It's Time to Step Up the Global War on Poverty
By Laura D'Andrea Tyson
Like most Americans, I have been deeply moved by recent images of Afghan citizens celebrating the return of freedom to war-ravaged Kabul--images of people listening to music for the first time in years, of women with uncovered faces walking alone, and of children playing. Such images remind us that human well-being depends on freedom of choice and simple things. Human development, as Nobel laureate Amartya Sen has counseled, is a process of expanding the real freedoms that people enjoy. Successful development requires the removal of major societal sources of "unfreedom" including political tyranny and intolerance. But it also requires the eradication of crushing poverty.
As the war on terrorism has unfolded, Americans have been reminded once more that we live in a world of unprecedented opulence and remarkable deprivation, a world so interconnected that poverty and despair in a remote region can harbor a network of terrorism dedicated to our destruction. In such a world, our prosperity and freedom at home increasingly depend on the successful development of countries like Afghanistan, where income per capita is less than $1 per day and 20% of the people--10% of the women--are literate.
Winning the war on global poverty won't be easy. It will require a substantial commitment of resources from the developed nations over many years and the creation of new mechanisms to channel support directly to individual citizens, bypassing the inefficient, often corrupt states in which they live. Yet such daunting challenges are not an excuse for inaction. According to World Bank estimates, development assistance must more than double, to about $100 billion per year, to achieve the U.N. goal of cutting extreme poverty in half by 2015. An increase in assistance on this scale would be enough to eliminate many of the problems at the root of poverty in the developing world--the lack of basic health and nutrition and the lack of basic education required for freedom in the modern world. (As the experience in Afghanistan demonstrates, training in radical madrasahs does not provide such an education.)
GOING TO SCHOOL. Working together, the developed countries can afford the price tag--$50 billion a year of additional aid amounts to only 0.2% of the gross domestic product of the countries in the Organization for Economy Cooperation & Development (OECD). In real dollars, the U.S. spent nearly $70 billion on foreign aid in 1949 to help Europe and Japan rebuild after World War II. Today, the U.S. spends less than $14 billion on foreign aid, about 0.1% of GDP.
Moreover, not all additional development assistance needs to take the form of foreign aid. The U.S. and other wealthy countries can forgive the debt owed to them by developing countries on the condition that they pursue sensible economic policies. Uganda, for example, has used the interest savings on forgiven debt to lower primary school fees, and school attendance has nearly doubled in response. In a recent report on globalization, George Soros identifies another promising approach using special drawing rights, or SDRs. SDRs are issued by the International Monetary Fund and serve as reserve assets that can be used as a means of payment among IMF members, the IMF, and other "prescribed" holders. Soros advocates the creation of new SDRs earmarked for use by development programs to support investment in programs like the spread of literacy and the containment of AIDS.
The developed countries can also support development through further trade liberalization. According to the World Bank, the elimination of barriers to merchandise trade, including trade in agricultural products, could reduce the number of poor in developing countries by 300 million by 2015. At the recent World Trade Organization meetings, the developed countries committed to negotiations to curb protectionist measures like antidumping, to reduce agricultural subsidies (currently five times larger than the total foreign assistance of the OECD countries), and to provide cheaper access to drugs to fight disease in developing countries. This agreement is a major victory in the global war against poverty.
What's to prevent additional development assistance from being wasted by repressive, inefficient states? Working together and through multilateral institutions, donor countries should design programs that link assistance to measurable performance indicators like primary school enrollment and literacy rates. In addition, donor governments should forge partnerships with nongovernmental organizations with proven track records in delivering food, health, education, and other services to the poor. Micro-lending programs and reproductive health and literacy programs for women also have demonstrated success at promoting development, especially in impoverished rural areas.
In recent days, the U.S.-led multilateral alliance has scored impressive victories in the campaign against terrorism. While celebrating, however, we must not forget the importance of winning the war on global poverty. It is likely to be long and costly, but the benefits to global stability and prosperity are well worth the price.
Laura D'Andrea Tyson is dean of the Haas School of Business at the University of California at Berkeley.