Reshaping International Institutions to Achieve MDGs

Manmohan AgarwalCIGI

1

Introduction

• Only limited progress in achieving MDGs, particularly in the poorest regions.

• Aid has been declining in importance; unlikely to be raised sufficiently to improve performance on MDGs.

• Countries have to do better on own resources.• Need technical help. But relevant UN agencies

would need to be re-oriented.

2

Poverty and Hunger (% of pop.)

Poverty Malnourished1990 2005 2000 2008

• EAP 54.7 16.8 12.4 11.9 • LAC 11.3 8.2 34.2 31.7• NAME 4.3 3.6 12.2• SA 51.7 40.3 43 41• SSA 57.6 50.9 28.3 25.2

3

Regional Poverty Distribution

4

5

Mortality

Infant Child Maternal1990 2005 1990 2005 1990 2008

• EAP 41 26 5 32 200 100 • LAC 42 22 52 27 140 91• NAME 57 32 76 40 210 98• SA 89 61 125 81 610 330• SSA 110 88 181 143 870 710

6

Comparative Regional Progress

• Poverty levels comparable in EAP, SSA and SA in 1990 though much lower in NAME and LAC.

• Poverty declined substantially in EAP during 1990-2005.

• Despite rapid growth very small reduction in poverty in SA; less than in LAC-though GDP grew almost twice as fast: 5.1 % against 2.6%.

7

Regional Health Indicators

• LAC has usually better indicators on poverty; but does less well on malnourishment.

• Very little progress in reducing malnourishment between 2000 and 2008 in all regions.

• Latin America has generally better indicators on mortality.

8

Progress in Social welfare

• An analysis of MDG indicators in 31 large developing economies in 1990 and 2000 found :– Countries in LAC were the highest ranked

followed by EAP and NAME. – Countries in SA and SSA were at the bottom.

9

The Haves Do Better

• The change in social achievement between 1990 and 2000 was highly correlated with the initial starting point so that countries with better indicators made the most progress.

• One of the significant exceptions to this is Bangladesh.

• On the other hand India did not improve its rank on the social indicators despite rapid GDP growth.

10

Social Progress and Economic Growth

• There seems little correlation between level of social indicators in 1990 and GDP growth over 1990-2000. Correlation between growth in 1990-2000 and social indicators in 2000 is stronger.

• Growth seems to lead to better social performance than the other way around.

International Institutions and MDGs

Two kinds of institutions may impact MDGs:

I) Purely economic institutions such as the WB, IMF and the WTO. But not all deal with poverty issues. Also these are independent of the UN.

II) UN related institutions, e.g., the WHO, FAO, ILO UNICEF which set standards and provide technical assistance.

12

The Economic Institutions

• WB and regional banks affect achievement of MDGs through their aid.

• Also important are bilateral donors.• The IMF and the WTO are not basically dealing

with poverty though they may have an incidental effect; the IMF however may indirectly have a larger influence.

13

Declining Importance of Aid Flows

Aid Flows as % of GDP

Region 1982-90 1991-2000 2001-05 2007• EAP 0.7 0.5 0.4 0.2 • LAC 0.5 0.3 0.3 0.2 • SA 1.4 1.2 0.9 0.7• SSA 6.1 5.5 5.4 4.5

14

Structure of Capital Flows

Structure of Net Public and Private Capital Flows, 2000-07(Percent of total net public and private capital flows)

2001-05 2006-07• Net Private Flows 104.9 103.9 • Net Equity Flows 73.7 61.4• Net FDI 64.0 48.0 • Net Debt Flows 26.3 38.6• Official Creditors -4.9 -3.9 • World Bank 0.7 0.2

Source World Bank Global development Finance, Various Issues.

15

Flows to Different Developing Regions

• Structure of Total Capital Flows to the Regions, 2000-07(Percent of total capital flows)

EAP LAC SA SSANet Private 103.9 108.6 88.4 95.4 Net Equity 79.4 89.6 54.8 79.2 Net FDI 62.6 78.7 28.6 55.1Official -3.9 -8.3 3.1 4.6World Bank -0.7 -1.2 2.4 7.7

16

Sectoral Composition of DAC AidComposition of Aid

1983-90 1991-2000 2001-05 2006-08• Social Sectors 24.8 27.7 32.9 37.8• Infrastructure 18.8 20.1 12.6 12.6• Production 17.2 10.8 6.2 5.8• Agriculture 10.5 7.3 3.9 3.9• Multi Sector 3.1 5.4 6.9 6.1• Environment 1.2 1.9 3.4• Commodity Assistance 5.6 2.6 1.7 1.2• Humanitarian Aid 1.8 5.0 6.8 7.4• Debt Relief 6.6 8.8 18.2 13.9 • Administrative costs 3.4 4.7 5.1 4.8• Support to NGOs 1.8 1.4 2.7 2.6• Refugees in Donor Countries 1.2 2.2 2.1

17

Sectoral Composition of World Bank Aid, 2000-2010

EAP LAC NAME SA SSAAgriculture 6.7 3.9 8.4 9.0 7.5Education 7.0 9.2 9.0 10.8 8.6 Energy, Mining 11.1 3.9 11.6 13.7 14.4Finance 5.4 12.9 13.8 8.8 3.1Health andSocial Sectors 7.0 17.0 5.9 10.5 14.6Industry and Trade 3.4 4.8 6.4 5.0 4.3Information, Comm 0.3 0.6 2.5 0.7 0.9Law, Public Administration 16.9 28.0 14.1 17.8 24.9Transportation 26.7 12.6 13.0 19.3 14.0Water, Sanitation 15.6 7.0 15.2 4.4 7.6

18

UN Agencies

• The major UN agencies e.g., WHO, ILO UNICEF etc have a limited amount of money.

• They are, however, important for setting standards and providing technical assistance.

• Their effectiveness has been limited because of differences as to what their mandate should be.

19

WHO-Fractured mandate and Limited Effectiveness

• Since the need for international health cooperation was considered necessary there have been conflicting visions about the nature of such cooperation.

• Firstly, should individual diseases particularly infectious ones be tackled or should one deal with broad social factors that affect health outcomes?

20

Continued…

• Secondly, should international cooperation be limited to establishing guidelines, definitions of diseases, surveillance etc or should any international effort also include action to tackle health problems in individual countries?

21

Mandate of the WHO

• The mandate of the WHO has been limited to setting standards, agreeing on nomenclature and establishing clinical guidelines.

• But WHO not involved in implementing its recommendations.

• An example is child inoculation. WHO set standards which were implemented by national governments sometimes assisted by UNICEF.

22

Consequences

• Its limited mandate made it difficult to evaluate its contribution and resulted in small regular budget funds (RBF).

• On the other hand extra budgetary funds (EBF) were available for specific tasks deemed important by donors.

• For instance, NIH system in US gave 10m for malaria and 1 b for HIV/AIDS.

23

Consequences Continued…

• Between 1970-71 and 2006-07 RBFs shrunk from 62 % of its expenditure to 28%.

• Programs from private donors better funded. • Important programs are located outside WHO

such as GFATM.• Lack of funding has resulted in deterioration of

capacity.• Also inability to prepare and implement long

term plans.

24

Conclusion

• Aid for many actions needed to achieve the MDGs is not available.

• Countries have to depend on own financial resources.

• But may still need technical assistance.• The capacity of UN agencies to provide such

assistance has been eroded because of budgetary limitations arising from lack of unanimity regarding their mandate.

25

Conclusion Continued…

• Without more clarity regarding the role of finance and technical assistance and the role of international agencies and national governments it is unlikely that most of the MDGs would be met in most of the regions of the world.

26