Ending poverty

Members of the savings and loans in Southern Malawi hold up their microcredit passbook. Microlending has given millions the chance to pull themselves out of poverty by creating small business or improve their existing ones. Photo by: Individuell Människohjälp / CC BY-NC-ND

The world has never been a better place to live!

Extreme poverty has already been halved, and the Millennium Development Goals Report 2014 revealed some other stunning successes. Child mortality rates have also been halved, that’s 17,000 more children alive every single day. Simple measures like mosquito nets have saved 3.3 million people from dying from malaria, and 90 percent of those are children.

Huge progress has been made, but there is much more to do.

Global average improvements mean little to poor families in South Sudan in danger of being caught up in a famine, or to the thousands of mothers and fathers that still see their children die from easily preventable diseases.

We are the first generation in history with ability to eradicate extreme poverty from the planet. The great kings, caliphs and emperors of the past would not have known how to go about it or how to pay for it. Now we basically know what it takes and we have all the required resources. What we need is the political will to just go ahead and do it!

Policies to end poverty

The remarkable development success stories over the past 50 years clearly illustrate how development and poverty eradication is achieved when countries choose the right policies.

In just two generations, South Korea has vaulted from being one of the world’s poorest countries to one of the richest. Good education and industrial policies have created a prosperous state with a productive sector that is home to global market leaders like Samsung.

All the amazing success stories of the past decades are basically of countries making the right political decisions.

The two destructive ml-isms of the past — marxist-leninism and market-liberalism — have mostly been replaced by pragmatism. Most people now agree that a strong state combined with vibrant private markets is the best way to achieve economic growth and development. 600 million people in China alone have been lifted out of extreme poverty as a result of new and better policies implemented by Deng Xiaoping and his followers. There are, of course, many other success stories — Bangladesh, Chile, Ghana, Indonesia and Turkey, to name a few.

Implementing the policies that work in various sectors and learning from each other is key to success.

Brazil would have continued down the road of ever worsening inequalities had Lula and the reformists not demanded equality through minimum wages, cash transfer programs for the poor and better public services. Brazil has managed to grow rapidly, reduce poverty and have incredibly even reduced deforestation in the Amazon by 80 percent while doing it. Microcredit started with the Grameen Bank founded by Nobel Peace Prize winner Muhammad Yunus in Bangladesh. Microlending has since spread across the world and given millions the chance to pull themselves out of poverty by creating small business or improve their existing ones.

Three out of four poor people live in the countryside and most of them work in farming, so getting agricultural policies right can make a huge difference. China’s dramatic poverty reduction was in its initial phase largely driven by growth in smallholder farming, contributing four times more to poverty reduction than manufacturing at the time.

However, manufacturing is important to diversify and grow economies, transfer skills and technology while producing higher value goods. One million young people are joining the labour market in Africa alone and manufacturing must provide most of these new jobs. We see promising signs of Turkish and Chinese companies south-sourcing their manufacturing to countries like Ethiopia. There is no reason why Africa should not replicate the manufacturing success we have seen in Asia. Read more details and examples in the 2013 Developing Cooperation Report.

Mobilizing resources to end poverty

Official development assistance has been an incredible success.

A new world record of $135 billion in ODA was reached in 2013. Additionally, southern providers of development assistance are becoming increasingly important. China is now a major provider of development assistance. Middle-income Turkey’s development program is ambitious and its foreign aid spending is now above the average of rich nations. The United Arab Emirates provided more than any other nation last year at 1.25 percent of gross national income. Brazil and Mexico use their resources and their own development experience to assist Latin American neighbours.

We need more development assistance and better cooperation between new and old donors. There should be no competition — just the benefit of mutual exchange of experiences.

But by far the most important source of finances for development is domestic resources like taxes. Development assistance can help mobilize more resources. Developing countries spend around $1.2 trillion annually on education, an amount nine times higher than all aid combined.

The Organization for Economic Cooperation and Development has rolled out two programs — Tax for Development and Tax Inspectors without Borders — to improve tax revenue generation. A project assisting Kenya’s tax administration returned more than thousand dollars for every one dollar invested. Developing countries as well as OECD nations are also losing billions of dollars every year to corruption, money laundering and tax evasion. These billions fund crime and lavish lifestyles, rather than schools and hospitals. Outward or lost flows like these can be stopped by sharing information, streamlining regulations and improving the capacity to investigate and prosecute financial criminals in developed and developing countries alike.

Development assistance can also mobilize more private flows. The flow of personal remittances and foreign direct investments are both many times greater than development assistance. Billions of dollars are needed to build roads, green energy infrastructure, railroads and to create jobs. Most of it must come from private sources.

ODA can also leverage private flows for development. Mechanisms like government guarantees can take some of the risk out of investment, encouraging private investors to become active in places they would not usually go. Much more details will be provided in the upcoming Development Cooperation Report 2014 on mobilizing resources due out in October.

Mobilizing the political will!

We are the first generation in history with the ability to make history and eradicate extreme poverty. Let us mobilize the political will to make the complete eradication of extreme poverty by 2030 a reality!

Aug. 18, 2014, marks the 500-day milestone until the target date to achieve the Millennium Development Goals. Join Devex, in partnership with the United Nations Foundation, to raise awareness of the progress made through the MDGs and to rally to continue the momentum. Check out our Storify page and tweet us using #MDGmomentum.

The views in this opinion piece do not necessarily reflect Devex's editorial views.

About the author

  • Erik Solheim

    Erik Solheim is chair of Organization for Economic Cooperation and Development’s Development Assistance Committee since January 2013, and incoming executive director of the U.N. Environment Program. With a solid background in climate, the environment and peace building, Solheim was also Norway’s minister for international development from 2005 to 2012.