Policy recommendations

The MDG Millennium Development Goals agenda has been a bold attempt to improve the life of people in the developing world. The conventional wisdom is that the main hurdles to the achievement of the goals are low economic growth and insufficient economic aid. According to this view, trade and investment liberalization, coupled with an increase in aid, would suffice to promote a faster convergence towards the MDGs. In contrast, some authors suggest that in order to achieve the MDGs, a preoccupation with income distribution, on the one hand, and a bigger emphasis on how aid is spent and further debt relief, on the other hand, are necessary.

 

In that sense, income policies, such as the creation or extension of transfer programmes for the poorest in society, extension of welfare coverage to broader spectrum of society, and policies to promote job security and decent pay, would also encourage achievement of the MDGs. These income policies might necessitate the appropriate support from macroeconomic policies. A reorientation of macroeconomic policies, aimed at strengthening domestic demand and fostering full employment, is appropriate. In addition, incomes policies must ensure that mass incomes rise in line with average productivity growth.

 

Further, it is essential that ODA official development assistance increases not just in absolute level, but more importantly as a share of the GNI gross national income of donor countries. Further, ODA must be distributed in a balanced way, taking into consideration that the MDGs are integrated and synergetic in nature. Part of the idea of the MDG agenda was to change the nature of economic and social policies so as to put human well-being at the centre of the policy priorities. However, it is important to understand that the process of development depends to a great extent on the capabilities of the people in developing countries, and for that not only ODA flows are important, but debt relief as well, which frees resources for alternative uses other than the service of debt helping to break the circle of indebtedness and poverty.

 

The interrelation between the various goals and the need for a comprehensive understanding of the difficulties of the process of development are brought to the fore by the question of global warming. The process of economic growth itself, which remains carbon intensive, has had significant impact on climate and this has created a feedback that affects development. Not only markets incentives and government regulation to reduce emissions of GHG Greenhouse gas are necessary, but also significant investment for the development of green technologies and new renewable and cleaner energy sources.

• A reorientation of macroeconomic policies aimed at strengthening domestic demand and fostering full employment, rather than just stabilizing price, is key;
• Incomes policies that ensure that mass incomes rise in line with average productivity growth should complement this reorientation;
• A significant increase in absolute ODA flows, but also relative to GNI with a balanced distribution between targets, remains necessary;
• Debt relief should be at the centre of the MDG agenda;
• Markets incentives and government regulation to reduce emissions of GHG are essential to reduce the effects of global warming;
• A major increase in investment for the development of new energy technologies is needed to reduce the environmental impact of economic development.