Who says trade and growth will lead to development?

This article first appeared on the Ottawa Citizen blog on aid and development.


Aid hasn’t done much for development, and even less for sustainable growth in countries. In fact everything but aid – trade liberalization, productivity and technology gains, income redistribution, remittances, the new “gangnam style” dance (ok, I made that bit up) – have been at the heart of the dramatic improvement in living standards in a number of emerging economies in recent years.

This is the main premise of the Globe & Mail’s March 29 editorial, “Towards better, smarter foreign aid”, on their rationale for why merging the Canadian International Development Agency (CIDA) into one Department of Foreign Affairs, Trade and Development makes total sense.

Forget building bridges, roads and dams. Together, aid can better used to promote trade, which in turn will lead to more sustainable growth and long-term development. Just look at Brazil and Mexico and South Africa, the Globe says.

So I did.

In recent years, there has been a growing body of evidence that has analyzed some of the factors that encouraged sustained and inclusive growth and development in many emerging and developing economies.

The World Bank -sponsored 2008 Commission on Growth and Development drew its “strategies for sustained and inclusive growth” from 13 developing economies that enjoyed a sustained (25 years) period of strong growth (seven percent) and human development. The UNDP’s 2013 Human Development Report on “The Rise of the South” was released just one month ago. It taps the experience of 40 countries that had “done better than expected” in terms of both income and non-income dimensions of human development.

Both reports (like me) unequivocally agree that while trade and growth are important, growth is an insufficient condition to ensure long-term, positive and sustainable human development.

So what then? Each report highlights a number of key factors that contributed to the success of these economies in terms of both positive growth and human development outcomes. They overlap in three areas worth highlighting:

1)      Strong leadership and an active government and society  – While the private sector has an important role to play in development, both the Commission and UNDP reminds us of the necessity of a pro-active developmental state and society. Supported by a talented and well compensated public service, the Commission’s cases identified the importance of active governments that were invested in, and committed to, long-term plans to bring about inclusive growth in their economies and to effective institutions to deliver on this commitment.  But governments also need social policy that promotes inclusion, adds the UNDP, to ensure non-discrimination and equal treatment. As the Arab Spring has reminded us, this also requires space for people – in particular young people - to voice their concerns and demands, influence and shape policy, participate in political processes and demand accountability.

2)      A healthy questioning of unfettered liberalization – While the Commission acknowledges the need for open markets and a responsive economy that supports innovative new industries and dumps obsolete ones, it acknowledges that none of the countries they studied were free market purists (nor was the US and UK, for that matter). These countries developed industrial strategies to promote investments in new sectors, subsidized industries that otherwise wouldn’t have emerged, managed their exchange rates, implemented capital controls, and built up their reserves. (It is enough to make Adam Smith roll over in his grave.) Although neither the UNDP nor Commission advocate for such policies long term, they do recognize that there is a time and a place for such policies. Likewise, while the UNDP notes that tapping global markets is key, “success is more likely to be the result not of a sudden opening but of gradual and sequenced integration with the world economy, according to national circumstances, and accompanied by investment in people, institutions and infrastructure.”

3)      Impressive levels of public investments – Both the Commission and UNDP underscore the importance of investing heavily in people (quality education and skills development, in particular for girls, and nutrition and health care), and in infrastructure (roads, ports, airports, electricity, telecommunications). But this must also be accompanied by a strong focus on job creation and equality of opportunity that can shape (and be shaped by) the nature and pace of the job market, in synch with the skill-set of the new workforce. Furthermore, social safety nets, legal empowerment and access to basic services help smooth the transition for people between jobs. According to the Commission, this produces “healthy, educated workers, passable roads, and reliable electricity” and actually crowds in private investment, creating what the UNDP calls “virtuous cycles in which growth and social policies reinforce each other.”

Which leaves me wondering: wouldn’t “better, smarter foreign aid” have more leverage and impact if it aligned less with how we think growth and development works, and more with how it is actually happening – and quite successfully – in many parts of the developing world?

What do you think?

This blog was written by Fraser Reilly-King, Policy Analyst (Aid), CCIC. The views expressed are his own, and do not necessarily represent the views of CCIC or its members.

Human Development Report 2013: Operationalizing Sen’s Development Framework through the Multidimensional Poverty Index

Development is frequently framed solely in terms of economic growth. Welfare and poverty measures’ paramount focus has been on income, consumption of goods, and availability of resources. Hence, development processes have traditionally been evaluated and quantified using economic indexes such as the Gross Domestic Product. Likewise, poverty is defined by a threshold of income, or alternatively of household commodities consumption, that one must cross in order to escape from being labelled “poor.”

However, examining income alone is inadequate for describing human poverty. Utilitarian-focused poverty measures do not reflect concerns over other aspects of human deprivation, such as well-being, happiness, sustainability, freedom, capabilities, and the like. In short, these poverty measures’ preoccupation with setting the right components and prices in evaluating those metrics overshadow the non-economic aspects of human development.

Unsatisfied with current measures of poverty and welfare, and wanting to capture the full complexity of human capabilities, development economists such as Amartya Sen have expounded the capability approach throughout the past few decades. Sen’s work seeks to reorient development work to expand individuals’ capabilities in achieving valuable beings and doings. Departing from orthodox measures of poverty and the Rawlsian emphasis on primary goods or utility measures, Sen examines an individual’s level of functionings – that is, the “various things that a person may value doing or being.” This framework reorients human development to expand a person’s real opportunities or freedoms to live lives he or she has reason to value.

Notwithstanding his other contributions to the development discourse, Sen’s conceptualization of capabilities as a kind of substantive freedom is an advancement for those who are traditionally disregarded in decision-making processes. Recognizing the poor’s agency in voicing their own needs and laying claims to opportunities for living lives they have reason to value, the marginalized are cast to the forefront as actors – in lieu of passive beneficiaries of aid – within development processes. In sum, Sen’s philosophical reframing of poverty and development has the potential to effectively democratize development processes.

His conceptual framework laid the foundations for the Human Development Index, which was created in 1990 for the Human Development Report. This index is supplemented by the Multidimensional Poverty Index (MPI) in 2010, which “identifies multiple deprivations at the individual level in health, education and standard of living” across 104 developing countries (UNDP). Its developers advocate for its use in order to complement income poverty measures. By measuring acute poverty instead of extreme poverty (based on the World Bank’s $1.25/day poverty measure), the MPI sheds light on those who “do not reach the minimum standards in several indicators at the same time” (Alkire and Santos 2011:30).

The legitimacy of the MPI stems from how it reflects the Millennium Development Goals in its indicator cut-offs, making it a more direct measure of human development aspirations that are internationally agreed-upon (Alkire and Santos 2011:30). Drawing from data sources such as the Demographic Health Surveys (DHS), the Multiple Indicator Cluster Surveys (MICS), and the World Health Survey, the MPI focuses on the wider dimensions of poverty and underdevelopment than traditional income poverty measures. Unlike the Human Development Index, however, the MPI’s variables are linked to a particular household (i.e. same survey source). The MPI is also decomposable by population sub-groups, allowing policy makers to analyze poverty data and target their development policies to specific groups accordingly.

OPHI’s analysis of the global MPI 2013 spans four topics, of which one is an analysis of where the poorest “Bottom Billion” live using both national averages and individual poverty profiles. By identify where the poor are and how they are poor, the MPI 2013 can be used to divert resources effectively to meet the Millennium Development Goals and the post-2015 MDGs. The analysis is especially important in dispelling common assumptions of where the poor are: almost 10% of the poorest billion people live in High Income or upper Middle Income countries. This demonstrates the need for going beyond traditional monetary poverty measures for identifying the poor.

Because the MPI can be disaggregated, it can highlight inequalities across regions and social groups. If one examines national poverty levels, the MPI shows that the “Bottom Billion” live in 30 countries, with 66% of the poorest billion living in Lower Middle Income countries. An analysis of subnational poverty levels shows that the bottom billion live in 265 subnational regions across 44 countries. Finally, individual poverty profiles reveal that the poorest billion are distributed across 100 countries, with over 9% living in upper Middle Income countries. Geographically speaking, South Asia is home to the majority of the world’s poorest billion, ranging from 52 to 62%, depending on the level of disaggregation. Most of the rest of the “Bottom Billion” live in Sub-Saharan Africa.

From the discussion above, it is clear that the MPI is a crucial tool for analyzing the effectiveness of poverty alleviation efforts on national, subnational, and individual scales. Moreover, it provides a more comprehensive picture of human development and takes into account the voice of the poor. By focusing attention on people’s capabilities, the MPI is one step closer to realizing Sen’s call towards a development paradigm that centers on the poor’s agency in reframing what poverty means, thus bringing about a more inclusive development regime that truly addresses the deprivations faced by individuals.

Esther Kwan is a first year MPhil student at the Oxford Department of International Development.

Human Development Report 2013: The Emergence of the Global Civil Society and New Partnerships

The Global Civil Society in the New Arrangement

The rise of the South presents opportunities for new development partnerships and approaches. Local movements, national activists, labour unions, and civil societies in the South are increasingly becoming more connected and wired to various transnational solidarity and knowledge networks outside the confines of the traditional international governance channels dominated by the North. These transnational networks, such as the World Social Forum, CIVICUS, UBUNTU, and many others, are influencing the behavior of state and private actors alike by pushing for new norms, reframing critical development issues, and making demands for states to act on climate change, international trade regime reform, fairer governance, social inequalities, and human rights issues. These networks are laying the foundations for an emerging global civil society and a ground up global public opinion.

The emergence of the global civil society and public opinion is a vibrant and dynamic element of the new global arrangement. The new arrangement calls for a more equitable and meaningful representation of the South, civil societies, and social movements on the world stage.  This more equitable and meaningful representation aims to promote the human development and the aspirations of the growing global middle-class that amplifies our common goal for a more just and fairer world.
New Partnerships for Responsible Sovereignty 

Leading emerging countries of the South are using their own “ideas and energy to create new momentum for human development” (HDR, 2013: 120). As a result, non-state and state actors in the North are becoming more sensitive and inclusive of the needs of all nations. An important part of the North becoming more sensitive and inclusive of the needs of the South comes from new South-South economic and political partnerships, where developing countries are learning and benefiting from the successes of leading emerging countries. A number of these partnerships include new South-South trade arrangements like the Sao Paulo Round of 2010> and the recent 5^th BRICS Summit in Durban, and important institutions focusing on the South such as the South Centre(formerly the South Commission), and the Chiang Mai Initiative Multilateralization. Gradual transition is taking place as we strive for a more equitable representation of the South through determined reforms of international financial institutions, multilateral and security organs that is to come.

The growth of the global civil society and global civic activism is core to the responsible sovereignty of nations. “Responsible sovereignty takes the long-term interests of the world as a whole into account when formulating national policies” (HDR, 2013:116). Responsible sovereignty must also be extended not only to states but also to private citizens and corporations as they should also be responsible and accountable for their own decisions and actions to protect global resources and address transnational threats. Non-state and citizens actors must also contribute positively to the Post-2015 agenda, environmental sustainability, climate change, youth unemployment, human migration, urbanization, food security, and global trade and investment issues. Similar to the rising economic and political influence of the South, the rise of the global civil society and activists are important partners in global decision-making and pioneering new approaches in tackling international challenges. One example of responsible sovereignty spearheaded by Canada is the Responsibility to Protect Initiative, which attempts to modernize international security, human rights, and humanitarian norms.

Canada and New Partnerships
In the Canadian context, the heated debate around Private-Public Partnerships (PPP or P3) in extractive-led development overseas is challenging the boundaries and ethics of public and private interests that raises critical questions about international cooperation and for whom does this type of development truly benefits and excludes. However, definitions and concepts of “publicness” and “privateness” are social constructs designed by policy choices that need strong regulatory reorientation. Public and private interests in terms of human rights, trade, investment, development, environment, and sovereign interests, do not have to be zero-sum as we all try to adapt and co-create the changing global realities. At the same time, this new arrangement is not a divisive struggle of the new replacing the old or the South replacing the North, instead, the new arrangement “is integrating, coordinating and in some cases reforming” existing structures to make all actors, the South, the North, the private, and the public work more effectively and coherently together (HDR, 2013: 112).

Finally, the optimistic news is that the South, especially the leading emerging countries such as BRICS and other groupings (e.g. IBSA, CIVETS, and MIST), are making rapid advancements in human development. However, when we look beyond the national HDI averages, the numbers change quite drastically. When factoring in Inequality Adjusted-HDI and Gender Inequality Index, and Multidimensional Poverty Index, many states such as Mexico, Brazil, Namibia, Angola, Nigeria, and even South Korea, and the United States rankings drop. This year, Canada ranked 11 on the HDI,15 on the Inequality-adjusted HDI and 18 on the Gender inequality Index.  

Link to the Report Summary in English and en français of the Human Development Report 2013 - The Rise of the South: Human Progress in a Diverse World.

Kai-Hsin Hung is the current Research Assistant with the Asia-Pacific Working Group (APWG) and a recent graduate from the School of International Development and Global Studies at the University of Ottawa.

Country Action: Do all youth have a fair shot at secondary school?

This post by Jody Heymann and Kristen McNeill was first published on the Global Partnership for Education website. CCIC is thankful for permission to re-publish.

Which countries around the world make education compulsory for 15-year-olds? How many countries in your region ensure that secondary school teachers are sufficiently trained? How many high- and low-income countries ensure that disabled children can attend school in the same classrooms as their non-disabled peers?  How many countries have prohibited discrimination in education for children of all ethnic groups? These are but a few of the many questions that must be answered to truly understand whether children have access to schools, whether they will receive a quality education, and whether it is a real possibility for children across all income groups and marginalized populations.

Before now, there has been a wealth of important information on educational policies and outcomes made available through detailed UN reports, country reports, NGO initiatives, and other sources. These have been a crucial resource. However, the voluminous and qualitative nature of much of the available information limited accessibility; it was much more suited for in-depth investigations of the situation in particular countries than broad-scale comparisons and identifications of which countries are leading the pack and which are falling behind.

For the past several years, we have been working on the Children’s Chances Initiative to make comparative information on education and other child policies easily accessible. Key results of this study on what countries are doing to make equal chances for children a reality are presented in a new report launched February 12^th, entitled “Changing Children’s Chances.”

In terms of education, there is good news and bad news. Primary education has long been a priority for the global community, and rightfully so – it is an absolutely essential and foundational element of childhood. This global commitment has yielded important results. New data analyzed by our international team examining laws and policies in all UN member states around the world shows that in basic education the world has come a long way. The majority of countries in the world (166) have made primary education tuition-free. And in all but 15 countries, primary schooling is compulsory, with progress being seen across all regions. When net primary enrolment rates in sub-Saharan Africa jump from 56% to 73% in just eight years, and all but 8 countries globally now have public provision of special education to some degree for children with disabilities, such progress should be celebrated.

Yet, national action – and global goals – have not been set high enough to truly give all children a chance to succeed. When it comes to secondary education – often a minimum requirement for jobs providing a decent income – the picture our research presents does not show such cause for celebration. Some 38 countries charge tuition before the completion of secondary school, leaving secondary and higher education out of reach for many children in the poorest families. Looking beyond enrolment rates and accessibility, even those children who can currently attend secondary school may not be getting the most out of their education. In 48 countries teachers at the lower secondary level are required to have completed no higher than a secondary level of education themselves, and the same is true for upper secondary-school teachers in 30 countries. This leaves large numbers of youth being taught by instructors who have completed little more education than their students.

As with any area of children’s chances, the question of education cannot be solved in isolation. To truly ensure that all children have an equal chance in secondary school, governments also need to address the underlying social conditions that determine whether children are able to attend and continue with schooling. A child’s chance of going to school is hugely affected by whether their parents can earn enough to support the family without resorting to child labour to make ends meet.  When children are needed as income-earners, they will often have to drop out of school, especially in the absence of laws that protect them from long hours of labour. In 103 countries children can be working full-time under the age of 16, not old enough to allow for the completion of high school; in 118 countries children can work more than 6 hours on school days at age 15 or younger.  When girls are married young, school dropout becomes much more likely; nonetheless, girls can be married below the age of 18 in 99 countries (while boys can be married under 18 in 64 countries). And among these, 42 countries do not protect girls from marriage at 15 or younger.

To find out more about how countries are performing on education and other areas key to children’s full and healthy development, visit http://childrenschances.org. You will find over 100 global maps showing where tuition is still charged for primary and secondary school, where boys and girls have equal rights in education, where children are legally protected from discrimination in education based on religion, ethnicity, or disability, where children are sheltered from child labour and early marriage, and many more.

Clearly much more action is required on the part of nations if all children are to have equal chances – and this action is feasible, as demonstrated by the many countries at every income level that have already taken important steps forward. We know what works and what needs to be done– there are no more excuses for inaction.

 
Jody Heymann and Kristen McNeill are co-authors of Children’s Chances: How Countries can Move from Surviving to Thriving (Harvard University Press, 2013).