Twin dangers to development
February 16, 2009 4:30 PM
By Malcolm Bruce in The House Magazine
By Malcolm Bruce in The House Magazine
Changes in consumer behaviour resulting from the global environmental and financial crises threaten hard-won gains in the developing world, says Malcolm Bruce
By Malcolm Bruce MP,
Chair, International Development Select Committee
Globalisation has helped China and other Asian economies lift hundreds of millions of people out of poverty. Nevertheless, population growth, climate change, lack of progress on the Doha trade agreement and the financial downturn threaten this progress and make it harder to reach those who have failed to benefit and are still languishing in abject poverty.
The UK has increased aid and development funding and is committed to reaching 0.7% of GDP by 2013. However, many other countries have not fulfilled their commitments and some - most notably Italy - have slashed overseas development funding.
Even before the financial crisis hit with breathtaking speed poor people had faced soaring food and oil prices. While these have fallen back, some, notably rice, are still historically fairly high and further shortages are forecast as poor farmers cannot afford to plant or buy fertiliser.
Good rains and a Government programme (supported by DFID) to provide seed and fertiliser to Malawi's farmers has led to record harvest and maize exports for a country that has traditionally seen food shortages and net imports. This is an example where aid can work (although the good behaviour of the climate is required as well).
For those countries with oil and gas and mineral resources the world slowdown means a fall in prices depressing revenues that would sustain poverty reduction programmes and funding for the services essential to meeting the increasingly off track Millennium Development Goals.
The World Bank estimates up to 100 million people could fall back into poverty to join those known as the 'bottom billion'.
Many of the poorest people (and most of them are women and children) live in countries that are in conflict or have recently emerged from it and are susceptible to falling back into conflict in these difficult circumstances.
Regardless of the causes of the recent conflict in Gaza this has plunged over a million people into extreme hardship necessitating the provision of further aid funding that should not have been necessary and could have helped poor people elsewhere in the world.
In other countries providing effective support to poverty reduction is difficult where government is ineffective or corrupt.
The UK's commitment to provide support to poor countries is also compromised by the falling value of the pound. Specifically, our pledge to the European Commission is in euros and given the drop in the exchange rate DFID may have to find up to an extra £400 million to meet our EU obligations from elsewhere in its budget.
For other countries and multilateral agencies such as the World Bank, United Nations and Regional Development Banks the falling pound will buy less aid and development support.
The International Development Committee is currently undertaking two enquiries to seek evidence on how the twin impacts of climate change and financial recession are affecting developing countries.
The first looks at sustainable development in a changing climate (meaning weather and finance). The second looks at aid under pressure in terms of funding flows and aid effectiveness.
There is a real concern among poorer countries that the costs of adaptation to climate change effects will come out of poverty reduction budgets and make achieving development even harder.
Many argue with justification that as developing countries have caused the problems there should be a direct transfer of funding from rich to poor countries over and above any aid transfers.
In addition, some of the responses to the impact of climate change within developed countries could depress some of the economic activities that have helped developing economies.
For example, over 1 million people in sub Saharan Africa are currently employed in supplying flowers and vegetables to European markets. Yet environmental campaigners are encouraging people to resist these products and buy local threatening many of these hard won jobs.
We need to determine just how sustainable these products are compared with European produced flowers and vegetables which may use gas or oil fired greenhouses.
Similarly, long haul tourism sustains millions of jobs in the developing world. If Europeans turn their backs on exotic tourism for financial or environmental reasons this could knock many people back into poverty.
With aid flows reduced and domestic budgets being squeezed, poverty that has slowly been reduced in recent years could start to rise again and this will be exacerbated if social insecurity and other factors keep population growing faster than growth in many developing countries.
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