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The richest countries are currently committed to spending 0.7 percent of their gross national income (GNI) on international development aid. This goal was established by the Pearson Commission in 1969 and approved in a resolution of the United Nations General Assembly the following year. The countries reached this agreement half a century ago in a world where world poverty was at very high levels. At the time, the world was rightly perceived in binary terms: the North was rich and the South poor.
Much has changed in the past 50 years. Some countries have met the 0.7 percent target, but many others have not yet. Many developing countries experienced rapid economic growth in the 2000s, not just China and India, but also several African countries. Although all advances are currently in jeopardy, before the pandemic, at least, the world had entered a new era, with fewer low-income countries. At the same time, the loftier global ambitions set out in the UN Sustainable Development Goals (SDGs) committed countries to ending poverty in all its forms by 2030.
A new era needs a new approach. The COVID-19 pandemic makes this need even more urgent. My colleagues and I propose a tiered financial commitment to development, with a twist: it should be universal in all countries, rich and poor.
Before describing the proposal, it is necessary to ask what has changed since the 0.7 percent GNI target was adopted. During this period, two “new media” emerged. The first is an increase in the number of middle-income countries, which now host much of the population of the developing world. In many of these countries, aid levels are already low relative to domestic resources and non-public international flows. At the other end of the spectrum, some 30 countries remain “stagnant” in terms of growth. These highly aid-dependent states are home to roughly 10 percent of the population of developing countries, not the “poorest billion,” but the poorest 500 million.
The other “new medium” includes those who have escaped poverty, but remain vulnerable to falling back into it. This group, as we show, represents more than two-thirds of the population of the developing world.
If measured using the World Bank’s definition of extreme poverty (living on USD 1.90 or less per day), global poverty has decreased (although the decline is more modest when China is excluded) and incomes have increased among many of the poorest in the world. Extreme poverty now affects only 10 percent of the population in developing countries, up from 50 percent 40 years ago.
But poverty remains at alarming levels when measured by the World Bank’s poverty lines of $ 3.20 and $ 5.50 per day. It is sobering to note that every 10 cents added to the poverty line increases the number of poor globally by 100 million. Additionally, the poverty count at USD 1.90 doubles when multidimensional poverty, which includes health, education and nutrition, is considered.
When a threshold is used that is associated with a permanent escape from future poverty risk (US $ 13 per day in 2011 purchasing power parity terms), about 80 percent of the population in developing countries remains poor . Furthermore, poverty does not only occur in sub-Saharan Africa and in fragile or conflict-affected states. It is very widespread. In short, the second “new means” are those in developing countries that live above the poverty line of USD 1.90, but below the threshold of vulnerability to future poverty of USD 13.
In this context, and in the midst of the global pandemic, our proposal calls for a “universal development commitment” (UDC) from all countries, rich and poor alike. Given its goal of eradicating poverty, the SDGs would inevitably be the central focus of any such CDU.
One option for a UDC would be to institute a sliding scale. For example, high-income countries could maintain the commitment at 0.7% of GNI, while upper-middle-income countries would contribute 0.35%. Lower-middle-income countries would contribute 0.2 percent of their GNI, and lower-income countries would contribute only 0.1 percent. These are gross contributions, not net. In this scenario, the total financing available for development would amount to almost $ 500 billion a year.
These additional resources could, in principle, lift the remaining approximately 750 million people out of poverty of USD 1.90 per day; end hunger and malnutrition for approximately 1.5 billion people; end preventable infant mortality; make primary and secondary schooling possible for all children; and providing access to safe and affordable drinking water to more than one billion people, as well as providing adequate sanitation to more than two billion people. And in this tiered contribution scenario, $ 200 billion would still be available to support the achievement of other SDGs.
Developing countries would benefit by contributing, because a commitment to universal development would lead to more resources for those countries as a whole. Furthermore, and equally important, contributing would ensure that the poorest countries have a voice in the governance of funds, either symbolically, as a sign of their moral right to be heard, or physically, as board members deciding priorities and policies.
There are certainly many other issues raised by our proposal. But the principle remains simple: all countries contribute to the system and money is spent to end global poverty. In the midst of a global pandemic, and with the SDG deadline within a decade, the world needs a universal development commitment sooner rather than later.
Editor’s Note: Andy Sumner is Professor of International Development at King’s College London and a non-resident senior fellow at UNU-WIDER. The article is provided to The Reporter by Project Syndicate – the world’s leading source for original opinion comments. Project Syndicate provided inclusive perspectives on our changing world from those who are shaping politics, economics, science, and culture. The opinions expressed in this article do not necessarily reflect the opinions of The Reporter.
Contributed by Andy Sumner
