From the MDGs to SDGs: Has Anything Changed?
Professor David Hulme is currently at the World Social Science Forum in South Africa, where he delivered the following presentation, charting the shift from the Millennium Development Goals, to the Sustainable Development Goals.
You can also watch a recording of the presentation.
For further detail on Professor Hulme’s research in this area, please read ‘The Millennium Development Goals: A Short History of the World’s Biggest Promise.’
Forget the aid obsession: development needs redistribution through fiscal policy
By Professor Armando Barrientos
Perhaps the greatest failing of the Millennium Development Goals was their focus on aid as the main financing tool for development. This ‘cosmopolitan’ perspective has often misdirected attention away from basic fiscal policy in developing countries, which has a much greater impact on the lives of citizens.
Taxes and transfers are the most important instrument at our disposal to redistribute opportunity in low- and middle-income countries. Yet research and policy debate on international development has failed to maintain a consistent focus on fiscal policy. The extensive international consultations around the Sustainable Development Goals may have produced a rather unwieldy list of 17 ‘priorities’, but it has given an opportunity to re-establish the centrality of national tax and spending policies within the development agenda.
National governments collect taxes from citizens and companies, then deploy these resources to provide transfers in kind – through public provision of services like education, health care, sanitation – or transfers in cash – pensions, family allowances, disability benefits or scholarships. Even in low income countries domestic tax collection far outweighs international aid.
Where governments get it right, fiscal policy supports human development and economic growth leading to poverty eradication and low inequality. Where governments get it wrong, human development and growth stagnate, leading to high levels of poverty and inequality.
Getting it right or getting it wrong are not just a matter of technical advice (although this is essential), but primarily a matter of politics and institutions. There are many different ways for countries to establish effective fiscal policy – reforms that work in one country may be ineffective in the next. The important role of institutions in fiscal policy suggests a degree of path dependence. Citizens and companies are more likely to pay taxes if they perceive fiscal policy to be fair and effective.
In evaluating fiscal policy it is imperative to start from the whole, not the parts.
Initiatives like Commitment to Equity led by Nora Lustig provide valuable insights into the distributional outcomes of taxes and transfers for a growing number of middle-income and low-income countries. Based on responses to household surveys, they identify the incidence of taxes and transfers in cash. Transfers in kind are estimated from household demographics and aggregate budgets, for example children are allocated schooling costs. Overall, they find that the redistributive effects of fiscal policy in low- and middle-income countries are small, relative to high-income countries, and vary significantly across countries.
Fiscal policy is equalising in middle-income countries, but not by much. Redistribution is measured as the difference in the Gini coefficient of market income and final income after accounting for the effects of fiscal policy. Using survey data from 2014/5, they find that fiscal policy is responsible for a reduction in the Gini of less than 1 percentage point in Colombia and Indonesia; around 4 percentage points in Brazil Chile and Mexico; and over 7 percentage points in South Africa.Interestingly, the paper finds that fiscal policy is not always poverty reducing, especially due to the incidence of indirect taxes among people living in poverty.
The challenge facing low – and middle – income countries is to strengthen the redistributive capacity of fiscal policy. There are several areas of policy relevant to achieving this objective, but here we can only mention a few of them.
For most countries, raising tax revenues as share of GDP is a priority. In low-income countries, this is particularly hard to achieve. Improvements in tax administration are needed, but they are more likely to be effective if associated with third party information (payroll, business registration, etc.) And as the example of Brazil demonstrates, social and fiscal contracts are essential to raise tax/GDP ratios.
The tax mix is important too. Low- and middle-income countries rely to an important extent on consumption taxes and revenues from natural resources. The bulk of direct tax revenue collection comes not from personal income tax, but from corporate taxation.
Revenues from natural resources can generate a political resource curse because they insulate elites from the need to persuade citizens to pay taxes. Indirect taxes are easier to collect than direct taxes, but they tend to be regressive – hitting the poorest hardest. The challenge is to find innovative ways of countering the political resource curse, through strong fiscal contracts; and of making consumption taxes less regressive through differential rates or rebates.
On the transfer side, the expansion of social assistance transfers shows the way forward. Strengthening redistribution to low income groups through transfers in cash and through access to public services are an effective way to ensure fiscal policy contributes to growth and human development.
The Sustainable Development Goals have the potential to help shift the international development agenda away from its obsession with aid. Placing greater emphasis on the fundamentals of domestic tax and spending would mark a transformation in how ‘development’ is understood, particularly in the West. As the Goals are finalised in New York, it will be interesting to see if the ‘development community’ will become a bit more honest about how development actually happens.
What does SDG 8 on jobs mean for young people in Arusha, Tanazina?
Dr. Nicola Banks‘ research looks at the experiences of young people in Arusha, Tanzania and their struggles to find employment while living in poverty. During her last research visit, Nicola recorded this video, outlining the potential (and the pitfalls) of Sustainable Development Goal 8 on jobs and growth.
Are the Sustainable Development Goals the world’s biggest promise…. or the world’s biggest lie?
By David Hulme
In New York the finishing touches are being made to the Sustainable Development Goals (SDGs) which are due to replace the UN Millennium Development Goals (MDGs).
With 17 goals, 167 targets and perhaps more than 1,000 indicators those finishing touches remain a large task. The idea behind the SDGs is that they are a global ‘super-norm’, which will re-shape the plans and behaviours of nations, multilateral institutions, companies, development organisations and people, to make the world a fairer and more sustainable place. That’s a pretty grand ambition.
Development is changing – and so is Manchester
By Professor Uma Kothari and Professor David Hulme
The study of international development is undergoing a transformation. Its ideas, institutions, financing and political relations are being transformed by the rise of Asia, climate change and, even more importantly, by the evidence that global inequality is increasing in unprecedented ways.
Rising inequality has two main dimensions. A contemporary dimension, exemplified by estimates that the top 1% of the world’s population have the same economic wealth as the remaining 99%. This situation maintains chronic levels of poverty in an affluent world. It reduces the prospects for growth and damages social cohesion, enabling the elite to capture public institutions and policies.
Making the State Work
The Effective States CEO and Executive Director of Brooks World Poverty Institute Professor David Hulme introduces this new edition of ‘Governance, Management and Development’ outlining how the debates have changed and the four key themes of the book.
The last 25 years have seen the most rapid economic growth and the biggest increases in life expectancy in human history. Still, between 1.5 billion and 3 billion people live in poverty and at least one third of the world’s countries are classed as fragile or very badly governed.
The first edition of ‘Governance, Management and Development: Making the State Work’ rolled off the production line in 1997 when policy debates about governance and discussions about the future of non-governmental organizations in development were in their infancy. Privatization was de rigueur for the World Bank and IMF while public private partnerships were novel arrangements in developing countries.
At that time, my co-authors and I had deep concerns about the newly dominant policy agenda which focused on minimizing the role of the public sector, rolling back the state until it almost disappeared while naively waving the new banner of ‘good government’ for all to cheer.
Female ownership of land is not a panacea in developing countries
By Ralitza Dimova
Contrary to conventional wisdom, giving ownership rights on land to women may not be a welfare enhancing panacea in poor agricultural settings. When women have less access to complementary resources such as credit, labour or marketing channels than men, female ownership of land alone would not help them enter into productivity enhancing agricultural sectors and generate income in such sectors. If women control land, while men control all remaining resources – and asset ownership is insecure in an environment of market and institutional imperfections – the outcome for the household as a whole is likely to be negative.
These are the key findings of a new publication by Ralitza Dimova, Sumon Bhaumik and Ira Gang in the Journal of Development Studies.
Can “authoritarian developmentalism” be tested at the ballot box?
By Eyob Balcha Gebremariam
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The May 24, 2015 Ethiopian election is an archetypical political process where authoritarian developmentalism went to the poll seeking procedural democratic legitimacy for its less inclusive economic growth and severely restricted civil and political rights of citizens. The final results of the elections will tell whether the state-to-family level structures of control, harassment and indoctrination will be strong enough to extend the 99.6 per cent domination of the ruling party over the national parliament.DEVELOPMENT BOTH AS INSTRUMENT AND IDEOLOGY
Feeding back findings: Disaster risk reduction in urban Bolivia
by Gemma Sou
In March 2015, I am glad (and relieved) to report that I passed my PhD viva. Four years of grit and determination culminated in inevitable questions such as “What is your theoretical contribution?” and “Why did you choose a social constructivist approach?” All valid questions I absolutely agree; however, they significantly differ to the questions which I was confronted with this May when disseminating findings in my case site. Nevertheless, this experience was one of the most nerves wracking and rewarding of my research so far.
The silencing of violence against women
By Tanja Bastia
Last Tuesday Mo Hume came to Manchester to speak at the development@manchester seminar series. The seminar series has been running for five years and each year invites around ten internationally renown speakers on international development (see link for this year’s programme http://www.seed.manchester.ac.uk/subjects/idpm/whatson/dev@manchester/ ). Mo is a political scientist at the University of Glasgow (http://www.gla.ac.uk/schools/socialpolitical/staff/mohume/) with a longstanding research experience in Central America. Her paper drew on her longitudinal research on gender and violence in El Salvador, which she began in 2000 as part of her PhD research.