5.4 Solidarity in a globalizing world: Working Out of Poverty
5.4 Solidarity in a globalizing world: Working Out of Poverty
countries are still using a substantial portion of their resources to pay
interest and repay the capital of earlier borrowing. According to the UNDP,
59 low-income developing countries (with per capita incomes of US$755 or
less) paid out an average of 4.4 per cent of their GDP in debt service in 2000
compared with aid disbursements received equivalent to 2.1 per cent of
GDP.
Although debt service payments for the poorest countries within
this group are beginning to fall as the relief available under the HIPC initiative
starts to come through, a further enhancement of international arrangements
to reduce and write off debt is warranted. This would release
resources for investments in the physical and social infrastructure needed for
growth.
Additional aid is therefore essential to reduce the burden of existing
debts, increase flows of finance for investment and supplement government
expenditure on key services for poverty reduction. This is a matter of political
will. For example, reducing the US$311 billion OECD countries paid to
support their agricultural industry in 2001 could release resources for development
assistance. Industrial countries’ subsidies to agriculture were nearly six times the total ODA of US$52.3 billion to all developing countries by
these countries in 2001.
The World Bank has estimated that between US$40 and 60 billion of increased
financial assistance is needed each year until 2015 to enable all countries
to reach the targets set by the MDGs.The promise made by donors
at the International Conference on Financing for Development in Monterrey
in 2002 to raise ODA by $12 billion each year over the next three years
is only a beginning. Proposals for a new international investment finance facility,
a resumption of the issuance of IMF Special Drawing Rights and improved
tax cooperation to reduce avoidance and evasion deserve serious
consideration.
The speed, predictability and administrative efficiency of its delivery
are as important as the volume of aid. Despite promises by donors to shift
away from a multitude of relatively small projects and programmes to
longer-term commitments to broad government programmes, the transaction
costs placed on recipient country government services in meeting
donors’ conditions remain onerous.
The aid relationship continues to be unbalanced, compromising the
central objective of ensuring that poverty reduction strategies are nationally
owned. Since the principle of public accountability for public funds should
be retained, donors and governments could consider including the parliaments
of recipient and donor countries in the process of monitoring aid expenditures.
This would also encourage participation and increased interparliamentary
cooperation to promote the democratic accountability of all
governments involved in the aid relationship.
Reducing poverty in most countries requires both sustainable growth
and also redistribution. Getting the policy mix right to achieve and sustain
equitable growth is most likely where development strategies have a high degree
of support across social groups. This is necessary not only to avoid
destabilization as a result of irreconcilable claims, but also to generate confidence
that action by different groups, including government, will be
matched by others. This is particularly important for policies to increase the
availability of decent work opportunities. Building trust in the social institutions,
both public and private, needed to enable poor people to earn their
way out of poverty is a vital investment. The absence of social cohesion is a
severe brake on development and in extreme circumstances can undermine
the capacity of States to govern.
On numerous occasions, including at the World Summit for Social Development
in Copenhagen in 1995, the international community has agreed
that social security is a basic human right and a fundamental means for creating
social cohesion, thereby helping to ensure social peace and social inclusion.
As mentioned in Chapter 3, the 89th Session of the International
Labour Conference in 2001 committed the ILO to a major new campaign
to improve and extend social security coverage to all those in need of such
protection.
Developing countries, especially those where poverty is widespread,
need to extend systems of social security that address the vulnerabilities that
trap families and communities in cycles of deprivation. The importance of
access to primary and secondary education and primary health care has been recognized by many developing countries. For a poor family, securing a basic
income, basic health care and education for the children is a foundation for
participating productively in society and the economy. Secure families build
secure communities and stable societies.
For most people living in poverty, however, these basic securities are
not even a dream. Their daily reality is a world of insecurity with all the consequences
of crime, substance abuse, and social dislocation that breed violence,
ethnic and religious bigotry, and political extremism. As with many aspects of the development agenda, extending social protection requires action
at the national level within a supportive international context. However,
there is a danger that the pressures of competition for internationally mobile
finance and on world trade markets will reduce the scope for extending social
protection at a time when it is most needed. If they are to extend the triangle
of income, health and education security, low-income developing
country governments need in turn the security of a regular, predictable flow
of development assistance to their budgets for social expenditure.
As a contribution to new thinking about global solidarity, the ILO is
currently piloting an approach to supporting the extension of social security
through a Global Social Trust. The idea is to request people in richer
countries to commit to a regular monthly transfer of about 5 euros (or about 0.2 per cent of average monthly incomes) to a Global Social Trust based on
a network of national social trusts supported by the ILO and other interested
parties. These funds would then be invested to kick-start basic social protection
schemes launched primarily in least developed countries, which would
provide concrete benefits for a defined period until these initiatives became
self-supporting.
54 Solidarity in a globalizing world Working Out of Poverty - To learn more about this author, visit International Labour Organization's Website.
Like this article? Share it with your friends
Despite efforts to reduce the burden of excessive debt, many lowincome
countries are still using a substantial portion of their resources to pay
interest and repay the capital of earlier borrowing. According to the UNDP,
59 low-income developing countries (with per capita incomes of US$755 or
less) paid out an average of 4.4 per cent of their GDP in debt service in 2000
compared with aid disbursements received equivalent to 2.1 per cent of
GDP.
Although debt service payments for the poorest countries within
this group are beginning to fall as the relief available under the HIPC initiative
starts to come through, a further enhancement of international arrangements
to reduce and write off debt is warranted. This would release
resources for investments in the physical and social infrastructure needed for
growth.
Additional aid is therefore essential to reduce the burden of existing
debts, increase flows of finance for investment and supplement government
expenditure on key services for poverty reduction. This is a matter of political
will. For example, reducing the US$311 billion OECD countries paid to
support their agricultural industry in 2001 could release resources for development
assistance. Industrial countries’ subsidies to agriculture were nearly six times the total ODA of US$52.3 billion to all developing countries by
these countries in 2001.
The World Bank has estimated that between US$40 and 60 billion of increased
financial assistance is needed each year until 2015 to enable all countries
to reach the targets set by the MDGs.The promise made by donors
at the International Conference on Financing for Development in Monterrey
in 2002 to raise ODA by $12 billion each year over the next three years
is only a beginning. Proposals for a new international investment finance facility,
a resumption of the issuance of IMF Special Drawing Rights and improved
tax cooperation to reduce avoidance and evasion deserve serious
consideration.
The speed, predictability and administrative efficiency of its delivery
are as important as the volume of aid. Despite promises by donors to shift
away from a multitude of relatively small projects and programmes to
longer-term commitments to broad government programmes, the transaction
costs placed on recipient country government services in meeting
donors’ conditions remain onerous.
The aid relationship continues to be unbalanced, compromising the
central objective of ensuring that poverty reduction strategies are nationally
owned. Since the principle of public accountability for public funds should
be retained, donors and governments could consider including the parliaments
of recipient and donor countries in the process of monitoring aid expenditures.
This would also encourage participation and increased interparliamentary
cooperation to promote the democratic accountability of all
governments involved in the aid relationship.
Reducing poverty in most countries requires both sustainable growth
and also redistribution. Getting the policy mix right to achieve and sustain
equitable growth is most likely where development strategies have a high degree
of support across social groups. This is necessary not only to avoid
destabilization as a result of irreconcilable claims, but also to generate confidence
that action by different groups, including government, will be
matched by others. This is particularly important for policies to increase the
availability of decent work opportunities. Building trust in the social institutions,
both public and private, needed to enable poor people to earn their
way out of poverty is a vital investment. The absence of social cohesion is a
severe brake on development and in extreme circumstances can undermine
the capacity of States to govern.
On numerous occasions, including at the World Summit for Social Development
in Copenhagen in 1995, the international community has agreed
that social security is a basic human right and a fundamental means for creating
social cohesion, thereby helping to ensure social peace and social inclusion.
As mentioned in Chapter 3, the 89th Session of the International
Labour Conference in 2001 committed the ILO to a major new campaign
to improve and extend social security coverage to all those in need of such
protection.
Developing countries, especially those where poverty is widespread,
need to extend systems of social security that address the vulnerabilities that
trap families and communities in cycles of deprivation. The importance of
access to primary and secondary education and primary health care has been recognized by many developing countries. For a poor family, securing a basic
income, basic health care and education for the children is a foundation for
participating productively in society and the economy. Secure families build
secure communities and stable societies.
For most people living in poverty, however, these basic securities are
not even a dream. Their daily reality is a world of insecurity with all the consequences
of crime, substance abuse, and social dislocation that breed violence,
ethnic and religious bigotry, and political extremism. As with many aspects of the development agenda, extending social protection requires action
at the national level within a supportive international context. However,
there is a danger that the pressures of competition for internationally mobile
finance and on world trade markets will reduce the scope for extending social
protection at a time when it is most needed. If they are to extend the triangle
of income, health and education security, low-income developing
country governments need in turn the security of a regular, predictable flow
of development assistance to their budgets for social expenditure.
As a contribution to new thinking about global solidarity, the ILO is
currently piloting an approach to supporting the extension of social security
through a Global Social Trust. The idea is to request people in richer
countries to commit to a regular monthly transfer of about 5 euros (or about 0.2 per cent of average monthly incomes) to a Global Social Trust based on
a network of national social trusts supported by the ILO and other interested
parties. These funds would then be invested to kick-start basic social protection
schemes launched primarily in least developed countries, which would
provide concrete benefits for a defined period until these initiatives became
self-supporting.
54 Solidarity in a globalizing world Working Out of Poverty - To learn more about this author, visit International Labour Organization's Website.
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