distribution between Countries:
Rapid Global Income Expansion Propelled by and Accruing to Developing Countries.
The global economy has been especially strong in recent years. World-wide per capita income is growing as rapidly as ever before. Incorporating recently available projections for 2007, global gross domestic product (GDP) per capita has increased in the last five years (2003-2007) at an annual average rate of 2.3 percent. This compares with 1.2 per cent from 1990 to 2002 and with 1.4 percent from 1981 to 1989. Sustained global growth rates of this magnitude are unprecedented since the immediate post-WWII era and part of the 1960s.
Developing countries are now playing a major role as drivers of global growth. High income countries were responsible for 85 percent of the global cumulative growth in GDP from 1960 to 1973, 78 percent from 1973 to 2001, but only 63 percent from 2001 to 2005. If GDP is measured at purchasing power parities (PPPs) developing countries are now by far the largest contributors to global growth. Also reflecting the increasing weight of developing countries, when global GDP is measured at PPPs global per capita growth registers about 3 percent a year since the beginning of this century w. And since the developing economies that are expanding rapidly are very large, such as China and India, if we weight per capita GDP growth by population, global growth has been even more impressive – it goes up to values above 4.5 percent a year, with GDP in PPP.
Divergence amidst Convergence by Some Developing Countries
Developing countries are propelling global growth and capturing, as whole, increasing shares of global income. But how widely shared across developing countries have been the benefits from global economic growth?
One group of developing countries, representing a huge share of world population, has been at the forefront of global growth. Their economies are growing faster than those of developed countries. They are also starting to catch up with the wealthiest nations in terms of human development. Millions of their citizens are being lifted out of poverty every year, with life expectancy, child mortality and literacy converging on first-world levels. These countries are accessing global markets for goods, capital, and technology; they are trading more and more with each other as well as with rich countries. The share of global trade captured by developing countries – primarily due to these well performing developing countries – is now 37 percent, compared with 29 percent in 1996.
However, another group of developing countries – greater in number, if smaller in population – is being left behind. These countries are today farther away economically from the richest countries than ever before. Cross-country inequalities in mean income, which have grown relentlessly over the last two hundred years, continue to widen. The ratio of PPP GDP per capita in the 10 richest countries to PPP GDP per capita in the 10 poorest increased from about 21 in 1960 to 34 in 1990, and increased further to 47 in 2001 and to 50 in 2005. With GDP expressed in market exchange rates, the ratios are much higher. Some countries have also seen a sharp drop in life expectancy, in most (but not all) cases as a result of HIV/AIDS.
Drivers of Further Divergence: Recognizing the role of Climate Change
Will the forces of convergence eventually attract those developing countries being left behind? Part of the answer depends on how the world community will respond to the challenge of climate change. Climate change is traditionally thought about as an environmental sustainability problem. Is growth now taking place at the expense of the opportunities for future generations? This concern is at the heart of the definition of sustainable development: development today that does not preclude the development of future generations.
But besides this intergenerational income distribution concerns, there is a growing realization of the different impact that climate change will have on different regions and countries. And the evidence is clear in suggesting that developing countries will be hit the hardest and soonest, both because of geography and because of low income making adaptation much more difficult. Climate change is, in fact, already affecting growth and development prospects in some developing countries. Climate change, if not addressed, will impart an “unequalizing” impulse to global development. Many countries that are already having difficulties sharing in the fruits of global growth will face substantial new costs and barriers to increased prosperity. Some communities would most likely face declining living standards and human development indicators.
Income Distribution within Countries
Inequality is Going up within Many Developed and Developing Countries
Patterns of inequality within countries are another critical dimension to understand how income distribution is talking place. Patterns of strong divergence across citizens of the same country are emerging. Income inequality is not growing in all countries. But it is going up in many countries, both developed and developing. Most notably, it is increasing in several of the large and rapidly expanding developing countries, suggesting that many are being left behind from sharing in the benefits of rapid growth.
While the patterns of income distribution within countries are varied across countries, one notable feature common to both developed and developing where inequality is going up is the accumulation of income at the very top – the top 1 percent or even 0.1 percent – of the income distribution. It is too early to tell whether the extraordinary growth in the share of income going to the top of the income distribution is unique to a few countries or whether it signals a more general trend. The drivers of the distribution of income are complex and can differ significantly from country to country. But the growing importance of income (in some cases mostly in the form of salaries) at the top of the income distribution is consistent with super-star and winner-take-all phenomena, with skyrocketing pay for executives, movie and sports stars, and financiers.
Within Country Inequality matters for Growth…
Does inequality matter? There is some evidence showing that it does, with indicators of self-reported well-being and life satisfaction being inversely correlated with increasing inequality. This unease with the evolution of income distribution, in turn, is correlated with the deepening of market integration and openness that is propelling global growth. While correlation is not causation, it is certainly affect perceptions. It is possible, therefore, that the processes of market integration and openness that have been critical to accelerate world economic growth can continue to gather political and popular support – in both developed and developing countries.
What about the effects of inequality on growth and economic performance? In principle, some level of inequality may benefit growth, both through incentives that reward talent and hard work, as well as the accumulation of income that stimulates investment. On the other hand, it is conceivable that high inequality may alienate people from productive economic activity if it is linked to discrimination or perpetuation of privileges. This is, therefore, essentially an empirical question. The evidence seems to suggest two things. First, it suggests that very high levels of inequality are detrimental to growth, because they discourage the establishment of political and economic institutions that are conducive to growth and investment, and they fester alienation that increases the threats to political and social stability. Second, empirical work indicates that the interaction of inequality with underdeveloped markets and weak institutions – which happens in many developing countries – can also hinder growth.
…and it matters for Development
Increasing inequality and its effect on dampening growth has as one of its consequences a reduction of the growth elasticity of poverty reduction – that is, the rate at which growth translates into poverty reduction. In general, countries with higher levels of inequality have to grow much more rapidly, or take much longer, to achieve the same degree of poverty reduction that countries with lower levels of inequality. There has evidence of a dramatic fall in pro-poor growth: since 1990 it takes roughly three times as much growth to achieve the same rate of poverty reduction observed before 1990 in a typical lower middle-income country.
Growth that is not inclusive is also generating less employment recently than it has in the past. While in some developed countries this is a reflection of productivity gains (increase in output can be driven by either, or a combination of, increases in labor utilization or increases in the amount that is produced by each worker) in many developing countries this is reflected in less opportunities for decent employment. This is particularly troubling when it comes to youth employment, which has much higher unemployment rates that total population, with even lower employment elasticities.
The Imperative of Addressing the Drivers of Divergence
The world economy has been growing rapidly. While many developing countries have been benefiting from this expansion in global income, other countries are being left behind. The challenge of climate change will add to the forces that are driving income divergence. It will have to be brought into the debate not only as an environmental or intergenerational issue, but as a core development issue. Within countries, even in those that are growing rapidly, income expansion is not being shared by all. These cross-country and within-country divergence trends may impose economic and political limits on long term growth and on the further integration of the global economy. It is highly questionable whether the processes of globalization and market integration that, along with new technologies, have been the sources of accelerated world economic growth, can continue without concerted effort to deal with divergence and inequality.
Kelvyn Richards
Date : May 6th, 2008 03:44:01
Three cheers for Evo Morales, President of Bolivia. At last a president of a country has recognised the obvious that a world in which 6.6 billion people are poor, and 0.05 billion are rich, and 500 are super rich, is not sustainable. Capitalism has to change!
For a philosophical, psychological, sociological, economic discussion of unsustainable capitalism go to my web site: www.kelvynrichards.com [Social Ecology - a new morality. alternative choices]
EPicillo
Date : May 1st, 2008 12:37:59
In my opinion, I think that a largely overlooked group in development is the middle-income countries. Middle-income countries constitute approximately 1/2 of the world’s population, and over 1/3 of the world living under $2 PPP live in a middle-income countries. Evidence has shown that there is a trend of divergence between high-income countries and middle-income countries. Even with regionalism and trade integration with middle-income countries, there is not a trend of increasing convergence on incomes. Market access, inequalities and inequities, and disease are often in the same developing state as some of the other least developing countries. Although there is no question that the LDCs pose the greatest challenge to the global economy, it is still important to remember the middle, and to possibly increase the attention to the development of these important countries too.
Kelvyn Richards
Date : April 26th, 2008 03:59:20
What is more…there are officers in banks trying to transfer millions of dollars out of their country in Africa for their own personal benefit. For some reason or other, I have been recently been contacted by email by officers of a bank in Ougadougou in Burkino Faso with a view to claiming 35 million dollars so that they can send it out of the country and claim it later. Why do they not work out ways of claiming and using this money for the benefit of their own peoples! How often is this tried ?
Kelvyn Richards
Date : April 10th, 2008 10:59:51
It sounds impressive that world wide per capita income is growing at 2.3% per year, and that countries like India and China are propelling global growth.
But how can we reconcile this positive picture with the negative pictures of [a] a small minority controlling 98% of wealth; [b] in which poverty,inequality,discrimination is normal for most; and privilege and wealth for the few; [c]a perfect storm is being created by growing population,increasing prices,and extreme climate; [d] countries in Africa are not able to maintain production for the lack of energy solutions; [e] developing countries unable yo increase production as they cannot comply with the required standards of the developed countries?
The future will need to be cooperative, sustainable, subsistent production.
see www.kelvynrichards.com: Social Ecology - a new morality
Phillip Huggan
Date : March 16th, 2008 09:49:17
A good tool would be to quantify what percentage of incomes accrue from pareto effects. That is, at the highest income rates what % of income is from investment income, which offers relatively low societal returns, versus skilled employment income.
At the 0.1% income ceiling, I’d bet most income earned derives from capital gains and employment by associated credit actors. At the 50% income ceiling, mostly blue collar labour and low paying service sector labour. If we knew exactly where capital gains income was soaking up all of a given society’s productivity gains in an inefficient way, tax policy could adjusted accordingly (as I think it already is in many European nations). To compound the net public good, the extra revenues derived from increasing high tax bracket taxes (or maybe even a wealth tax) could be allocated towards education in a way that stimulates the training of more individuals in value-added fields (doctors and engineers and professors; those whose earnings genuinely increase societal good) to “trickle down” and raise the number of skilled professionals.
Md. Enamul Haque
Date : March 15th, 2008 09:11:53
Mass people do not understand growth and etc., they would like to purchase their needs without price hiking. Yhey need social security, health and education. They would be very happy if they able to practice thier voting right…………. it is actual groth for the mass people.
Kelvyn Richards
Date : March 9th, 2008 09:46:32
I agree with Eniola.
It has been a perennial problem with community development that the experts or the fund raisers come into the area and tell everyone what they need.
I think that in future, development should be about helping communities to maintain their subsistence, to support their ways of living, to resist the demands of corporations to adopt any commercial/industrial approaches.
It is not likely that every community in the world will be able to , nor want, ‘western’ ways of living.
It is more important to be able to survive.
[http://www.kelvynrichards.com]
Eniola Laka
Date : March 5th, 2008 11:18:35
when ever the question of development arises, cognizance must be taken of the view of the people sought to be developed what there own idea of development is and how they think it can be arrived at, too often the question of development is dealt with externally hence why the pace is so slow cause in that case one must first convince the people that they require the developers notion of development , wont it be simpler if each society is encouraged to postulate its own idea of development and assisted to achieve it?
Soavelohaja Rajaonson
Date : February 29th, 2008 03:41:12
A peine eu le temps de passer sur Kemal Dervis.
Les plus pauvres vivent au quotidien les conséquences des intempéries et de tous ces fléaux.
Ils se sentent manipulés. les gouvernants viennent à eux pour justifier leur demande d’aide extérieure.L’aide arrive aux pauvres par bribe multipliant la corruption et ne permettant pas de reconstruire les infrastructures ni de relever le niveau de vie. Les reconstructions sont précaires comme si prévues justes pour les prochaines intempéries. La démocratie se résume à l’expression des urnes à la fois payante et inutile. Combinaisons les exemples de quelques pays comme USA, Maurice et l’esprit du pays et ceci donne: une maturité politique structurée autour de trois ou quatre tendances politiques auxquelles s’activent les forces vives et politiques de la nation. un Président sera élu par chaque partie comme les préliminaires USA. Les parties politiques gouverneront à tour de rôle mais leur Président pourra être jugé de la conduite du pays et sanctionné par une peine légère au terme de son mandat. Les Conseils d’Etat ou politique pourront s’attribuer le rôle de conseil de sages garantissant l’imprenabilité des hautes institutions comme la Haute Cour de Justice. Le problème du développement est quand le peuple paie le coût des multinationales: inflation, accord tacite sur les prix, fuite fiscale, destruction des routes, travailleur expatrié à VIH/sida, dégâts environnementaux. Pourquoi les partenaires étrangers viennent et s’enrichissent à l’exploitation minière en faisant creuser des trous par les pauvres et pourquoi nous faut-il combattre la pauvreté par de gros investissements miniers et des pipelines sans maîtrise des rentrées fiscales et sans distinction des matières pipelinisées? Faut-il arrêter les aides des clubs et autres pour être sûr qu’il n’y a pas anguille sous roche?
Kelvyn Richards
Date : February 24th, 2008 10:58:01
I am not sure that my comment was sent and arrived.
Again.
The tone of the essays 4 development was optimistic, and in support of capitalism. But recent UN reports remind us that 98% of the world’s wealth is owned by 1% of the population. The Forbes 500 report [2007] suggests that much of that wealth is controlled by 500 individuals and their families. Walmart, owned by the Walton’s, the richest family in the world,is the biggest customer for Communist China! and a major employer of communist Chinese workers! The evidence from many governments is that the rich are getting richer and the poor, poorer. The ‘trickle-down’ effect is in fact ‘trickle-up’.
In the future, we have to accept that for the vast majority of the world’s population poverty is the norm. Capitalism is a system of inequality.
Today, we find ourselves in situations of water shortage, resource depletion, extreme pollution as consequences of capitalist exploitation organised by the 1%.
Ice sheets are melting. Coral reefs are dying. Forest are disappearing. The Pacific Ocean is full of plastic bottles.
The other 99% are not going to be able to catch up.
For a future, we are all going to have to adopt a subsistence lifestyle. The richest will redistribute their wealth for the benefits of the majority. The future will be socialist not capitalist.
Kelvyn Richards
Date : February 21st, 2008 05:18:12
The blog and the comments seemed most optimistic for the future.
Such a tone is surprising given that the UN reports that 98% of the world’s wealth is owned by 1% of the population ; and of that 1% the Forbes 500 own a significant proportion.
The base line for any future action has to be that poverty is the norm for the vast majority of global population.
Any discussion about development must be about reduction of poverty. Such discussions are not about growth, they are about redistribution.
The capitalist system as currently practised means that the rich get richer and the poor get poorer. So it is an unsustainable system.
The double bind in all of this is that as the world population grows, and demands increase, the impacts of exploitation and pollution will tip us into chaos. The resources of the globe will not be able to support populations of 7/8/9 billion.
The future is redistribution and self sufficiency, not capitalism and consumerism.
See my website for a fuller and more analytical discussion of the issues of social ecology.
Víctor Puac
Date : February 19th, 2008 12:31:06
18-02-2008
Estimado Sr. Kemal Dervis:
He leído su artículo y he considerado prudente hacer algunos comentarios desde mi perspectiva.
1. En la actualidad, la pobreza de los Países en vías de desarrollo debe ser analizada a partir NO solamente desde la perspectiva económica. De lo contrario estaríamos retrocediendo a los años 80’s cuando las Instituciones financiera como el Banco Mundial, el Fondo Monetario Internacional y el Banco Interamericano de Desarrollo, entre otros, eran fieles defensores de que el desarrollo de los países pobres solamente podía solucionarse mediante acciones de naturaleza económica. El resultado?, mayor profundización de la pobreza en donde ni siquiera los fondos sociales creados en América Latina lograron paliar, dicha profundización”.
2. Me parece que habrá que continuar con el análisis a mayor profunidad de si realmente el PIB debe seguirse considerando un indicador de mejor distribución de la riqueza de un País. Es claro que el PIB sí refleja el mayor ingreso económico de un País, pero hay mucha diferencia en asumir que esa riqueza es también distribuida en la misma proporción a los más vulnerables.
3. No ha sido sino hasta hace un par de años en que los más grandes organismos financieros internacionales han reconocido de que el crecimiento de un País debe incluir por lo menos dos visiones: la económica y la social (entendiendo lo social entre otros como lo cultural, valores, tradiciones). En américa Latina y el Caribe tengo la impresión de que en general existe un “capital social” fuerte basado en una visión del mundo desde una óptica distinta al “crecimiento humano desde la perspectica económica exclusivamente” .
El desarrollo sostenible debe continuar siendo un tema de análisis permanente ya que necesitamos mucha creatividad, ingenio y sobre todo “voluntad política” para que realmente se pueda acompañar procesos serios de Desarrollo Humano.
Exitos y a continuar con la vida. Porque la VIDA ES LUCHA Y SE LUCHA TODA LA VIDA!!!!.
sicillia
Date : February 12th, 2008 05:04:15
I agree with Duncan said.
Above all, this world need theory not that much. It needs a simple practice and a heart to do that.
Mounir BENSALAH
Date : December 23rd, 2007 02:25:14
Bali est une illustration de la non-raison en terme de développement durable.
Robert Searle
Date : November 26th, 2007 10:53:06
THE NEED FOR A NEW FINANCIAL PARADIGM TO HELP CREATE CHANGE IN THE DEVELOPING WORLD, AND ON OTHER ISSUES.
The key to the future is a new understanding of capital. This is absolutely vital. It is my belief that in the future Transnational Corporations, or TNC s could actually help save the planet, and at the same time greatly profit.
They could have new (non-repayable)unearned money transmitted to them via a more advanced banking system than exists at present. This capital would not lead to inflation because bank computers would be programmed in a such way so that this would not occur, and hence lead to currency devaluation . At the same time high price flexibility necessary within the present capitalist system would still be possible….
Anyway, this revolutionary development in finance would be in the interest of the TNCs because it would widen their market to fully include the Third World as it would be as profitable to sell to it as to the rich countries (which ofcourse is their key trading bloc) . Their profits could be subsidized by the transmission of new unearned money to a level on par with the First World. This is a big subject…
The TNCs would also profit greatly by involving themselves in various projects of high ethical sustainability in the Third World. At present, most of these would be commercially unviable but with the right financial incentives this would dramatically change. Smaller private companies could also involve themselves too towards the greater, and fairer development of the poor, and their world. Their profits could be subsidized, and like the TNCs receive huge commercial grants (in instalments ofcourse)created out of new unearned money. Interest free loans could be included too.
To get some idea of the background of such radical thinking it would be best to go to my research, and development project which is concerned with TRANSFINANCIAL ECONOMICS, or TFE at the kheper website. It is to be updated soon hopefully, and a paper for a peer reviewed journal accepted it but I withdrew it from publication due to a dispute. It has to be sent elsewhere but offers many answers to the problems of the world.
It should also be said the banking system could still remain in private hands if desired. Interest free loans could be created but the profits (ie the interest) could be self-created by an independent public body.
R.Searle.
Dire Tladi
Date : November 20th, 2007 03:45:30
As my first participation in internet discussions, I found this discussion very interesting. The expositions provided by Kermal Dervis and Jochen Jesinghaus, were most informative. I must admit, though, that I am somewhat worried by the strong pro-growth tone in Kermal Dervis’ pieces.
While I share his sentiments about the impact of climate change on income distribution, I fear that too much faith is placed on the economic growth as a tool for poverty alleviation. Just having completed a study on sustainable development (Dire Tladi Sustainable Development in International Law: An Analysis of Key Enviro-Economic Instruments PULP, 2007), I had thought that the world had moved beyond that paradigm.
A number of Human Development Reports have shown that while the world economy continues to grow, the global divide between rich and poor continues to grow. One thing is when it comes to economic growth: It is benefits those who already have.
In my view, the issue that needs to be confronted is the pervasiness of this economic growth value in international and national policy-making. The global issue raised by Kermal Dervis, climate change, provides a good illustration of this pervasiness. Kermal Dervis tells us, correctly, that we need to find a solution to the climate change problem. Presumably that solution is the Kyoto Protocol. A proper, an honest evulation of the international agreement (while better than having nothing), reveals that the main components were arrived at with the view not to disturb economic growth. In some instances, one get the distinct feeling that the Protocol, in fact, provides further opportunity to entrench the pervasiness of the economic growth value.
Dire Tladi
Carlos Castaños
Date : November 13th, 2007 08:18:04
Estimado Sr. Dervis:
Estoy totalmente de acuerdo con lo que usted propone y sobre todo la importancia que tiene la desigualdad en la perpetuación de condiciones de pobreza para una gran cantidad de habitantes del mundo.
Considero que es fundamental mostrar un interés real de que el mundo le puede ofrecer un mejor presente y futuro a nuestros hijos y nietos.
Son graves las condiciones socioeconómicas de algunas poblaciones, especialmente en América Latina y sobre todo en México, pero debemos entender que la redistribución de los ingresos económicos no se va a dar solamente con apoyar a organizaciones humanitarias o dar un donativo a la Cruz Roja, muy respetable la acción por supuesto, pero son paliativos que no generan una mejor condición de vida de la población.
Debemos reconocer que nos falta mayor sensibilidad social y es necesario diseñar y operar acciones concretas, ofrecer realmente la oportunidad para que la gente pobfre mejore sus condiciones, a través de acceso a educación, a servicios de salud y sobre todo a una vivienda digna.
Tenemos un gran reto en México, pero debemos enfrentarlo si queremos que nuestra descendencia tenga mejores condiciones de vida.
Le envio un cordial saludo.
Antropólogo Social Carlos Castaños Montes
Investigador y Asesor de la Dirección General del Instituto de Vivienda Social del Estado de México.
Jochen Jesinghaus
Date : November 8th, 2007 05:57:39
Sir,
I would like to add two observations to your very interesting analysis.
First a general point: Your introduction reads as if strong “GDP growth” was a proof for successful development. While I welcome your observation that rising inequality is no good, I am worried about the “more growth is needed” message. Certainly, there is a correlation between development and income. A straightforward equally weighted MDG index composed of the 60+ Millennium Development Goals indicators shows a correlation coefficient of r=0.589 (see http://esl.jrc.it/dc/mdg_unsd/mdg_fvr.htm) – provided we use the LOG of income. In short, for every doubling of GDP we get a small linear improvement of overall MDG outcomes. The same MDG index, however, shows an excellent correlation of r=0.75 with (linear) life expectancy. Personally I believe that life expectancy is a much more precise indicator of development than GDP. However, life expectancy is a very slow indicator, showing the impact of government actions that happened decades ago. For managing and promoting development, the 60+ MDG indicators are a much better choice. UNDP knows that, of course, and uses detailed, mostly MDG-compatible indicator sets for assessing policies – that is why I am uneasy with the message “GDP growth is good for poor countries”. Not by accident, on 19+20 November 2007 the European Parliament and European Commission, together with WWF and Club of Rome, will host a high level conference titled “Beyond GDP”.
Second, a specific point on climate change: While I was among the “early warners” when I wrote “Ecological Tax Reform” in 1992 (with Ernst von Weizsäcker), and while I still believe that climate change will have dramatic and often catastrophic consequences, I am surprised that so few people notice an equally dramatic and much more immediate catastrophe: Driven by low energy prices in certain OECD countries, we are close to peak oil, and currently driving against the wall at full speed – thanks also to two “Developing countries [that] are now playing a major role as drivers of global growth”. For many poor developing countries, the extra cost (as compared to the situation two years ago) for importing oil exceeds by far the overall ODA they receive. I have not yet seen preparations for a G-8 summit dealing with this disaster… Gleneagles put 50 Billion on the table, peanuts compared to what oil-importing African nations pay every year to their oil-exporting neighbours. So why does nobody talk about this? Is it so much cheaper to talk about islands being flooded by the disobedient oceans? Should somebody invite our Heads of State to a cinema evening, featuring “A Crude Awakening”, http://www.oilcrashmovie.com/film.html ?
Per Kurowski
Date : October 27th, 2007 03:19:21
Although getting an integral perspective on development should always be ambitioned it is not always that easy and so we have to settle with the issues that seem to be having the largest effect on the margin. In this respect I wish to put forward the following relevant topics:
1. There has been an explosion in intellectual property rights awarded and in the empowerment of global brands with no corresponding strengthening of the checks and balances needed to ascertain those IPR and brands are not unduly exploited. This has most probably led that an ever larger portion of the world’s GDP gets captured by these rights and so many of the globalization benefits have not been really free to flow to the final consumers. In as much as redistribution needs to be scaled up to compensate the losers from globalization it seems equally or more important to keep the rent captures in check.
2. Some of our current difficulties to understand what is happening around us are derived from the fact that we measure most of the results of our economic activities in dollar and cents and not really in terms of the results that are really relevant to us. For instance, knowing that decent jobs is the glue that holds societies together, and that those decent jobs are currently very scarce, to start measuring the results of for instance financial and trade systems in terms of the net decent jobs produced during the year in relation to the needs could most probably help us to better focus on what we want to achieve. Another example of this revised development approach is for instance how small islands could better focus their economic development if they for instance took up to analyze domestic salaries paid per mile of beach used, given that their beaches are in fact many times their most valuable and scarce resource.
3. Another difficulty is the fact that in a world of ever increasing global interrelation the traditional geographically bound accountancy of economic result does not suffice any longer. As an example, very relevant to a United Nations that is not called a United Countries for nothing; we have for instance the case of El Salvador. The emigrant workers of El Salvador currently earn gross more than the GDP officially attributed to El Salvador and so the fact is that the El Salvador Nation has perhaps been growing faster than China whose migration, from west to east, has been purely internal.
4. Bank regulations are currently based exclusively on risk-adverseness. Although these regulations might be needed they do generate a regulatory arbitrated bias against development which normally takes place in the land of higher risks. How to design compensating mechanism that neutralizes this bias without increasing default risks and so allow the commercial banks to fulfill its traditional development role better is one of the most pressing challenges developing countries face.
Nouhoum MALLE
Date : October 23rd, 2007 04:34:51
La disparité et l’inégalité des revenus
La résolution des questions relative à la disparité et à l’inégalité des revenus est quotidiennement évoquée dans les discours des politiques et les bailleurs de fonds pour le développement, et cela depuis des décennies.
Néanmoins des années s’écoulent, mais des pays notamment de l’Afrique subsahariennes ont du mal à grimper dans le classement suivant les critères de développement humain, élaborés par des organismes internationaux.
Quelles sont les vraies causes ?
Elles sont à rechercher en premier leu au niveau de la culture des populations dans ces pays. En effet le processus de prise de décision, d’élection des dirigeants, de règlementation des activités économiques et des comportements sociaux, est sujet de défaillances avérées. Aucune force coercitive n’est bien implantée culturellement pour contraindre le citoyen à opter pour des actes mettant en avant le travail bien fait, la responsabilité et l’intégrité morale face aux décisions à prendre pour le pays.
La justice ne fonctionne pas, son le disfonctionnement découle aussi des défaillances susmentionnées. Un pays sans justice est un lieu où l’on peut observer toute sorte de malversations sans impunité. Ainsi, celui qui à un moment donné arrive à se mettre en position de force, ne craignant aucune poursuite, est encouragé à passer par les voies les plus courtes et les faciles pour « se développer lui-même en ignorant l’intérêt du pays (la collectivité) ». C’est une manière ignoble choisie par certaines autorités. Mais les effets à long terme sont néfastes et affectent le monde dans sa globalité.
Les premiers coupables contrairement à ce qu’on peut imaginé, sont les populations elles mêmes :
Une société qui à le soucis d’avancer et d’améliorer son bien être d’année en année, est contrait de s’organiser, de trouver des règles qui régissent la vie quotidienne de manière à atteindre les objectifs de développement visés. Il va de soit que ces règles et le système juridique promeuvent le travail bien fait, la récompense de l’excellence, la justice entre les citoyens de toutes les classes sociales. Ces notions sont de toute évidence détériorées dans les sociétés Africaines d’aujourd’hui.
Les élections sont faite pour la forme avec un fond vide d’objectivité. Un peuple faible d’imagination, et en arbitrage objectif caractérise l’Afrique. Le dirigeant n’est donc ni choisi en fonction de son intégrité et de sa capacité à maintenir le pays sur le cap du développement, mais en fonction des considérations d’intérêts égoïstes.
Aujourd’hui, les enfants de l’Afrique sont en train de prendre le coté mauvais de chaque civilisation qu’ils rencontrent : ils ne veulent pas travailler (cultiver l’excellence) comme les occidentaux, mais veulent vivre dans le luxe comme ces derniers ; ils veulent créer du confort à tout pris autour d’eux, mais ne voient pas la nécessité de la justice.
Quel paradoxe ? D’où viendra le moyen pour assurer la vie du luxe ou le confort tant recherché ? et quelle pérennité pour un bien mal acquis ?
Les dirigeants (que le peuple faiblement organisé et à capacité d’arbitrage objectif réduite) élus ont tout à apprendre de ce qu’est le citoyen exemplaire. Ils sont de toute évidence pour plusieurs d’entre eux de mauvaise volonté de prendre des décisions et faire des actes en faveurs de développement du pays. Le premier souci de ce groupe est tout autre chose, et ils prennent soin de brouiller en plus les pistes de développement…. Ils ne faut surtout pas que le peuple s’éveil….
Les bailleurs de fonds pour le développement, leurs efforts sont vains. Les choses donnes l’impression de s’empirer en Afrique. La pauvreté s’accroît, l’analphabétisme ne s’améliore pas, le peuple est de plus en plus piégé par quelques leaders qui se font incontournables,
Quel avenir dans un contexte pareil ?
Axe d’appui pour un futur meilleur pour l’Afrique et le monde car le monde deviendra un :
L’accent devra être mis sur la promotion d’un peuple fort à travers les actions de formation de sensibilisation accompagnées des moyens matériels pour rendre le peuple indépendant, influent, capable de faire barrière (de façon objective) à toute action néfaste à l’intérêt de la collectivité.
En conclusion
Les experts du domaine social avec l’appui des bailleurs de fonds ont le devoir (ont nom du bien être dans le monde dans son ensemble), de définir les grands axes de renforcement des capacités des peuples faibles et pauvres à opérer un bon arbitrage à chaque fois qu’ils ont des choix à faire (élections, programmes de développement, système juridique) ; et à intégrer le système compétitif des marchés grâce à un savoir faire amélioré.
Il s’agit d’appuyer les peuples (pour un éveil des consciences, un savoir faire amélioré), mais pas un groupe de leaders en Afrique. L’appui aux autorités dirigeantes se consistera à financer les actions définies en commun accord avec les peuples pour améliorer par exemple les systèmes juridiques, les différents secteurs stratégiques (éducation, santé, énergie, communication…..).
oxfam
Date : October 22nd, 2007 12:38:03
The three contrasting initial perspectives from Kemal Dervis, Abdou Diouf, and Jean Michel Severino help highlight some of the big debates which will keep us all busy in the years to come.
Kemal Dervis provides a cogent analysis of inequality within and between countries, and adds a powerful emphasis on the role of climate change as both a cause of future poverty and of current inequality. Perhaps no surprise, as UNDP is about to bring out this year’s flagship Human Development Report on climate change! What he doesn’t add is that the way we respond to climate change (because respond we must) will itself influence the future path of inequality – if carbon is to be priced, will that squeeze out the poor, or will some element of carbon redistribution be included in the deal?
Abdou Diouf focuses on the role of institutions and the rule of law – largely missing (or at least only implicit) in Kemal Dervis’ piece. Institutions are too often overlooked in favour of a focus on policies, which often boils down to ‘if only economists ruled the world, this is what they would do’. I find that a somewhat alarming prospect, but luckily, it will never happen. Instead of ‘if I ruled the world’ fantasies, we have to become much more immersed in the politics of building institutions, and especially effective states – that is how every country that has ever prospered has done it.
Unfortunately, Mr Diouf seems to succumb to the temptation to say every country needs Western institutions, especially legal institutions. This debate often centres on property rights, and Mr Diouf’s position has a serious flaw in that it is largely ahistorical. As Hernando de Soto brilliantly demonstrates in ‘The Mystery of Capital’, successful systems of property rights are not imported, but grow organically as states recognize the forms of ‘actually existing property rights’ and turn them into law. That certainly fits with the work of Dani Rodrik and others on the essentially sui generis nature of property rights regimes in China and elsewhere, but seems a long way from the kind of blueprint that OHADA is proposing.
Finally Jean Michel Severino makes an impassioned plea for ‘one last heave’ to achieve the MDGs. I like half of what he says, but worry about the other half. First the bit I’m worried about – his classic aid professional’s cry to ‘embody the principles of the UN Charter in concrete and operational programs’. In William Easterly’s parlance, this is pure ‘planner’ talk, with no time for the entrepreneurial chaos of the world of ‘searchers’. But development doesn’t happen like that, or at least not just like that. It is bumpy, driven by events, and involves building those institutions that the MDGs largely ignores in favour of its cherished ‘outcomes’.
But the bit of Mr Severino’s paper that I got excited about was his description of an emerging global welfare state, and the comparison with the emergence of similar systems at a national level in the second half of the 20th century. I agree that something resembling global government is starting to rise from the morass of proliferating international norms, laws, treaties and institutions, but its shape is unclear. It looks like a saviour to some, a monster to others. In some lights it appears ruled by principles of the survival of the fittest, in others of global cooperation – Darwin or Gandhi, we do not yet know who will prevail.
The comparison with the genesis of national welfare states is as illuminating for what is missing as for what they hold in common. Key issues like global taxation and freedom of movement (migration) that are an essential part of a nation state are largely absent from the global governance system, whereas the issues that matter to the powerful countries, such as access to markets, capital movements, or protecting their technological edge are rigorously enforced. Just ask yourself what a system of global governance based on one person one vote (not a particularly outlandish idea, surely?) would look like to see how far we have yet to travel!
Thus far too, the profound systemic challenge posed by climate change and the need for rich and poor countries alike to move to a low carbon model of development dwarfs the response – and I think Mr Dervis would agree with that.
Environmental constraints imposed by climate change will lead to higher priced, (or restricted) carbon, with important ramifications for growth models. It is by no means certain that technology alone will be enough to deliver low carbon growth at the level required – as far as I’m aware, no country has yet reduced its overall carbon emissions through growth, even though many have reduced their carbon intensity per unit GDP. Reducing overall global emissions will require both rich countries to finally cross this carbon threshold, and for poor countries (especially large ones) to find non fossil fuel-intensive paths to growth. That is a huge challenge. We may well be entering a new era where the carbon efficiency of different growth models becomes as salient as the headline growth figure. If we hit peak oil in the next few decades, increasing natural resource constraints will merely accelerate this process
If this is the case, then the emphasis for those who care about development must shift from quantity of growth to quality – a combination of carbon equity and getting as much poverty reduction and reduced inequality as possible per dollar of growth.
So what would an Oxfam researcher add to the pot? Well I am currently finishing ‘From Poverty to Power’, a book reflecting on the state of the development debate. It seems to me that we are a bit stuck – the MDGs will probably start to lose value as a motivational tool and organizing principle in a couple of years time, and in 2005 we missed the opportunity provided by that year’s World Development Report and Human Development Report (both on inequality), because we did not grasp the nettle of redistribution.
If we are really to attack inequality, what is required is nothing less than a global new deal – a redistribution of power, voice, opportunities and assets to achieve a dynamic and inclusive society in which all people have a decent chance to lead fulfilling lives in which they enjoy their full political, economic and social rights.
Oxfam’s extensive experience working to eliminate poverty and reduce risk in over 100 countries around the world leads us to conclude that such redistribution can best be accomplished through a combination of active citizens and effective nation states.
Why effective states? Because history shows that no country has prospered without states than can actively manage the process of development. The extraordinary transformations of countries such as South Korea, Taiwan, Botswana or Mauritius have been based on states that ensure health and education for all, and that actively manage the process of economic growth and transformation.
Why active citizenship? Because people working to determine the course of their own lives, fighting for rights and justice in their own societies, is critical in holding states, firms and others to account for their actions. Active citizens are an essential ingredient in making today’s states work effectively to end poverty and inequality in ways that are sustainable.
For their part, rich governments should concentrate on putting their own houses in order, cracking down on their current harmful activities, such as the arms trade, restrictions on the free flow of knowledge and technology, corporate malpractice, the forced liberalization of trade and capital markets, and grotesque levels of planet-destroying carbon emissions. This ‘stop doing harm’ agenda should be complemented by active solidarity with the struggles of poor people and their communities within developing countries.
The fight against poverty, inequality and the threat of environmental collapse will define the 21st century, as the fight against slavery or for universal suffrage defined earlier eras. Such a global new deal is both just and essential if we are to bequeath to future generations a thriving, viable world of which we can be proud. I applaud the organizers of the blog for giving us all a chance to stand outside our day-to-day concerns and think big. Let’s see what others have to say!
Duncan Green
Head of Research at Oxfam GB
mohammed elalami
Date : October 21st, 2007 02:07:45
Cher monsieur.Le changement climatique a eu des repercussions desasteuses sur les populations pauvres,vulnerables du globe.les pays developpés fournissent de l’aide aux pays en voie de developpement,mais,la question qui se pose :pourquoi cet aide n’aboutit pas toujours aux objectifs escomptés?je crois,que c’est a cause la fuite d’un taux non negligeable de ces aides vers les pays du nord,vu la corruption qui doit etre exterminée du monde.un developpent durable,equitable doit passer d’abord par la democratie,la vraie volonté de toutes les parties concernées,et les efforts acharnés des individus et de la societé humaine toute entiere.