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The future of development – aid and beyond

Just over a year ago, in March 2014, UNU-WIDER published a Report called: ‘What do we know about aid as we approach 2015?’ It notes the many successes of aid in a variety of sectors, and that in order to remain relevant and effective beyond 2015 it must learn to deal with, amongst other things, the new geography of poverty; the challenge of fragile states; and the provision of global public goods, including environmental protection.

The questions raised in the UNU-WIDER Report remain highly relevant, and the second half of 2015 provides an unprecedented opportunity to address them. Before turning to that opportunity, though, it is worth recalling that the last 15 years have seen extraordinary progress against the objectives set out in the Millennium Development Goals (MDGs). The proportion of people living in absolute poverty has been halved; far more children (girls as well as boys, and the UNU-WIDER rightly emphasises the gender dimension of development) are attending primary school, and far fewer of them are dying before they reach their fifth birthday. Undoubtedly rapid economic growth in China and India has been a major factor in this progress, but aid has also played a significant role.

In Africa as well as Asia, many countries are making significant progress. Many of them are looking to move to middle-income status over the coming decade or so, and will as a consequence become less dependent on the large-scale transfer of concessional resources. Bilateral financial aid will in practice focus on a decreasing number of fragile states and countries emerging from conflict, in which the conditions for transformational change do not exist and which lack human and institutional capacity.So – as the UNU-WIDER Report notes – aid will have an important continuing role in those countries both in addressing issues of governance and capacity-building, but also providing direct support to the social sectors.

Marines and Pakistani Soldiers unload supplies by United States Marine Corps Official Page. CC BY-NC 2.0 via Flickr.

At the moment, the majority of poor people live in middle income countries; there are more poor people in India alone than in the whole of Africa. That will change over the coming decade and a half, and by 2030 – recognising the aspiration to eliminate absolute poverty by that date – deep poverty will be essentially a problem of fragile states, which will be found mainly in Africa. Whilst other flows such as remittances and foreign direct investment will as a general rule become more important, and in the overall scheme of things aid will become less important, aid will remain crucial for those poor, fragile states.

Aid is not just about supporting individual countries, and the international community will have to cooperate increasingly closely in supporting ‘global public goods’. Addressing the challenges of climate change (both mitigation and adaptation) is perhaps the most obvious example, but others include the need to address issues of environmental pollution; or preventing the loss of bio-diversity; or working together to combat deadly diseases which, as the recent outbreak of ebola in West Africa has reminded us, are no respecter on national boundaries.

The environmental problems in particular have been created – or at least exacerbated – by the more developed countries, and the negative effects have been felt most strongly by the less-developed countries. It will take very significant resources to address them, and there are strong grounds – both moral and self-interest – for the better-off countries to provide the bulk of those resources.We ignore the existential threats to our Planet – and to humankind – at our peril.

Whatever the future of aid, and the crucial role of continuing concessional financing for a number of countries, it is important also to address other policies which impact directly and negatively on developing countries. It is important to have a ‘whole of Government approach’ to development, described by some as ‘policy coherence for development’.  This includes, for example, looking at the full range of issues such as the cost associated with transferring remittances; the impact of agricultural subsidies and rules of origin; the application of intellectual property rights etc – all of which can have a significant negative impact on developing countries.

The second half of 2015 provides an extraordinary opportunity to address these and other issues. There are (at least!) four very significant meetings taking place, beginning with the ‘Financing for Development’ Conference taking place in Addis Ababa in the second half of July, which will give some indication of the total resources from all sources (aid; remittances; private sector investment) available to support the development aspirations of less-developed countries. Second, there  will be a Conference in New York in the second half of September to decide on a new set of ‘Sustainable Development Goals’ (SDGs) to replace the Millennium Development Goals (MDGs) which expire at the end of 2015.

The broad shape of the SDGs is already clear – a comprehensive set of 17 Goals, the over-arching one of which is to see the elimination of absolute poverty by 2030.The SDGs are based on three key pillars – economic growth; equity (‘leave no-one behind’); and sustainability (look after the Planet, on which succeeding generations will depend). The SDGs reflect a comprehensive consultation process, and it is interesting that employment and job-creation were noted as a key priority, after health and education, by respondents in that process – an area also flagged by the UNU-WIDER Report as being of crucial importance.

There are then two major Conferences in December. The first of these, in Paris, is on the environment, thus linking very strongly to the sustainability pillar of the SDGs. It is potentially an event which will attract more Heads of State and Government than any previous Conference – so we must hope they will not wish to leave without a significant agreement. And finally there will be a meeting of Ministers of the World Trade Organisation (WTO) in Nairobi, also in December, to try to make progress on a range of trade issues which have made little progress for many years but which have the potential to stimulate world trade to the benefit of better off and poorer countries alike; trade, like peace and security, is in many ways a global public good.

So a good many of the issues raised in the UNU-WIDER Report of March 2014 not only remain relevant, but will come into sharper focus as we move into the second half of 2015.The remainder of this year will effectively establish the framework for international development for the coming fifteen years. We had better get it right.

This post originally appeared on UNI-WIDER, 29 May 2015.

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