Front Matter

Front Matter

Author(s):
International Monetary Fund
Published Date:
April 2008
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    GLOBAL MONITORING REPORT

    2008

    MDGs and the Environment: Agenda for Inclusive and Sustainable Development

    © 2008 The International Bank for Reconstruction and Development / The World Bank

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    This volume is a product of the staff of the World Bank and the International Monetary Fund. The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank, the Board of Executive Directors of the International Monetary Fund, or the governments they represent.

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    ISBN: 9780821373842

    eISBN: 978-0-8213-7385-9

    DOI: 10.1596/978-0-8213-7384-2

    Cover photo: © Robert Wallis/Panos Pictures.

    Cover image: Women in Rajasthan, India, carry sand near the village of Paladi Bhopatan to form rainwater collection channels. Rajasthan has been suffering from a drought for the last eight years.

    Cover design by Quantum Think.

    Contents

    Foreword

    The Global Monitoring Report 2008 comes at an important time. This year marks the halfway point in the effort to achieve the Millennium Development Goals (MDGs) by 2015. This is also an important year to work toward a consensus on how the world is going to respond to the challenge of climate change, building on the foundation laid at the conference in Bali in December 2007. Successfully meeting this challenge will be essential for durable progress toward the MDGs and related development outcomes. In providing an integrated assessment of the agenda for development and environmental sustainability, this year’s report offers timely input on issues that will be at the center of discussions at various international forums in coming months.

    The report’s assessment of the MDGs at midpoint presents a mixed picture. The first MDG calls for reducing extreme poverty and hunger by half. Although the poverty goal is likely to be met at the global level, thanks to a remarkable surge in global economic growth over the past decade, there are serious shortfalls in fighting hunger and malnutrition—the “forgotten MDG.” High food and energy prices have brought increased attention to these issues, but more is needed. Reducing malnutrition is the MDG with a “multiplier” effect, because it is essential to success on a number of other MDGs which are unlikely to be met, including maternal health, infant mortality, and education. Shortfalls in the human development areas are especially serious in South Asia and Sub-Saharan Africa. Within this overall picture, there is considerable variation across countries. The report finds that, on current trends, most countries are off track to meet most of the MDGs, with those in fragile situations falling behind most seriously.

    The implication of this assessment is clear. If the world is to get back on track to meet the MDGs, the international community needs to move quickly to generate stronger and broader momentum toward these goals. In the context of expediting and broadening progress toward the MDGs, and ensuring the sustainability of that progress, the report proposes an agenda for inclusive and sustainable development.

    Strong and inclusive growth must be at the center of the strategy to achieve the MDGs, including concerted efforts to spur growth in lagging countries in Africa and elsewhere and in fragile situations. While specific policy priorities for growth vary from country to country, looking across countries, several areas emerge as essential to robust growth: sound macroeconomic policies; a conducive private investment climate, including access to energy and other key infrastructure; and good governance. In many countries in Africa, and in low-income countries more generally, a dynamic agricultural sector is crucial for strong and inclusive growth and will help to mitigate the recent upward pressures on food prices. In countries that are severely affected by the food price increases, well-targeted safety nets may also be needed to cushion the impact on the poor.

    The recent financial market turbulence and the resulting global economic slowdown pose difficult challenges for policy makers. We will need decisive monetary and fiscal policy action to head off a deterioration of growth prospects in advanced and developing economies, and stronger prudential supervision to put the financial system on a firmer footing.

    We must accelerate progress toward the human development goals. There is a clear need to step up programs in health and education, but it is also clear that increased public spending alone is not the answer. The quality and equity of spending are equally important. And policy interventions must factor in the strong links that exist between health and education outcomes, nutrition, and environmental factors—water and sanitation, pollution, and climate change.

    We must integrate environmental sustainability into core development work, maximizing synergies. For natural resource–dependent countries, sound resource management is critical for sustainable growth. Poor countries will suffer the most from climate change and are the least able to adapt. For them, the best way to adapt is to develop—by diversifying their economies, strengthening infrastructure, and developing health systems. Mitigation of carbon emissions will require financing and technology transfer to developing countries. Such support should not divert resources from other development programs.

    Donors must scale up aid in line with their commitments. Sizable shortfalls loom if current trends in aid persist. Thanks to reforms, a number of developing countries are in a position to utilize increased resources productively. The changing aid architecture, including new sources and modalities of aid, promises more resources and innovation but also poses new challenges for aid effectiveness and coherence. We should use the opportunity provided by the Accra High Level Forum in September 2008 to address the new, dynamic dimensions of the aid effectiveness agenda. We also need to catalyze and leverage more private capital in support of development.

    We can and should harness trade more effectively to contribute to strong and inclusive growth. The international community must achieve a successful outcome of the Doha trade negotiations in 2008. The current high food prices provide a window of opportunity to break the impasse on agricultural trade liberalization. We should increase aid for trade; together with behind-the-border reforms of key trade-related services, it can help poor countries take advantage of trade opportunities, promoting more inclusive globalization.

    The international financial institutions (IFIs) have a crucial role to play in supporting this agenda through their financing, knowledge, and coordination services. At the country level, these institutions need to tailor their products and services to the increasingly differentiated needs of member countries. They also need to respond to the expanding agenda of global and regional public goods, such as combating climate change. In a more complex international financial and development architecture, the coordination and leveraging role that the IFIs play will be increasingly important.

    Robert B. Zoellick

    President

    World Bank

    Dominique Strauss-Kahn

    Managing Director

    International Monetary Fund

    Acknowledgments

    This report has been prepared jointly by the staffs of the World Bank and the International Monetary Fund. In preparing the report, staff have collaborated closely with partner institutions—the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, the Organisation for Economic Co-operation and Development, the World Trade Organization, and the United Nations. The cooperation and support of staff of these institutions are gratefully acknowledged.

    Zia Qureshi was the lead author and manager of the report. The core team for the report included Punam Chuhan, Maureen Cropper, Stefano Curto, Kirk Hamilton, Bernard Hoekman, Homi Kharas, Maureen Lewis, Jamus Lim, Muthukumara Mani, Alessandro Nicita, and Giovanni Ruta (World Bank) and Richard Harmsen and Alexei Kireyev (IMF). Other significant contributions were made by Sebastien Dessus, Mary Hallward-Driemeier, and Linda Lee (World Bank) and Emmanuel Hife and Ioana Niculcea (IMF). Sachin Shahria assisted with the overall preparation and coordination of the report. The work was carried out under the general guidance of Alan Gelb, Acting Senior Vice President and Chief Economist, World Bank.

    A number of other staff made valuable contributions, including the following from the World Bank: Issam Abousleiman, Mehdi Akhlaghi, Juan Alonso, Philippe Ambrosi, Jorge Araujo, Elizabeth Ashbourne, Soma Bhattacharya, Iwona Borowik, Eduard Bos, Paul Brenton, Shaohua Chen, Ajay Chhibber, Michael Child., Kenneth Chomitz, Susmita Dasgupta, William Dick, Ariel Dinar, Yvonne Edwards, Nevin Fahmy, Manuela Ferro, Viven Foster, Homa-Zahra Fotouhi, Dianne Garama, Colum Garrity, Batshur Gootiiz, Vincent Gouarne, Gloria Grandolini, Christopher Hall, Michael Jensen, Ellis Juan, Sima Kanaan, Arthur Karlin, Hiau Looi Kee, Jung-Kwan Kim, Jane Kirby-Zaki, Peter Kolsky, Markus Kostner, Aart Kraay, Arianna Legovini, Soe Lin, Andres Londono, Ana Lopes, Mariem Malouche, Aaditya Mattoo, Susan McAdams, Craig Meisner, Gary Milante, Don Mitchell, Lalita Moorty, Richard Newfarmer, Kyran O’Sullivan, Abha Prasad, Xiaolin Ren, Ashok Sarkar, Banafsheh Siadat, Susan Stout, Jana Stover, Gary Stuggins, Gaiv Tata, Margret Thalwitz, Mark Thomas, Sumter Travers, Katherine Tulenko, Gallina Vincelette, Roberto Zagha, and Albert Zeufack.

    Other contributors from the IMF included Sonia Brunschwig, David Hofman, Subir Lall, Dustin Smith, Mark Tareen, and Anna Unikovskaya.

    Contributors from other institutions included: Philibert Afrika, John Kofi Baffoe, Ferdinand Bakoup, Shen Gao, Onyango Ouma James, Penthesilea Lartey, Mohamed Manai, and Daniele Ponzi (AfDB); Chris MacCormac, Bruce Purdue, Antonio Ressano-Garcia, Manju Senapaty, and Shahid Zahid (ADB); Alistair Clark, James Earwicker, Elisabetta Falcetti, Jacquelin Ligot, Nicolas Mathieu, Terry McCallion, and Alan Rousso (EBRD); Marcelo Barrón, Tracy Betts Sikander Daryanani, Fernando Fernández, Orlando Ferreira, Carlos Herrera, Mercedes Mateo, Patricia Meduña, Fernando Mendoza, Max PulgarVidal, Susana Rubio, Alejandro Soriano, Raul Tuazon, and Natasha Ward (IDB); and Yasmin Ahmad and Brian Hammond (OECD).

    Acknowledgments are also due to Joseph Aldy, Robert Mendelsohn, Nicholas Stern, and David Wheeler for valuable contributions and comments.

    Guidance received from the Executive Directors of the World Bank and the IMF and their staff during discussions of the draft report is gratefully acknowledged. The report also benefited from many useful comments and suggestions received from the Bank and Fund management and staff in the course of its preparation and review.

    The World Bank’s Office of the Publisher managed the editorial services, design, production, and printing of the report. In particular, Susan Graham, Denise Bergeron, Nancy Lammers, Stephen McGroarty, and Santiago Pombo-Bejarano, along with Kirsten Dennison and associates at Precision Graphics, Candace Roberts and associates at Quantum Think, and Martha Gottron, provided excellent help with publishing this report on a very tight schedule.

    Abbreviations

    ACP

    African, Caribbean, and Pacific countries

    ADB

    Asian Development Bank

    AfDB

    African Development Bank

    AIDS

    acquired immune deficiency syndrome

    AMC

    Advanced Market Commitment

    ASEAN

    Association of Southeast Asian Nations

    CCT

    conditional cash transfer

    CDM

    Clean Development Mechanism

    CEA

    Country Environmental Analyses (of the World Bank)

    CERs

    Certified Emissions Reductions

    CPIA

    Country Policy and Institutional Assessment

    CRS

    Creditor Reporting System (of the OECD DAC)

    DAC

    Development Assistance Committee

    DALY

    disability-adjusted life year

    DRF

    Debt Reduction Facility (of the World Bank)

    EBRD

    European Bank for Reconstruction and Development

    EC

    European Commission

    EDF

    European Development Fund

    EFA-FTI

    Education for All–Fast-Track Initiative

    EIF

    Enhanced Integrated Framework

    EITI

    Extractive Industries Transparency Initiative

    EPA

    Economic Partnership Agreement

    EPI

    Environmental Performance Index (of the EU ACP)

    EU

    European Union

    FAO

    Food and Agriculture Organization (of the UN)

    FDI

    foreign direct investment

    GAVI

    Global Alliance for Vaccines and Immunizations

    GDP

    gross domestic product

    GEF

    Global Environment Facility

    GFATM

    Global Fund to Fight AIDS, Tuberculosis, and Malaria

    GHG

    greenhouse gas

    GNI

    gross national income

    HIPC

    heavily indebted poor country/countries

    HIV

    human immunodeficiency virus

    IBRD

    International Bank for Reconstruction and Development

    IDA

    International Development Association (of the World Bank Group)

    IDB

    Inter-American Development Bank

    IEA

    International Energy Agency

    IFC

    International Finance Corporation (of the World Bank Group)

    IFI

    international financial institutions

    IFFIm

    International Finance Facility for Immunization

    IHP

    International Health Partnership

    IMF

    International Monetary Fund

    IPCC

    Intergovernmental Panel on Climate Change

    ITC

    International Trade Centre

    LDCs

    least-developed countries

    LICs

    low-income countries

    MDG

    Millennium Development Goal

    MDB

    multilateral development bank

    MDRI

    Multilateral Debt Relief Initiative

    MICs

    middle-income countries

    NAMA

    non-agricultural market access

    NGOs

    nongovernmental organizations

    NTM

    nontariff measure

    ODA

    official development assistance

    OECD

    Organisation for Economic Co-operation and Development

    OPEC

    Organization of Petroleum Exporting Countries

    OTRI

    overall trade restrictiveness index

    PEPFAR

    President’s Emergency Plan for AIDS Relief

    PPP

    purchasing power parity

    PRS

    poverty reduction strategy

    PTA

    preferential trade agreement

    SADC

    Southern Africa Development Community

    SME

    small and medium enterprise

    SWAp

    sectorwide approach

    TTRI

    Tariff Trade Restrictiveness Index

    UA

    unit of account

    UN

    United Nations

    UNCTAD

    UN Conference on Trade and Development

    UNFCCC

    UN Framework Convention on Climate Change

    UNHCR

    UN High Commissioner for Refugees

    UNDP

    UN Development Programme

    UNRWA

    UN Relief and Works Agency

    WFP

    World Food Programme

    WHO

    World Health Organization

    WTO

    World Trade Organization

    Executive Summary

    The central messages of the Global Monitoring Report 2008 are clear: urgent action is needed to help the world meet the Millennium Development Goals (MDGs) by 2015; and urgent action is also needed to combat climate change that threatens the well-being of all countries, but particularly of poor countries and poor people. The goals of development and environmental sustainability are closely related, and the paths to those goals have many synergies.

    MDGs at Midpoint

    Assessment of the MDGs at midpoint presents a mixed picture, one of both significant progress and formidable challenges. The first MDG calls for reducing extreme poverty and hunger by half. Although the poverty goal is likely to be met at the global level, thanks to a remarkable surge in global economic growth over the past decade, there are serious shortfalls in fighting hunger and malnutrition. The recent rise in food prices has brought increased attention to these issues, but more is needed. On current trends, the human development MDGs are unlikely to be met. Prospects are gravest for the goals of reducing child and maternal mortality, but shortfalls are also likely in the primary school completion, empowerment of women, and sanitation MDGs.

    Within this overall picture, there is considerable variation across regions and countries. At the regional level, Sub-Saharan Africa lags on all MDGs, including the goal for poverty reduction, though many countries in the region are now experiencing improved growth performance. South Asia lags on most human development MDGs, though it will likely meet the poverty reduction MDG. At the country level, on current trends most countries are off track to meet most of the MDGs, with those in fragile situations falling behind most seriously.

    Yet most MDGs remain achievable for most countries if stronger efforts are made both by the countries and their development partners. Progress must be accelerated and made more inclusive. International attention associated with the MDG midpoint makes 2008 a crucial year to generate the necessary momentum. The planned high-level meetings during the year provide an opportunity to agree on priorities for action and milestones for monitoring progress.

    Development and Environmental Sustainability

    Concurrently, building on the outcome of the December 2007 conference in Bali, 2008 is also an important year to make progress on the climate change agenda. MDG 7 underscores the strong links between development and environmental sustainability, the special theme of this year’s Global Monitoring Report. Ensuring environmental sustainability is necessary for achieving the other MDGs and maintaining long-term growth and development.

    Early action to control greenhouse gas emissions will significantly reduce mitigation and adaptation costs. Even if efforts to stabilize emissions are successful, some degree of warming and related impacts will continue to occur into the next decades. Developing countries will be the most affected. In the 1990s about 200 million people a year, on average, were affected by climate-related disasters in developing countries, compared with 1 million in developed countries. Heavier dependence on natural resources and agriculture in poor countries makes them more vulnerable to the impact of climate change, and their poverty and lack of development make them less able to adapt. Thus development, adaptation, and mitigation are closely connected.

    Inclusive and Sustainable Development: A Six-Point Agenda

    To expedite and broaden progress toward the MDGs, and to ensure the sustainability of that progress, the report proposes a six-point agenda for inclusive and sustainable development.

    1. Sustain and broaden the growth momentum

    • Strong and inclusive economic growth must be at the center of the strategy to achieve the MDGs. Poor countries need to achieve annual GDP growth of 7 percent or more to make serious dents in poverty.

    • Stronger, concerted efforts are needed to spur growth in lagging countries in Africa and elsewhere and in fragile states. While growth in Africa has improved, only about one-third of the region’s population lives in countries that have achieved sustained GDP growth of 7 percent or more in the past decade.

    • While specific policy priorities for growth vary from country to country, looking across countries, three areas emerge as essential to robust growth: sound macroeconomic policies; a conducive private investment climate, including access to key infrastructures; and good governance. In fragile states, improvement of the governance environment, together with security enhancement, is crucial.

    • In many countries in Africa, and in low-income countries more generally, a dynamic agricultural sector is key to achieving strong and inclusive growth, and will help to mitigate the upward pressures on food prices. An African Green Revolution would provide a strong foundation for growth and poverty reduction in the region.

    • Risks to developing-country growth arising from the financial market turbulence and the rise in energy and food prices need careful monitoring and appropriate policy responses, including prudent fiscal and monetary policies and, where needed, well-targeted safety nets to cushion the impact of the price increases on the poor.

    2. Achieve better results in human development

    • Progress toward the human development goals must be accelerated. That will require commitment of more resources, including increased donor support, to key programs in education and health—for example, the Fast-Track Initiative in education, health systems strengthening, and combating malaria.

    • More spending on education and health programs, however, is not the sole answer. The quality and equity of spending are equally important. Improved governance, stronger accountability mechanisms, and sound expenditure management are essential to raising the quality of education and health services and improving the access of poor, underserved populations.

    • A stronger focus is needed on combating malnutrition, especially among children, to underpin better human development outcomes.

    • Policies and programs must factor in the strong links that exist between health and education outcomes, nutrition, and environmental factors—water and sanitation, pollution, and climate change.

    3. Integrate development and environmental sustainability

    • Environmental sustainability must be integrated into core development work, maximizing synergies. Environmental management and integration with the development agenda require institutional strengthening in developing countries, including capacity building for related institutions and improvement of policies such as property rights to natural resources.

    • For natural resource–dependent countries, sound resource management is critical for sustainable growth. The quality of macroeconomic management and governance can determine whether the resource wealth is a source of development finance or a contributor to the “resource curse.” The Extractive Industries Transparency Initiative has laid a good foundation for enhancing international cooperation in support of efficient and transparent management of natural resources.

    • Mitigation of carbon emissions will require financing and technology transfer to support transition to low-carbon growth in developing countries. Such support should not divert resources from other development programs.

    • Developing countries will also need support with adaptation to climate change, which is vitally important for them given their greater vulnerability. For poor countries, the best way to adapt is to develop—by diversifying their economies, strengthening infrastructure, developing health systems, and curbing climate-sensitive diseases such as malaria and diarrhea.

    4. Scale up aid and increase its effectiveness

    • The time to deliver on aid commitments to support the effort to meet the MDGs is now. Donors must expedite aid delivery to meet their commitments. Sizable shortfalls loom if current trends in official development assistance continue; shortfalls will particularly hurt those poor countries and fragile states that, thanks to their reform efforts, offer promising scale-up opportunities.

    • The changing aid architecture, including new sources and modalities of aid, promises much-needed increases in resources and creates opportunities for experimentation and innovation in development finance. It also poses new challenges for aid effectiveness and coherence. The opportunity provided by the Accra High Level Forum in September 2008 should be used to address the new, dynamic dimensions of the aid effectiveness agenda.

    • Increased private flows to developing countries create opportunities to catalyze and leverage more private capital in support of development, including through innovative public-private partnerships.

    • Both borrowers and creditors need to pay attention to debt sustainability considerations to prevent a reaccumulation of unsustainable debts following debt relief.

    5. Harness trade for strong, inclusive, and sustainable growth

    • The international community must aim for a successful outcome of the Doha trade negotiations in 2008. The current high food prices provide a window of opportunity to break the impasse on agricultural trade liberalization.

    • Aid for trade should be increased; together with behind-the-border reforms of key trade-related services, it can help poor countries take advantage of trade opportunities, promoting more inclusive globalization.

    • Trade policy can facilitate transfer of environmentally friendly technologies by removing barriers to trade in environmental products and services.

    6. Leverage IFI support for inclusive and sustainable development

    • The international financial institutions (IFIs) have a crucial role to play in supporting this interrelated development and environment agenda through their financing, knowledge, and coordination services. In a more complex international financial and development architecture, the coordination and leveraging role that the IFIs play will be increasingly important, even as their relative financing role declines.

    • At the country level, the IFIs need to tailor their advice, products, and services to the increasingly differentiated needs of their member countries, including a strong focus on low-income countries, fragile states, and concentrations of poverty within middle-income countries to help the “bottom billion” grow and connect to the global economy.

    • The IFIs also need to adapt their strategies to respond to the growing importance of global and regional public goods, such as combating climate change, through advice, direct interventions, and working with other development partners and the private sector.

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