1 Millennium Development Goals: Significant Gains before the Crisis

International Monetary Fund

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Author: International Monetary Fund

Language:: English

Keywords:: MISC RPT; MISC; country; low-income country; MDG; income; poverty reduction; crisis trend; MDG indicator; country circumstances; Multilateral development institutions; Global; Sub-Saharan Africa; East Asia; Central Asia; South Asia; poverty gap; poverty MDG; poverty convergence; zero elasticity; Personal income; Africa

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Abstract

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.

The questions raised here are hard to answer immediately, partly because the data to assess development outcomes are incomplete and collected infrequently but also because impacts can take several years to emerge. For example, deteriorating health and nutrition now will lead to higher mortality rates later. Lower investments will hamper future progress in sanitation and water supply. Fewer children in school will lower completion rates in later years. And household incomes that fall far below the poverty line will delay escapes from poverty.

The Millennium Development Goals (MDGs) provide powerful benchmarks for measuring global progress on key development outcomes, calling attention to the enormous challenges in low-income countries. The goals have likely contributed to the progress itself, galvanizing governments, donors, civil society, private agencies, and the media to support human development¹ But uniform goals—reducing poverty by half, infant mortality by two-thirds, maternal mortality by three-quarters—can underestimate progress in poor countries. Why? Because the pace of progress is inversely related to initial conditions, particularly the greater distance to the goals from low starting points in poor countries.² And although the extent to which countries are on track to achieve the MDGs in 2015 varies widely, recent improvements have been widespread. So, too, are the losses caused by the interruption in progress.

This chapter offers an overview of progress in the decade before the crisis. It serves as the starting point for a more forward-looking analysis and explains what is at stake when a period of strong growth in many developing countries, including the low-income countries in Africa, is interrupted³ Subsequent chapters examine economic forecasts, how development indicators responded to previous crises, and how the current crisis differs, thus providing the building blocks to answer the questions about the human costs of the crisis.

Because the MDGs are more ambitious for poor countries, global progress is mixed

Before the global economic crisis in 2008–09, overall progress on the MDG targets were particularly strong on poverty reduction, even in Africa (figure 1.1). Progress was also made on gender parity in primary and secondary education, maternal mortality, and on reliable access to improved water. Progress was less encouraging on gender parity in tertiary education and other targets for the empowerment of women. Of greatest concern were the human development goals. Progress on most of them—especially for child mortality but also for primary school completion, nutrition, and sanitation—was lagging at the global level (figure 1.2).

But substantial progress is evident in many areas

Economic growth is a key driver in reducing poverty and achieving other desired development outcomes, and it is there that progress has been most evident (figure 1.3). Economic growth in developing countries has accelerated, thanks to improved macroeconomic policies and a hospitable global environment—rapidly expanding world trade, favorable commodity prices, more foreign aid and debt relief, abundant low-cost capital, and large remittance flows. The 12 years before the crisis capped a remarkable period of sustained economic growth, technological advances, and globalization that started in 1950, and spread to a widening number of developing countries in Asia and Latin America and finally to low-income countries in Africa.⁴ Since the mid-1990s growth in Sub-Saharan Africa has been comparable to that in other regions. As a result, progress toward the MDGs has been greater for the goals most influenced by economic growth, such as income poverty. Extreme poverty is falling rapidly. Despite growing populations, the number of poor people living on less than $1.25 a day in developing countries fell from about 1.8 billion in 1990 to 1.4 billion in 2005—from 42 percent of the population to 25 percent. The global MDG target of 21 percent poverty is the one most likely to be exceeded, but the economic crisis adds new risks to prospects for reaching the goal.

Much of the progress is attributable to East Asia, which reduced the incidence of poverty from 55 percent in 1990 to 17 percent in 2005 (figure 1.4). China reduced its poverty rate from 60 percent to 16 percent, as the absolute number of extremely poor fell from 683 million to 208 million. India reduced the share of its population living in poverty from 51 percent to 42 percent, but because of population growth, the number of poor people actually rose from 436 million to 456 million.

With the precrisis surge of growth in Sub-Saharan Africa, the proportion of Africans living on less than $1.25 a day fell from 58 percent in 1990 to 51 percent in 2005, but the absolute number of poor people rose from 296 million to 388 million (figure 1.5). Despite Africa’s recent progress, the pace of economic growth is still not fast enough there to cut the 1990 poverty rate by half in 2015. In almost every other region, it is.

Universal primary education is within reach. Many countries are close to providing universal primary education. In more than 60 developing countries, over 90 percent of primary-school-age children are in school; the number of children out of school fell from 115 million in 2002 to 72 million in 2007, even with growing populations. In 2007 the primary school completion rate reached 86 percent for all developing countries together—93 percent for middle-income countries but just 65 percent for low-income countries. Net enrollment rates are rising in several poor countries (figure 1.6). Because of the substantial improvements, the world will come close to the goal of universal primary school completion in 2015 (MDG 2) but still fall short. For Sub-Saharan Africa and South Asia the lower rates of 60 percent and 80 percent in 2007 still constitute advancement over the 51 percent and 62 percent, respectively, in 1991. But with 41 million primary-school-age children in Sub-Saharan Africa and 31.5 million in South Asia out of school, the task of meeting the target remains challenging.

Higher enrollments are shrinking the gender gap in education. Gender equality and female empowerment, the third MDG, are important not only in themselves but also because they improve progress on the other MDG targets related to poverty, hunger, disease, and education. As more girls than ever complete primary school, many countries have reached gender parity in primary education (figure 1.7). All told, almost two-thirds of developing countries reached gender parity at the primary school level by 2005, and the MDG 3 target of achieving gender parity in primary and secondary education can be met by 2015. Sub-Saharan Africa is making good progress but is far behind the global target.

Access to safe drinking water is on track globally and in most regions. Rapid expansions of infrastructure spending account for part of this increased access. Progress on this part of MDG 7 remains vital for child survival and various health improvements. Between 1990 and 2006 more than 1.6 billion people gained access to improved sources of drinking water, raising the proportion of the population with such access from 76 percent to 86 percent (figure 1.8). As many as 76 developing countries are on track to hit the target. But 23 developing countries have made no progress, and 5 others have fallen behind.

New findings suggest a significant drop worldwide in the maternal mortality. New analysis of maternal deaths in 181 countries from better data found a significant decline globally.⁵ Aggregate maternal deaths decreased by over 35 percent from about 526,300 in 1980 to 342,900 in 2008. More than half of all maternal deaths were concentrated in six countries—India, Nigeria, Pakistan, Afghanistan, Ethiopia, and the Democratic Republic of Congo. All told, maternal deaths for every 100,000 live births decreased markedly from 422 in 1980 to 320 in 1990 and to 251 in 2008. The yearly rate of the decline in the global maternal mortality ratio since 1990 was 1.3 percent (with an uncertainty range of 1.0–1.5). Progress is still varied. The Arab Republic of Egypt, China, Ecuador, and Bolivia have been achieving rapid gains, and 23 countries are on track with this MDG 5. In Sub-Saharan Africa, central and eastern regions showed some improvement since 1990, but southern and western regions showed deterioration because of the significant number of pregnant women who died from HIV infection. In southern Africa, the maternal mortality ratio increased from 171 in 1990 to 381 in 2008.

Where progress has been mixed or lacking

The recent food crisis has complicated progress on fighting malnutrition and hunger. The developing world is not on track to halve the proportion of people who suffer from hunger. Because reducing malnutrition is essential to success on several other MDGs, including infant mortality, maternal mortality, and education, it has a multiplier effect. Child malnutrition accounts for more than a third of the disease burden of children under age five. And malnutrition during pregnancy accounts for more than 20 percent of maternal mortalities.

The proportion of children under five who are underweight declined from 31 percent in developing countries in 1990 to 26 percent in 2007, a much slower pace than needed to halve malnutrition by 2015. Progress has been slowest in Sub-Saharan Africa and South Asia, with severe to moderate stunting affecting as many as 46 percent of children under five—more than 140 million children.

Progress on full and productive employment, especially for women, was lacking even before the crisis. (figure 1.9). The employment-to-population ratio is the proportion of a country’s working-age population (ages 15 years and older) that is employed. Considerable underemployment in informal sectors and subsistent activities of rural areas are of course hard to account for in developing countries. The female employment ratios have consistently been lower than male ratios, particularly in the Middle East and North Africa and in South Asia. Nonetheless, progress is noted in the female ratios for Latin America and the Caribbean and to a slight extent in the Middle East and North Africa (figure 1.9).

Gender parity is weak beyond primary education. MDG 3 also calls for gender parity in tertiary education (figure 1.10), gender equality in employment, and greater political representation of women. Progress toward these targets has been slower and less even. The gender targets face added risk from the current crisis because evidence from past crises suggests that women in general are more vulnerable.

Access to sanitation has been elusive. Sanitation coverage, another important target of MDG 7 on environmental sustainability, rose from 43 percent in 1990 to 55 percent in 2006, in low- and middle-income countries. But the global target will be missed. Almost half the people in developing countries lack adequate sanitation. In Sub-Saharan Africa the proportion with access rose from 26 percent in 1990 to just 31 percent in 2006, and in South Asia, from 18 percent to 33 percent. MDG 7 also calls for integrating sustainable development into country policies and programs and reversing the losses of environmental resources. Progress on this broader environmental agenda, although fairly slow, is picking up as the world focuses on environmental sustainability and climate change.⁶

Prospects are worst for most MDGs relating to health, such as infant mortality. The under-five mortality rate in developing countries declined from 101 deaths per 1,000 to 74 between 1990 and 2007, showing notable but insufficient progress to meet MDG 4 for reducing child mortality under five by two-thirds. In 2006, 10 million children died before age five from preventable diseases, compared with 13 million in 1990. The human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) epidemic and civil conflicts have impeded Sub-Saharan Africa’s progress. Its under-five mortality rate stood at 144 deaths per 1,000 in 2008, down from 185 in 1990. Sub-Saharan Africa has 20 percent of the world’s children under age five but 50 percent of all child deaths. Progress in reducing infant mortality is also well short of the target in South Asia.

The situation is similar for universal access to reproductive health (MDG 5.b). For example, the contraceptive prevalence rate has increased for all income groups between 1990 and 2007 but is still quite low at only 33 percent for low-income countries in 2007 (figure 1.11).

Progress in halting the spread of major communicable diseases has been mixed (MDG 6). An estimated 33.4 million people were living with HIV/AIDS in 2008; there were 2.7 million new infections and about 2 million AIDS-related deaths. The rapidly rising trends of HIV spread and related deaths that were recorded in the 1990s were halted in the 2000s and were showing some signs of decline in recent years (figure 1.12). However, further actions are still necessary to achieve significant reversals. Sub-Saharan Africa remains the region most heavily affected by HIV worldwide, accounting for over two-thirds of all people living with HIV and for nearly three-fourths of AIDS-related deaths in 2008. HIV prevalence has declined in recent years in Sub-Saharan Africa (map 1.2), but it has risen in other regions, albeit from much lower levels.

Antiretroviral treatment (ART) now reaches almost a third of people living with HIV/AIDS in developing countries (figure 1.13). But few countries will meet the target of universal access to treatment anytime soon.

The prevalence of tuberculosis, which killed 1.3 million people in 2008, has been declining in all regions except Sub-Saharan Africa. Mortality from malaria remains high—at about 1 million people annually, 80 percent of them children in Sub-Saharan Africa.

More attention should be given to achieving environmental goals. According to the World Bank’s 2010 World Development Report on development and climate change, developing countries can shift to lower-carbon paths while promoting development and reducing poverty, as long as they receive financial and technical assistance from high-income countries. High-income countries, which produced most of the greenhouse gas emissions of the past, must act to shape our climate future, taking actions quickly to reduce their own carbon footprints and boost development of alternative energy sources. The costs for getting there will be high but still manageable. A key way to slow climate change is to ramp up funding for mitigation in developing countries, where most future growth in emissions will occur.⁷

More progress is needed on developing a global partnership for development. MDG 8 covers cooperation in aid, trade, debt relief, and access to technology and essential drugs. Net disbursements of official development assistance (ODA) from the Development Assistance Committee of the Organisation for Economic Co-operation and Development rose during 2003–05 but fell in both 2006 and 2007, dropping from 0.33 percent of donor gross national income (GNI) in 2005 to 0.28 percent in 2007. The ratio of ODA to GNI reached 0.31 percent in 2009, but to meet donors’ aid commitments, aid increases will have to be larger and sustained. Donors need to shield aid budgets from the fiscal impact of the financial crisis. In trade the largest implementation gap is the failure to conclude the Doha Round of negotiations. Progress has been greater in providing debt relief to poor countries, thanks to the Heavily Indebted Poor Countries Initiative and the Multilateral Debt Relief Initiative. The lack of specific targets is hampering the transfer of technology to developing countries and their access to essential drugs.⁸

Progress varies by type of country

Inside the global picture is considerable variation across income groups, regions, and countries. Middle-income countries have progressed fastest toward the MDGs. As a group, they are on track to achieve the target for poverty reduction. But many of them still have large concentrations of poverty, in part reflecting great income inequality. These concentrations of poverty, together with large populations in some countries, mean that middle-income countries remain home to a majority of the world’s poor in absolute numbers. Many middle-income countries also continue to face major challenges in achieving the nonincome human development goals.

Progress has been weaker in low-income countries, with considerable variability. It has been slowest in fragile and conflict-affected states (figure 1.14). Wracked by conflict and hampered by weak capacities, these states—more than half of them in Sub-Saharan Africa—present difficult political and governance contexts for the effective delivery of development finance and services. Fragile states account for close to a fifth of the population of low-income countries but more than a third of their poor people. Much of the challenge of achieving the MDGs will be concentrated in low-income countries, especially fragile states.

Most regions are progressing rapidly toward the goals. Thanks to rapid economic growth, especially in China, East Asia has already halved extreme poverty. South Asia is on track to do the same, but it is seriously off track on most human development goals. For the health goals most regions are off track, although the rate of progress varies substantially, with East Asia and the Pacific, Latin America and the Caribbean, and Europe and Central Asia doing better than the other regions.

Sub-Saharan Africa is a special case. It is easy to see that Sub-Saharan Africa lags on all the MDGs, including poverty reduction. But that is only half the story—because the region has made progress. Practically all the MDG curves for Sub-Saharan Africa (figure 1.15) have been headed in the right direction for more than 10 years, but the progress required looks steeper in direct comparisons with other regions because of Africa’s lower starting points. Achievements are more apparent when viewed against the severe economic stagnation that afflicted the region from the 1970s to the early 1990s.

Many countries are likely to fall short of most of the goals. Among countries for which there are data, the proportion off track exceeds that of countries on track for all MDGs except poverty reduction and gender parity in school (figure 1.16). This result likely comes from low starting points in poor countries.

How starting points affect results

Progress varies positively with income growth but is conditioned by starting points or country circumstances. This phenomenon is best illustrated for poverty reduction. In general, the elasticity, or responsiveness, of poverty with respect to economic growth depends on how the incomes of poor people move with average growth; whether growth is in broad terms reaching poor people; and how any increase in incomes interacts with the income distribution and the poverty line. However, when a common poverty goal like the MDG 1 is applied to all developing countries against a uniform poverty yardstick (such as $1.25 a day), starting points or country circumstances matter greatly. Starting points thus help explain why, despite the precrisis progress in growth and poverty reduction, low-income countries are still far from reaching the poverty MDG.

Recent empirical analysis reveals that a high initial poverty incidence slows progress against poverty at any given growth rate.⁹ Analysis of more than 600 household surveys in 116 countries since 1980 confirms the story: in two countries with the same economic growth rate, poverty reduction will be slower in the country that begins with the higher poverty rate (figure 1.17). There are some data and observation issues to consider. At low poverty rates, there is considerable noise, and elasticity becomes volatile, especially at the $1.25-a-day poverty threshold. Some more advanced countries have no computable observations in this range. Twelve countries with zero poverty rates in the initial period have zero or irregular elasticity; seven other countries with nonzero poverty rates have zero elasticity. Almost all these outliers belong to transitional economies in Eastern Europe and include the turbulent years in the 1990s when their economies, incomes, and income distributions were undergoing fundamental changes. Even at a $2.00-a-day poverty line, seven countries have zero elasticity. When the initial poverty rate is greater than 10 percent, the pattern becomes broadly more regular.¹⁰

At the aggregate or regional level, the responsiveness (median elasticity) of poverty to growth is generally lower in low-income countries, which tend to have higher initial poverty rates for both the $1.25-a-day and the $2.00-a-day international thresholds (table 1.1). Elasticity also depends on the choice of a global poverty threshold, although the pattern holds in general. For middle-income countries, particularly upper-middle-income ones, the lower $1.25 threshold becomes less meaningful as the median poverty rate falls below 4 percent. The regional numbers are summarized in table 1.2.

TABLE 1.1

Poverty reduction is more difficult in poor countries