Human Development Reports

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Agenda. The argumentTracking past progress and mapping the futureInequality: a navigation tool to guide policyReshaping international cooperationAidTradeConflict. The world is at a crossroads

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Human Development Reports

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2. Human Development Reports Annual report since 1990, created by Mahbub ul Haq with Amartya Sen, among others Addressing emerging development challenges from the human development perspective Using new measurement indicators Elaborating new dimensions Advocating new policies Independent report commissioned by UNDP, but not a statement of UNDP policy National reports since 1992; regional reports since 1994

3. Agenda The argument Tracking past progress and mapping the future Inequality: a navigation tool to guide policy Reshaping international cooperation Aid Trade Conflict

4. The world is at a crossroads – but it can change track On the eve of the World Summit, this year’s Report: Reviews progress in human development over the past decade Highlights the human costs of missing the MDGs Identifies inequality as a brake on human development Focuses on three pillars of international cooperation – aid, trade and security

5. Why international cooperation must take a different path Without effective national policies there can be little progress But good national policies alone are insufficient New direction in international cooperation is vital for accelerated progress towards the MDGs Systemic advance, not piecemeal reform Aid: progress with problems Trade: problems with no progress at Doha Conflict: tackling the barrier to human development

6. Agenda The argument Tracking past progress and mapping the future Inequality: a navigation tool to guide policy Reshaping international cooperation Aid Trade Conflict

7. Human development has improved in most regions

8. But the human development record of the 1990s is mixed

9. Income poverty reduction continuing but slowly in the 1990s Poverty in the past decade fell at one-fifth the 1980-96 rate Sub-Saharan Africa 100m people more people living on less than $1 a day in 2001 than in 1990 Average incomes lower today than in 1990 Central and Eastern Europe and the CIS Proportion of people on less than $2 a day increased from 5% in 1990 to 20% in 2001 Since 1990 real per capita incomes fell by over 10% in Kyrgyzstan, Russia, Ukraine; over 40% in Georgia, Moldova and Tajikistan But recent economy recovery helped Russia halve poverty during 1999-2002

10. Life expectancy – the great reversal Since 1960 life expectancy in developing countries increased by 16 years But most of the advance occurred before 1990 Asia, Latin America and Middle East have been converging to rich country levels South Asia increased life expectancy by a decade in the last 20 years But SSA experienced reversals Gap between SSA and rich countries increased from 24 years to 33 years in last two decades Life expectancy also fell in the CIS Russian males surviving up to 59 years today, on average, compared with 70 years in mid-1980s

11. Place of birth determines life-chances

12. The demographic shock of AIDS exceeds that of the first World War

13. China and India: Globalisation’s success stories fail their children

14. We live in an unequal world – the champagne glass effect Annual income flows of the richest 500 people exceeds that of the poorest 416 million Cost of ending extreme poverty – $300 billion – less than 2% of the income of the richest 10% of the world’s population

15. Child mortality – the human cost

16. The human cost of a world on auto-pilot – scenario 2015 Compared with meeting the MDGs, in 2015 the world will have: 4.4m additional child deaths 210m fewer people with access to water 380m more people living on $1 a day 47m children still out of school

17. Agenda The argument Tracking past progress and mapping the future Inequality: a navigation tool to guide policy Reshaping international cooperation Aid Trade Conflict

18. Why inequality matters Social justice “No society can be flourishing and happy if a greater part of its members are poor and miserable” Adam Smith Focusing on the welfare of the poor Growth and efficiency Political legitimacy Accelerating progress towards the MDGs

19. Average income matters, but so does inequality

20. Inequality matters for poverty reduction If the income of the poorest 20% grew at twice the national average, it would shorten the time it takes the median household to escape poverty by 19 years in Brazil 15 years in Mexico Kenya If per capita income grew by 1% each year, it would not halve poverty until 2030; Doubling the share of the poor in future growth could halve poverty by 2013

21. Chains of disadvantage - income inequality affects human development for the poor

22. Health inequalities counteract wealth advantages

23. Human development inequalities in the fastest growing economy - China

24. The two worlds of Mexican education

25. Women are often left behind - Pakistan

26. Focusing on inequalities can help prioritise public policy MDGs are largely distribution neutral - they focus on national averages Therefore, the poor often disproportionately account for human development lags Child mortality rates among the poorest 20% are falling at half the average rate of decline Using the inequality lens can accelerate progress towards MDGs

27. The human development potential of pro-poor growth

28. Some effective steps for pro-poor growth Education for all increases efficiency and growth Reducing health inequalities increases productivity Income, employment and incentive-based fiscal transfers Land reform Public investment in rural infrastructure

29. Agenda The argument Tracking past progress and mapping the future Inequality: a navigation tool to guide policy Reshaping international cooperation Aid Trade Conflict

30. The need to make aid more effective There was real progress at the Gleneagles Summit, but Too little aid is given Donors need to deliver on their pledges And they need to provide resources upfront Too much aid is poorly targeted And much is wasted through inefficient delivery

31. Richer but less generous…

32. …but performance varies

33. The aid donor league

34. Aid is not always given to the poorest countries

35. Debt diverts government resources

36. Aid quality leaves much to be desired Predictability and volatility During 2001-03 the gap between commitments and disbursements exceeded 2% of GNI for 35 countries Conditionality Coordination On average, a country in SSA dealt with more than 30 donors in 2002 In 2002 Senegal hosted over 50 World Bank missions In 2003 Zambia hosted 120 donor missions Tied aid imposes a tax

37. The aid tax: costs of tying aid

38. Can more aid be absorbed? Research suggests diminishing returns set in only at around 20% of GNI Large aid flows don’t necessarily mean lower revenue generating capacity (Ethiopia) “Dutch disease” can be avoided if aid used for infrastructure, agricultural productivity and human capital (Ghana, Mozambique)

39. Effective aid for human development Reducing financing constraints for meeting MDGs Increasing economic growth Improving access to primary education (Tanzania and Kenya) and primary health (Uganda) Extending social insurance (Zambia) Supporting reconstruction (Timor-Leste, Sierra Leone) Combating global heath challenges with vaccines

40. Unlocking the potential in international trade Global interdependence – a mixed report on human development Unfair rules favour developed countries Unlike aid, little progress in the Doha Round Beyond the rules: commodities and supermarkets Capacity building for whom?

41. Developing countries’ exports have grown faster…

42. …but growth is largely concentrated in East Asia

43. Lowering tariffs is no magic bullet for growth

44. Trade can be a means to human development, but results vary

45. Perverse graduation in tariffs against the poorest countries

46. Agriculture subsidies are the flashpoint in trade negotiations

47. Subsidies: welfare support for rich producers Three-quarters of CAP support goes to the biggest 10% of subsidy recipients Richest 5% of US subsidy recipients get half the total subsidy

48. Subsidies hit where it hurts most Subsidised EU sugar exports lower prices by a third Losses for Brazil ($494m), South Africa ($151m) and Thailand ($60m) In 2001 U.S. cotton subsidies cost Burkina Faso and Mali 1%-3% of their GDP Fall in cotton prices increased Benin’s poverty rate from 37% to 59% in 2001-02

49. The policy space for developing countries is shrinking Industrial policy rules are constrained Bilateral and regional agreements are pushing “TRIPS-plus” provisions in intellectual property Services negotiations have seen little progress on temporary movement of labour

50. Challenges beyond the rules The commodity crisis is threatening livelihoods Coffee retail sales increased from $30b in 1990 to $80b in 2003, but coffee exporters recovered only $5.5b compared to $12b in 1990 For every $2 in aid received by Ethiopia in 2003, $1 was lost through lower coffee prices Supermarkets are the gatekeepers to developed country markets 30 chains account for one-third of global grocery sales But concentration of buying power influences prices Building capacity at the WTO and beyond Technical assistance suffers from: donor-driven priorities, biased advice, underfunding, weak links to development strategies

51. How trade can deliver for the MDGs Lower peak tariffs to no more than twice the average tariff Give duty-free and quota-free access to SSA exports and other LDCs Relax rules of origin Prohibit export subsidies and limit production subsidies to 10% of the value of production Relax constraints on policies: industrial policy, intellectual property legislation and mobility of labour Establish trade adjustment compensation fund providing $500m a year until 2015

52. Violent conflict: Bringing the real threat into focus Countries worst off on human development have also recently experienced violent conflict The challenge of conflict-prone states Regulating enabling factors – natural resources and small arms Building regional capacity Supporting reconstruction with improved aid and institutions

53. Fewer conflicts since 1991…

54. … but security risks have shifted towards poor countries Low income developing countries accounted for just over a third of all conflicts in 1946-89 Over 1990-2003 low income countries accounted for more than half of all conflicts Africa’s share has increased

55. Violent conflict is a significant barrier to human development Some of the worst human development performers have experienced conflict at some point since 1990: 22 out of 32 countries with a low HDI ranking 9 out of the 10 lowest HDI countries 7 out the 10 countries at the bottom of GDP per capita tables 5 out of the 10 countries with the lowest life expectancy 9 out of 10 countries with the highest infant and under-five mortality rates 8 out of the 10 countries with the lowest primary enrolment ratio 9 out of the 18 countries that had a decline in their HDI in the 1990s

56. Beyond the bullets: conflict has many costs Assets, income and growth In southern Sudan 40% of households lost all their cattle in the 20-year civil war The poverty rate in the Occupied Palestinian Territories jumped from 20% before September 2000 to 55% in 2003 Lost opportunities in education Half of all primary schools were destroyed in Mozambique during 1976-92 Low-income countries that had conflict since 1990 spent one-fifth less on education than their non-conflict counterparts

57. Beyond the bullets: adverse consequences for public health Diseases like AIDS spread more rapidly Health infrastructure destroyed Low-HDI countries in conflict in 2002 spent on average 3.7% of GDP on their militaries but only 2.4% on health

58. Beyond the bullets: displacement, insecurity and crime Half of Chechnya's population is internally displaced Half of all women in Sierra Leone reportedly faced sexual violence during the civil war 250,000 child soldiers worldwide Colombia averaged 61 homicide victims annually per 100,000 people during 1998-2001; the United States averaged 5.7 homicide victims

59. The challenge of conflict-prone states Security gap Capacity gap Legitimacy gap About 46 fragile states around the world; 35 of them were in conflict at some point since 1990

60. Horizontal inequalities can create conflict Social and regional inequalities in Nepal Economic and political exclusion in Cote D’Ivoire Skewed development in oil-rich Aceh, Indonesia

61. Natural resources have fueled conflicts in many countries

62. Regulating natural resource exploitation is a priority Extend certification schemes beyond diamonds to oil and timber Make transparency directives mandatory Prioritise transparent budgeting Prosecute corrupt practices abroad by multinationals in their home countries

63. Controlling the small arms trade is another priority 639m small arms worldwide kill 500,000 people a year – one a minute The United States, Russia and China dominate production There is a need to extend the scope of sub-regional moratorium agreements Use the 2006 UN Small Arms Review Conference to establish an international arms trade treaty with binding commitments on arms brokering and common standards of enforcement

64. Improved regional capacity means quicker response to crisis In 2004 only 300 AU soldiers were deployed to protect 1.5m displaced people in Darfur Nigeria had to foot 90% of the costs of the ECOWAS intervention in Liberia – $1.2b – while other countries withdrew due to financial constraints The UK’s intervention in Sierra Leone is estimated to yield benefits 8 times the investment over 10 years Donors must support the creation of a 15,000 strong African Union standby force by 2010 – follow up on commitments made at the G-8 summit Regional early warning mechanisms will also be crucial to contain risks

65. Aid for post-conflict reconstruction: politics over need

66. Reconstruction needs long-haul commitments plus delivery Match aid to need and make “over the horizon” commitments Use aid to promote conflict-sensitive development that reduces inequalities Establish a $250m peace-building fund to support short term reconstruction Repair infrastructure and provide credit for private sector recovery

67. Three simple messages from HDR 2005 If we are serious about meeting the MDGs, a world on auto-pilot will not get us there We have to use inequality indicators as the navigation tools to prioritise public policy at the national level Beyond country-level policies, the three pillars of international cooperation – aid, trade and security – are interlinked Half measures will not work – the world is at a crossroad to make that choice

68. Thank you

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