Written Statement for the Development Committee, delivered at the IMF/WB Spring Meetings
Angel Gurría, Secretary-General of the OECD and Erik Solheim, Chair of the OECD Development Assistance Committee
12 April 2014, Washington, D.C.
The international community is set to transition into a critical new phase in its fight against poverty. A number of key issues must be addressed if it is to be successful: disparities between countries must be reduced, as well as a range of inequalities within them. Providers of development co-operation must maintain their commitments on the quantity and quality of the resources they provide, and they must help developing countries mobilise more domestic resources. The OECD is uniquely placed and equipped to support these and other efforts with a number of adapted tools.
Sustained efforts are crucial to meet the MDGs
As the target year for the Millennium Development Goals (MDGs) approaches, the global community can take pride in important advances in human development. Several MDG targets have already been met or are within close reach. Nevertheless, we must also step up efforts in crucial areas:
- Environmental sustainability is under severe threat. This calls for a new level of global co-operation. The growth in global emissions of carbon dioxide is accelerating, and emissions today are more than 46% higher than their 1990 level.
- Most maternal deaths are preventable, yet progress in this area is insufficient. Efforts need to be accelerated. Access to antiretroviral therapy needs to be expanded, and efforts to prevent HIV should be deepened.
- Too many children are still denied their right to primary education and the world is unlikely to meet the target of universal primary education by 2015.
International co-operation efforts need to address the disparities between countries
Most MDG targets in fragile states will not be met. Where progress has been made, it is easily reversed as countries relapse into conflict. Regional disparities remain important, with Africa still lagging behind other regions and off-track on five out of the eight goals . Rural-urban gaps persist – for example, in access to reproductive health services and to clean drinking water.
We must ensure sufficient resources are made available to achieve the MDGs. It is therefore very encouraging to see that official development assistance (ODA) rose by 6.1% in real terms in 2013 to reach the highest level ever recorded.
The amounts of ODA provided in 2013 by Development Assistance Committee (DAC) members represented 0.3% of their combined gross national income (GNI) Five DAC members — Denmark, Luxembourg, Norway, Sweden, and the United Kingdom — exceeded the United Nations’ ODA target of 0.7% of GNI. The United Kingdom increased its ODA by 27.8% to meet the target for the first time. Other DAC countries also posted impressive increases in ODA: for example, Japan (36.6%) and Italy (13.4%). The United Arab Emirates, which is not a member of the DAC, put up the largest reported ODA/GNI ratio: 1.25%. An annual survey of donor spending plans conducted by the DAC indicates that aid levels could increase again in 2014 and stabilise thereafter.
The post-2015 agenda must create a truly enabling environment for development
Over the last decade, strong economic growth in developing and emerging economies has seen these countries account for a rising share of global GDP. Despite this process of shifting wealth, a number of countries face slowing growth and risk getting stuck in a middle-income trap. OECD projections show that, at current growth rates, 96 out of a sample of 120 countries – both low- and middle-income – will fail to converge with the average OECD income level within 50 years . This is worrisome. The growth prospects of middle-income countries (MICs) have crucial implications for poverty reduction efforts: large pockets of poverty exist in MICs, and a growth slow-down in these countries could have negative spillovers on other developing countries through trade and investment linkages.
Countries need to go beyond boosting productivity and competitiveness; ensuring that development is inclusive and environmentally sustainable is also vital. Income inequality within some important converging economies (China, India, Russia and South Africa) has increased, while it has declined markedly in Brazil – albeit from very high levels. In addition, although recent strong economic growth has played a major role in lifting many people out of poverty, many of these people remain vulnerable.
The future development agenda needs to offer more than a simple extension of the MDGs. The development agenda that emerged around the MDGs placed an emphasis on poverty in low-income countries. In doing so, it focused less on addressing inequality and vulnerability, and the concerns of large segments of the population in the developing world, notably in middle-income countries. It will be important that the post-2015 agenda leaves space for countries to define their own priorities within broad international development objectives. More will need to be done to create an enabling international environment so that every country can pursue its own realistic national plan, reflecting its own choice of development priorities and policies.
Growth needs to be both inclusive and environmentally sustainable. The post-2015 agenda should recognise the importance of employment growth; a more equitable distribution of income growth; inclusive social protection systems; and environmental protection. Decent job creation is a key driver of improvements in living standards and human development, and equity is an important ingredient of social cohesion and development. The protection of the environment is also essential for the sustainability of economic growth and development. It should become an overarching objective in industrialisation and development strategies and policies.
The root causes of gender equality deserve particular attention. Leaders should commit to gender equality through a stand-alone goal, complemented by gender-specific targets and indicators in the other goals, to tackle widespread and persistent inequalities which leave women among the poorest and most marginalised people in societies across the world . The new framework will need to confront the discriminatory social norms and practices that underlie gender inequality, such as early marriage or tolerance of violence against women.
Implementation of the new framework will require action on a number of fronts:
- A financing framework will have to be put in place, which will in turn require a comprehensive approach for monitoring and measuring development finance.
- More will need to be done to address base erosion and profit shifting (BEPS) — tax planning strategies that exploit gaps and mismatches in tax rules to make profits “disappear” for tax purposes or to shift profits to locations where there is little or no real activity but where taxes are low — as well as to curb illicit financial flows (IFFs). These are two major obstacles to developing countries’ own efforts to mobilise resources for development. Encouragingly, between 2010 and 2012, OECD countries returned USD 147 million and froze almost USD 1.4 billion of stolen assets.
- The efficiency of development policies – both in donor and developing countries – needs to be deepened. For donors, this means stepping up efforts to improve the effectiveness of aid delivery, while for developing countries it entails making better use of evidence, sharing knowledge of what works, and improving the mobilisation of domestic resources and private investment.
- Collective action will be critical to breaking silos and to building more integrated responses to global challenges. The Centres of Government will have an increasingly important role in building a common understanding and achieving consensus on the global development agenda.
- The international community needs to rekindle the spirit of solidarity underpinning the Millennium Declaration, and strengthen partnerships at the global, regional, national and sub-national levels.
Next week’s High Level Meeting of the Global Partnership for Effective Development Co-operation (15-16 April 2014, Mexico City) is one opportunity to advance thinking and action in these areas. Looking forward, the Partnership can become part of the means of implementation of a post–2015 global development framework.
The OECD: A key partner for current and future development goals
Through its Strategy on Development, the OECD is applying a more comprehensive approach to better understand the magnitude and the inter-linkages of economic, social, environmental, and governance challenges; to identify effective solutions; and to create the conditions and capacities for inclusive growth and sustainable development.
Several initiatives are underway within the OECD to help address the challenges outlined above:
- The OECD is developing a proposal for a more accurate, comprehensive and inclusive system for measuring and monitoring official external development finance. Mandated by DAC ministers, it is collaborating with a number of key institutions – including the United Nations, World Bank, and IMF.
- At the invitation of G20 finance ministers, the OECD has developed an action plan to address BEPS in a co-ordinated and comprehensive manner, ensuring developing countries are part of the process.
- The OECD is at the forefront of efforts to improve international tax transparency. It worked with G20 countries to present, on 13 February 2014, a new single standard for the automatic exchange of tax information. The 121 member countries of the Global Forum on Transparency and Exchange of Information for Tax Purposes will monitor implementation.
- The OECD is scaling up work on Tax Inspectors Without Borders to help developing countries bolster their domestic revenues by making their tax systems fairer and more effective.
- Although the exact scale of illicit financial flows is unknown, they have devastating effects on developing countries. The OECD measures and reports on the efforts of donor countries to fight against these flows.
The OECD’s multidisciplinary approach can help address the wide range of challenges faced by different countries. For example:
- The OECD strives to help mitigate the effects of climate change through green development co-operation policies; to strengthen the conditions that enable more investment in green infrastructure; to support international collaboration on green technology co-operation, development and transfer; and to open pathways for trade to support green growth.
- The OECD is supporting policy-makers to strengthen their countries’ human capital. Through its PISA for Development initiative, it can support developing countries to improve the quality of education and achieve better learning outcomes. It can support global efforts to frame a learning goal in the context of the post-2015 agenda and to provide a single universal metric for measuring progress.
- As the only cross-country measure of discriminatory social institutions, the OECD Development Centre’s Social Institutions and Gender Index (SIGI) is a valuable tool for designing effective interventions and evaluating progress towards any post-2015 goal and target.
Global development is at a critical juncture. The international community has set in motion a process — the MDGs and its successor framework — to drive development. Success will depend on collaboration and knowledge sharing among all actors. The OECD is working, and will continue to work, with partners to inform the design, implementation, and monitoring of the new agenda. This involves modernising the system for measuring and tracking external development finance, recovering domestic resources wasted through unfair tax systems and illicit flows, promoting policies that facilitate effective development co-operation, and providing evidence and analysis on key issues such as climate change, education, and gender equality. In all of its work, the OECD aims to contribute to the design of “better policies for better lives” — not just for OECD countries, but for every person in every country.