Thursday, November 01, 2012

Born Equal - major new report on inequality in developing countries

Save the Children has issued a major new report calling for inequality to be at the heart of the post-2015 development framework. This is the first time a major development organisation has called for the fight against illicit financial flows to be part of the post-2015 framework that will replace the Millennium Development Goals, and that's highly significant.

The report, Born Equal, has as its first recommendation
"The post-2015 framework should consist of goals that enshrine equality and deliberately seek to improve the life chances of the poorest and most vulnerable people"
A goal which we (and all reasonable people who've been reading the newspapers) would support. But they go on to say:
To ensure equitable allocations of public resources (according to need), and to motivate increased public sector investment, we recommend that the post-2015 global framework is accompanied by a financial strategy that includes targets on the equitable distribution of public resources.

Consideration of how to tackle capital flight and to strengthen domestic taxation measures will be key to increasing domestic revenues. It is now widely accepted that illicit financial outflows (dominated by corporate tax evasion) dwarf receipts of aid.

Progressive taxation plays a critical role in raising revenues to fund social protection mechanisms and universal access to basic services, and also in establishing the social contract between states and citizens upon which effective political representation and accountability depend.

A major issue for the post-2015 framework is to what extent it should emphasise both domestic budgetary transparency and the international financial transparency between states that is necessary to combat illicit flows.
Coming from such a large and influential global development agency, this is highly significant. The wider report contains many surprising and interesting things, including that children face twice the
inequality of households in general, and this has grown by a third since the 1990s. Alex Cobham, one of the report's authors, summarises some of its key points in his development blog, Uncounted, and makes the case for focusing on inequality – rather than, say, just highlighting extreme deprivation. Among other things:
"Recent work by IMF researchers shows that high inequality prevents countries experiencing sustained periods of economic growth, while Oxford researchers funded by DFID (link is to a background paper for the World Bank’s World Development Report 2011) have built a wealth of evidence on the role of inequalities (between groups, especially) in fuelling conflict and instability."
"We care about inequality because it has grown so sharply that it may now be the major international development obstacle. As Andy Sumner famously established in the New Bottom Billion, the majority of people living in extreme income poverty now do so in middle- rather than low-income countries. This means that while an important and deep element of poverty is still about ‘poor people living in poor countries’, a greater part reflects inequality in countries that are somewhat better off on average. Martin Ravallion, the World Bank’s leading expert on income poverty has just published research showing that reducing inequality is central to making further progress."

Visualisation from the Guardian Development Blog

To conclude, a statement from the SCF report:
"Inequalities such as these are an injustice and an infringement of human rights. In 2015 we, the international community, have an opportunity to rectify this. By placing inequality front and centre of the new international development framework we have the opportunity to stem the tide of rising inequalities and to give every child a better start in life."
Quite so. And it is excellent to see such an important player pointing to the elephant in the room.


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