Progress towards the Millennium Development Goals,1990-2005
Goal 8 - Develop a global partnership for development
The Millennium Declaration embodies partnership between developed and developing countries. Millennium Goal 8 calls for more official development assistance; measures to ensure debt sustainability in the long term; an open, equitable, rule-based, predictable and non-discriminatory multilateral trading and financial system; and measures to address the special needs of least developed, landlocked and small island developing states.A meaningful partnership between rich and poor countries must also address developing countries access to technology, medicines and jobs for their growing populations.
How the indicatorsare calculated
Charting the ebbs and flows of official development assistance
Indicators of official development assistanceProvision by donor countries of official development assistance is monitored on the basis of the following indicators: the total ODA to all developing countries as a percentage of donors’ national income, the ODA to least developed countries as a percentage of donors’ national income, the share of ODA that is allocated to basic social services and the share of ODA that is untied.
The Monterrey Conference on Financing for Development in 2002 came at a critical time. In 1970, the United Nations General Assembly proposed a target for ODA of 0.7 per cent of donors’ national income.[1] For many years afterwards, the collective contributions of members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) hovered around half this level. But during the 1990s, it fell by about one third, reaching an all time low of 0.22 per cent in 2001. From 2002, however, aid flows began to recover as donors started to deliver on commitments made in connection with the Monterrey Conference. The ratio of ODA to donors’ national income rose to 0.23 per cent in 2002 and to 0.25 per cent in 2003. In 2004, it reached a record high of $79 billion. Full delivery of Monterrey-related commitments would result in an increase in ODA by a further $20 billion, corresponding to 0.29 per cent of donors’ national income by 2006. Only five donors have achieved the longstanding United Nations aid target of 0.7 per cent of their gross national income (see Table 1), although six more have indicated that they intend to do so before 2015. If these pledges are honoured, ODA will exceed $100 billion in 2010.
Within their total aid packages, developed countries agreed to provide at least 0.15–0.20 per cent of their gross national income to assist the 50 “least developed countries” (these are countries designated as having acute development challenges.) Even though they account for only 14 per cent of the developing world’s population, the least developed countries now receive about one third of all aid flows. But this is still not enough. Aid to least developed countries fell from about 0.09 per cent of donors’ national income a decade ago to about 0.05 per cent in 2001, but slightly increased in 2002 to 0.06 per cent and in 2003 to 0.08 per cent of donors’ income.
Most of the recent increase in foreign aid has been used to cancel debts and meet humanitarian and reconstruction needs in the aftermath of emergencies. Debt relief, while welcome, often goes to countries that have already ceased debt repayments, and does not necessarily provide a new source of financing for social services or poverty reduction. Similarly, emergency and disaster relief, although essential, do not address long-term development needs.
Fully delivering on these commitments will be a challenge for many donors, particularly given recent increases in budget deficits. More recent announcements, such as pledges to boost AIDS funding, also reflect renewed international commitment to meet the Millennium Development Goals. Nevertheless, total ODA will still be well short of the amount estimated to be required to ensure that the Millennium Development Goals are achieved.
Figure 1. Official development assistance from developed countries, 1990–2003 (constant US dollars and as a proportion of donor country gross national income)
Table 1. In 2004, only five countries reached the overall level of 0.7 per cent of their gross national income for official development assistanceNet ODA as percentage of OECD/DAC donors' gross national income
Norway / 0.87 / Finland / 0.35
Luxembourg / 0.85 / Germany / 0.28
Denmark / 0.84 / Canada / 0.26
Sweden / 0.77 / Spain / 0.26
Netherlands / 0.74 / Australia / 0.25
Portugal / 0.63 / Austria / 0.24
France / 0.42 / New Zealand / 0.23
Belgium / 0.41 / Greece / 0.23
Ireland / 0.39 / Japan / 0.19
Switzerland / 0.37 / United States / 0.16
United Kingdom / 0.36 / Italy / 0.15
Source: OECD, 11 April 2005.
The proportion of ODA to basic social services
The World Summit on Social Development at Copenhagen in 1995 proposed a mutual commitment between interested developed and developing country partners to allocate, on average, 20 per cent of ODA and 20 per cent of the national budget, respectively, to social programmes such as basic education, health, population, and poverty-focused water and sanitation projects. The share of bilateral aid that can be allocated to sectors and directed towards these basic social services has risen regularly from 8.8 per cent in 1996-97 to 12.3 per cent in 1998-99, 14.6 per cent in 2000-2001, and almost 17 per cent in 2002-03.[2]
Figure 2. Gross bilateral ODA (in 2000 US$ billions).
1
Some of the recovery in aid since the mid-1990s has gone to health, water and government capacity-building. About half of the assistance going to basic education, health, and water and sanitation is to promote gender equality and women’s empowerment. What’s worrying is that the share devoted to agriculture and physical infrastructure has diminished. This trend needs to be reversed if the poorest countries are to achieve the MDGs. Emergency and reconstruction aid has doubled as crises have multiplied – and will rise further with the additional aid following the Asian tsunami. Debt relief is also up, but releases new money for development only if the debt was being repaid.
Proportion of bilateral ODA that is untied
It is widely recognized that tying aid to procurement from suppliers in a donor country reduces the cost-effectiveness of aid and its flexibility in implementation. Acknowledging this, members of OECD’s Development Assistance Committee have raised the share of their aid that is untied from about 68 per cent in 1990 to 92 per cent in 2003.[3]
However, the share of untied aid to the least developed countries has not risen at the same rate. In 2001, the Development Assistance Committee adopted a recommendation on untying aid to the least developed countries, intended to spur progress in this area.[4]
Addressing the special needs of landlocked countries and small island developing states
Indicators on development assistance to landlocked countries and small island developing statesProgress made to address the special needs of landlocked developing countries and small island developing states is assessed on the basis of the ODA received as a percentage of the recipient countries’ gross national income.
Landlocked developing countries present special challenges. They are often far from markets and the cost of exporting goods is higher than for other countries. Most have recorded disappointing economic results.
Small island developing states also face unique constraints. They have a narrow resource base and high costs for energy, small domestic markets and heavy dependence on a few external and remote markets. They also have little resilience to cope with natural disasters or resources to protect fragile natural environments.
Despite their special needs, aid to landlocked countries as a percentage of their national income rose slightly at the beginning of the 1990s, but fell in 1996 and then stayed at around 6 per cent during the late 1990s until 2001. Figures for 2002, however, show an increase of the ratio to 7.6 per cent, equivalent to $8.8 billion. Figures for 2003 show a decrease in the ratio to 7.4 per cent, although, in absolute terms, the amount increased to $9.9 billion.
Official development assistance received by the small island developing states as a percentage of their gross national income (GNI) fell between 1990 and 2003, from 2.8 per cent to 1.1 per cent, totalling $1.7 billion in 2003. It should be kept in mind, however, that the small island developing states include countries with very diverse incomes per capita (ranging from least developed to high-income countries) and thus have diverse ODA/GNI ratios; within the group, a number of small island developing states now need less aid, having successfully diversified their economies by developing tourism, offshore banking, or clothing or other light industries.
Achieving the MDG on poverty in the least developed countries, landlocked developing countries and small island developing states remains a daunting challenge. Extreme poverty, structural handicaps, such as high international transport costs and isolation from world markets, poor infrastructure, lack of access to information and technology, and weak human capacity make them extremely vulnerable to external shocks, natural and man-made disasters, and communicable diseases. Despite the efforts of their governments to mobilize meaningful domestic resources and attract foreign investment, ODA will remain a critical source of external financing for poverty reduction and sustainable development in these countries in the years to come.
Opening markets to developing countries
Indicators on market accessInternational efforts to remove barriers to trade from developing countries are monitored on the basis of the share of exports from developing and from the least developed countries that enter developed countries free of duty, and on the basis of trends in average tariffs imposed on exports from developing countries of agricultural products, textiles and clothing.
If developing countries are to realize the potential of international trade to enhance economic growth, the main barriers to their exports need to be removed. These include tariffs (taxes) imposed by developed countries on imports from developing countries and the subsidies that developed countries provide to domestic agricultural producers.
1
Some improvements in removing trade barriers for developing countries have been made in recent years. Initiatives in 2001 by the world’s two largest markets, the European Union’s “Everything but Arms” arrangement for the LDCs and the United States African Growth and Opportunities Act, provided increased trading opportunities for the poorest countries. Other developed countries such as Australia, Canada, Japan, Norway and Switzerland have also opened up their markets to goods from least developed countries.
The Doha round of multilateral trade talks, under the aegis of the World Trade Organization (WTO), was promoted as a development round because it was expected to deliver long-sought trade reforms that would help developing countries to export their goods to richer nations, thereby spurring their economic growth. These efforts were seriously compromised by the collapse of negotiations in Cancún in September 2003.
The goal of improving market access is monitored by four indicators that reflect the level and structure of tariffs imposed on exports from developing countries and the domestic subsidies provided by developed countries. Both sets of policies distort trade and restrict growth in developing countries.
Duty-free access
The share of exports, excluding arms, from developing countries that entered developed countries free of duty has, in 2000-2003, risen for developing countries and improved modestly for least developed countries. In 2000, the proportion of developing country exports eligible to enter duty free into developed country markets was 63 per cent. In 2003, the figure was 70 per cent. The figures for exports from LDCs were 77 per cent and 80 per cent in 2000 and 2003, respectively. When both arms and oil are excluded, the proportion of duty-free exports from developing countries increased from 61 per cent in 2000 to 64 per cent in 2003, and from 70 per cent to 72 per cent in LDCs over the same period.
Table 2. Proportion of total developed country imports (by value and excluding arms) from developing countries and least developed countries, admitted free of dutyPercentage of total developed country imports
1996 / 2000 / 2001 / 2002 / 2003
Excluding arms:
Developing countries / 48.2 / 63.0 / 62.6 / 64.8 / 69.7
Least developed countries / 70.3 / 76.9 / 77.5 / 78.0 / 80.5
Excluding arms and oil:
Developing countries / 44.7 / 61.3 / 60.2 / 63.4 / 63.9
Least developed countries / 77.4 / 69.7 / 70.4 / 69.2 / 72.1
Source: United Nations Statistics Division,Millennium Indicators Database, (accessed June 2005); based on data provided by the World Trade Organization (WTO).
Almost two thirds of exports from developing countries now enter developed countries duty-free. When looking at the period from 1996 to 2003, the proportion of duty-free imports from both developing countries and LDCs has increased noticeably. However, when both arms and oil are excluded from duty-free imports from LDCs, the proportion has decreased.
These different trends can be explained by two developments. First, the bias on the part of developed countries in protecting products of export interest to developing countries is still prevalent, despite the reductions in tariffs arising from the implementation of the WTO Uruguay Round commitments. As the growth and volume of exports from some developing countries continue to expand, the share of these exports entering duty free will either decrease or remain constant. An improvement in this indicator, therefore, requires a change in the structure of developed country protection, or a shift in the composition of developing country exports to include a greater share of products that are not tariff constrained in developed country markets. Second, the effect of initiatives specifically in favour of LDCs are now more noticeable. Of these, of particular note is the Africa Growth and Opportunity Act of the United States. The European Union also enacted a scheme to benefit LDCs, but this has not had a significant impact on the figures since the scheme augmented an already extensive set of duty-free and quota-free market access arrangement in favour of LDCs.
Figure 3. Proportion of imports from developing countries (excluding arms and oil) admitted to developed countries duty-free, 1996-2003 (Percentage of value)
Tariffs on agriculture, textiles and clothing
Developed countries’ tariffs remain high on goods that are strategically important to developing economies, such as textiles and farm products. Tariffs imposed by developed countries on imports of agricultural and textile products from developing countries declined marginally over the period 1996-2003. Some of the reductions are an outcome of the Uruguay Round of negotiations, which has resulted in a reduction in overall tariffs; the remaining are due to preferential trading agreements. Ongoing multilateral trade negotiations provide an opportunity to make the markets of all countries more accessible to exports from the developing world.
Figure 4. Developed countries’ average tariffs on imports of key products from developing countries, 1996–2003 (percentage)
Support and protection for domestic agriculture in developed countries
Indicators on other policies and interventions to facilitate market accessEfforts by developed countries to create an open and non-discriminatory trading system for developing and least developed countries are assessed on the basis of domestic agricultural subsidies measured as a percentage of total gross domestic product in OECD countries and on the basis of the support provided to developing countries to help them build their trade capacity.
Tariffs are not the only impediment to exports from developing countries. Subsidies to producers in developed countries enable them to sell their output at a lower price than would otherwise be the case – to the disadvantage of producers from developing countries. This is particularly importantfor agricultural products, since they represent a large part of developing countries’ trade. It is estimated that trade in agricultural products without these subsidies would benefit developing countries by some $20 billion per year. Annual agricultural support by OECD countries remains at around $350 billion, but has fallen as a share of their growing gross domestic product (GDP). The nature of support is also changing. Support that distorts prices and production has declined from 60 per cent to 46 per cent of total support. Yet it still accounts for a third of farmers’ incomes. And prices paid to rich world farmers are some 31 per cent higher than world market prices.
Figure 5. Value of agricultural subsidies in developed countries, 1990–2003 (billions of US dollars and as a proportion of gross domestic product)
Building capacity in trade
At Doha, donors committed to providing increased support to help developing countries, especially LDCs, build the capacity to trade and to integrate into world markets. The World Trade Organization and the OECD have compiled the Doha Development Agenda Trade Capacity Building Database that lists and quantifies such activities by bilateral and multilateral donors from 2001 onwards. Table 3 below presents the latest available data for the proportion of ODA provided to build trade capacity.
Table 3. Proportion of ODA provided to help build trade capacity (trade-related technical assistance/capacity-building)Trade-related technical assistance/capacity-building as a percent of total sector-allocable ODA
2001 / 2002 / 2003
Africa / 4.2 / 4.3 / 5.6
Americas / 5.6 / 3.9 / 9.2
Asia / 2.3 / 2.9 / 2.5
Europe / 3.0 / 6.1 / 6.5
Oceania / 3.3 / 3.7 / 3.7
Global programmes / 9.0 / 4.0 / 4.2
World / 4.0 / 3.8 / 4.5
Source: United Nations Statistics Division, Millennium Indicators Database, (accessed June 2005); based on data provided by the OECD.
Easing the debt burdens of the poorest countries
Over the years, developing countries have borrowed extensively from official lenders and commercial banks to finance their development. But interest charges and repayment of these loans present difficulties, especially when the amounts involved become large in relation to the funds a country has available, principally through its export earnings. Recent weakening prices for commodity exports from the poorest countries have made the problem more acute.