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Equity in a global economy

Indisputably, the global market place has been bountiful for a small minority with capital and skills. The 200 richest people in the world, for instance, more than doubled their net worth between 1994 and 1998, to more than $1 trillion. Meanwhile, disparities continue to grow: In 1960, the income gap between the richest fifth of the world's population and the poorest fifth was 30 to 1; in 1997 it was 74 to 1.

The problems and inequalities engendered by globalization demand both global and national responses. Among the global measures suggested in the Human Development Report 1999 are mechanisms to help calm international market volatility before a crisis ensues and to ensure a steadier and more equitable investment stream for developing countries. On the national level, a number of countries have already instituted macroeconomic, social and political reforms and systems from which others can learn to prevent or modulate extreme fluctuations.

A fundamental and inescapable step in strengthening countries' capacity to participate equitably in the global economy is to ensure people's access to sound basic social services such as health, education, family planning and water and sanitation. These services make sustained and stable economic progress possible, help people achieve greater productivity and form an especially crucial buffer for children and women in difficult times. Basic services are financially feasible if, in the spirit of the 20/20 Initiative, developing countries allocate 20 per cent of their budgets to these services, and if donor countries similarly earmark 20 per cent of their official development assistance (ODA) to the same task.

A family of squatters sleeping in their makeshift home along the railroad tracks in Jakarta's central district.

"In the wake of the Asian financial crisis, both governments and civil society feel that the 20/20 Initiative is needed, essential and feasible," declared Horacio Morales, Agrarian Reform Secretary in the Philippines, in a keynote address to the Hanoi Meeting on the 20/20 Initiative, held in October 1998. "The Initiative does not promote merely a safety net. In addition to helping protect the gains in human development, it can contribute to economic recovery," he asserted. Insisting that the Initiative was feasible, Mr. Morales noted, "In a $25 trillion world economy, universal access to basic social services by the year 2005 will require less than 0.2 per cent of world income, or around 1 per cent of developing countries' income."

The 20/20 Initiative offers a practical way forward. But it is bucking a disturbing trend: ODA from donor countries, rather than increasing to a target level of 0.7 per cent of the gross national product (GNP), has declined by one third since 1986, standing at an average of 0.22 per cent of GNP in 1997, the lowest point since 1970. Meanwhile, external debt for the least developed countries has rocketed from 62.4 per cent of GNP in 1985 to 92.3 per cent in 1997. A recent UNICEF study of 30 developing countries indicates that nearly two thirds of these nations allocate more for debt payment than for basic social services. The solution to this zero-sum game is clear, according to Hilde Johnson, Norwegian Minister of International Development and Human Rights: "Breaking the vicious circle of poverty also requires eliminating the unsustainable debt burden."

About inequities between the rich and poor

As the world's currency markets exchange $1.5 trillion each day, more than 1.2 billion people in the world live on less than $1 a day - more than 600 million of them children. While the average per capita income in 40 countries has grown by more than 3 per cent each year since 1990, 55 countries have seen a decline during the same period and more than 80 countries now have per capita incomes lower than a decade ago. The richest fifth of the world's population enjoys a share of global income that is 74 times that of the poorest fifth. Income inequality has increased in most OECD countries since 1980. An estimated 12 per cent of the people living in the richest countries in the world are affected by poverty. Sources: UNICEF; UNDP, Human Development Report 1999, World Bank 1999.

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