Under the first Millennium Development Goal (MDG1), the international community aims to halve the global rate of extreme income poverty—as measured by the share of the population living on less than $1 per day—between 1990 and 2015. Current trends and growth forecasts indicate that this goal will be achieved, although not in Sub-Saharan Africa. High growth in China and India explains much of the reduction in the global poverty rate, although progress toward MDG1 has also quickened in many other developing countries. High growth has continued in most of the developing world in the past year as a result of better policies in developing countries and a favorable global environment. The outlook for growth and poverty reduction remains favorable, although some risks remain. In particular, low-income country per capita growth is expected to remain above 5 percent in 2007.1
What is the human cost of the global economic crisis? How many people will the crisis prevent from escaping poverty, and how many will remain hungry? How many more infants will die? Are children being pulled out of schools, making it virtually impossible to reach 100 percent completion in primary education by 2015? What are the gender dimensions of the impacts? These are some of the questions as the global economy comes out of the worst recession since the Great Depression.
With less than five years left to achieve the Millennium Development Goals (MDGs), the international development community is showing renewed urgency to assess the various development efforts, especially in light of the recent global economic crisis and the still-fragile recovery. What are the prospects and challenges for reaching the goals? Answers are clearly linked to the complex tapestry of progress that lies below the global numbers.
The deepening global recession, rising unemployment, and high volatility of commodity prices in 2008 and 2009 have severely affected progress toward poverty reduction (Millennium Development Goal [MDG] 1). The steady increases in food prices in recent years, culminating in exceptional price shocks around mid-2008, have thrown millions into extreme poverty, and the deteriorating growth prospects in developing countries will further slow progress in poverty reduction. The prospects for an economic recovery, essential for alleviating poverty, are highly dependent on effective policy actions to restore confidence in the financial system and to counter falling international demand. While much of the responsibility for restoring global growth lies with policy makers in advanced economies, emerging and developing countries have a key role to play in improving the growth outlook, maintaining macroeconomic stability, and strengthening the international financial system.
In chapter 1, economic growth is seen as critical to attaining the Millennium Development Goals (MDGs). Prospects for further progress on the MDGs should be seen in light of macroeconomic developments in emerging and developing economies, and in the global economic environment they face.
Economic growth is central to achieving the Millennium Development Goals (MDGs) and related development outcomes, and a vigorous private sector is vital for strong and sustainable growth. The private sector drives job creation, increases in productivity, and economic growth.1 Private sector jobs provide most of the income in developing as well as developed countries. Revenues from private sector transactions and incomes pay for many of the public goods provided by governments. Competition can help spur technological advancements and productivity gains that are the key to sustained long-term growth.
Historically, periods of sharp contraction have been extremely harmful for human development. Social indicators tend to deteriorate rapidly during economic downturns and improve slowly during economic booms. Moreover, vulnerable groups, such as children and women, are more exposed to the effects of growth volatility.
Since 2000, over 34 million additional children in the developing world have gained the chance to attend, and complete, primary school—one of the most massive expansions of schooling access in history. Over 550 million children have been vaccinated against measles—doubling the coverage rates in some countries, and driving down measles deaths in Sub-Saharan Africa by 75 percent. The number of developing-country AIDS (acquired immunodeficiency syndrome) patients with access to antiretroviral treatment increased from 240,000 in 2001 to over 1.6 million at mid-2006. Despite migration and resource constraints, health workers and clinic visits across the developing world are increasing significantly, as are the share of pregnant women with access to health care when they deliver, and the share of young children with regular health and nutrition screening. There is now little question that the “stretch” goals adopted by the global community in 2000 to promote human development have helped stimulate and support more rapid expansion of basic health and education services across the developing world.
The recovery of the global economy has been more robust than expected. Driven by strong internal demand in many emerging economies and the recovery of global trade, GDP growth in emerging and developing countries is projected to accelerate to 6.3 percent in 2010, from 2.4 percent in 2009. Supporting the economic recovery are expansionary macroeconomic and, especially, fiscal policies. Fiscal deficits in emerging and developing countries, up by almost 3 percent of GDP in 2009, are projected to remain high in 2010. More than in previous crises, many countries sustained spending plans and raised social spending to mitigate the effects of the downturn on the poorest people, although the differences among countries are wide. While financial market conditions for emerging and developing countries are improving and capital flows are returning, international bank financing and foreign direct investment are projected to remain weak in 2010.
The Millennium Development Goals (MDGs) strongly emphasize human development-related outcomes, with five of the eight MDGs having health, nutrition, and education results as key indicators for monitoring progress. Governments have a special responsibility to their citizens, especially their poorest citizens, to ensure attainment of primary education, basic maternal and child health and nutrition, and control of communicable diseases. Previous Global Monitoring Reports have largely focused on strengthening this government role. Yet experience in many countries, including some of the poorest, shows that the private sector is also extensively involved in the delivery of services that address these MDGs.