Why the Goals are important

There is no one-size-fits-all explanation for why the Goals are failing or succeeding. Each region and each Goal requires a careful analysis. We can, however, identify four overarching reasons why the Goals are not being achieved. Sometimes the problem is poor governance, marked by corruption, poor economic policy choices, and denial of human rights. Sometimes the problem is a poverty trap, with local and national economies too poor to make the needed investments. Sometimes progress is made in one part of the country but not in others, so that pockets of poverty persist. Even when overall governance is adequate, there are often areas of specific policy neglect that can have a monumental effect on their citizens' well-being. Sometimes these factors occur together, making individual problems all the more challenging to resolve.

Economic development stalls when governments do not uphold the rule of law, pursue sound economic policy, make appropriate public investments, manage a public administration, protect basic human rights, and support civil -society organizations—including those representing poor people—in national decisionmaking.

The rule of law involves security in private property and tenure rights, safety from violence and physical abuse, honesty and transparency in government functions, and predictability of government behavior according to law. Too many countries fail to achieve these basic standards, sometimes due to authoritarian rulers who use violence and corruption to hold on to power—but often because upholding the rule of law requires institutions for government accountability, and those institutions are missing.

Political and social rights should ensure equality before the law and fairness in society across groups. These rights must be substantive and not merely formal. The poor must have a meaningful say in the decisions that affect their lives. Women and girls must be assured freedom from violence and from legal, economic, and social discrimination. In many places, access to public goods and services is restricted for certain groups. Minority groups, for their language, religion, or race, suffer discrimination at the hands of more powerful groups.

Sound economic policies involve a rational balance of responsibilities between the private sector and the public sector to secure sustained and widespread economic progress. The private sector is the engine of growth in production. The public sector establishes the framework and enabling environment for growth by setting sound macroeconomic policies and providing such public goods as infrastructure, public health and education, and support for science and technology.

Public investments are crucial for a “private-based” market economy. Every successful economy relies heavily on public spending in critical areas including health, education, infrastructure (electricity grid, roads, seaports), environmental management (national parks and protected reserves, water and sanitation), information and communications, scientific research, and land for affordable housing.

Accountable and efficient public administration requires transparency and administrators who are qualified, motivated, and adequately paid. It also requires efficient management systems, to disburse and track large investments, and monitoring and evaluation systems. Many poor countries without adequate resources for decent salaries—or the checks on political abuse that provide the incentives for performance and the ability to weed out the inept and corrupt—are unable to afford an effective public sector, so they end up suffering from large-scale inefficiencies and wasted resources.

Strong civil society engagement and participation are crucial to effective governance because they bring important actors to the fore, ensure the relevance of public investments, lead to decisions that best address the people's needs as they perceive them, and serve as watchdogs for the development and implementation of government policies.

Achieving the Goals requires that all these areas of governance be properly addressed. There is no excuse for any country, no matter how poor, to abuse its citizens, deny them the equal protection of the law, or leave them victims of corruption, mismanagement, and economic irrationality. Some improvements in governance do not cost much money, if any, and some actually save money (by cutting corruption or granting land tenure, for example). Some improvements in economic outcomes are thus available at low cost, and such opportunities must not be squandered.

To achieve the Goals, governments must work actively with all constituencies, particularly civil society organizations and the private sector. Civil society organizations can help design national strategies, deliver services, defend human rights, and supervise government in the fight against corruption and misrule. And the private sector is, plainly, the place for job creation and long-term income growth (box 4).

Many well governed countries are too poor to help themselves. Many well intentioned governments lack the fiscal resources to invest in infrastructure, social services, environmental management, and even the public administration necessary to improve governance. Further, dozens of heavily indebted poor and middle-income countries are forced by creditor governments to spend large proportions of their limited tax receipts on debt service, undermining their ability to finance vital investments in human capital and infrastructure. In a pointless and debilitating churning of resources, the creditors provide development assistance with one hand and then withdraw it in debt servicing with the other.

In an important recent policy initiative, the U.S. government established a set of transparent indicators that identifies poor but reasonably well governed countries that can qualify for funding from its new Millennium Challenge Account. The list of 30 countries includes Bolivia, Ghana, Mali, and Mozambique. Despite significant efforts and real progress, these countries, and many like them, pass the governance test but still fail to make adequate progress toward the Goals.

The reasons are clear. They lack the basic infrastructure, human capital, and public administration—the foundations for economic development and private sector–led growth. Without roads, soil nutrients, electricity, safe cooking fuels, clinics, schools, and adequate and affordable shelter, people are chronically hungry, burdened by disease, and unable to save. Without adequate public sector salaries and information technologies, public management is chronically weak. These countries are unable to attract private investment flows or retain their skilled workers.

The Goals create a solid framework for identifying investments that need to be made. They point to targets of public investment—water, sanitation, slum upgrading, education, health, environmental management, and basic infrastructure—that reduce income poverty and gender inequalities, improve human capital, and protect the environment. By achieving the Goals, poor countries can establish an adequate base of infrastructure and human capital that will enable them to escape from the poverty trap.

Civil society

ActionAid, Bread for the World, CIVICUS, DATA, Development Alternatives with Women for a New Era (DAWN), the International Planned Parenthood Federation (IPPF), Médecins sans Frontières, InterAction, Oxfam, RESULTS International, and Social Watch are among the many remarkable and dedicated civil society organizations that have contributed mightily to development progress around the world. National strategies to achieve the Goals will not succeed without their active engagement and that of other civil society organizations.

Civil society organizations can raise public and political awareness about the Millennium Development Goals (MDGs), maintaining constructive pressure on governments to follow through on their commitments. They can help design national MDG-based poverty reduction strategies, ensuring that investment strategies attend to the needs of historically excluded regions, groups, and policy issues. Many can also take on key tasks in public service delivery, particularly those that hinge on -person-to-person training, -community-level systems, and the mobilization of young people. In monitoring progress, they can be public watchdogs, ensuring transparency in investment programs and accountability in budget management.

Internationally, civil society organizations can mobilize support among young people and other key constituencies to keep pressure on world leaders to follow through on political commitments. Through their work on the ground, they can be instrumental in sharing best practices and technical expertise. And they can help with direct service delivery, as they do already, for example, through humanitarian relief efforts in times of crisis in the world's poorest regions.

Private sector

Private businesses are important partners in achieving the Goals. Long-term poverty reduction in developing countries will not happen without sustained economic growth, which requires a vibrant private sector. In low-income countries, the majority of the labor force works in rural agriculture, so one powerful route to growth is through a boost in farm productivity and a transition from subsistence farming to commercial farming. In urban areas the transition should be from informal employment to formal employment in internationally competitive manufacturing and services.

Strong public systems are needed to provide the human capital and infrastructure needed for firms to thrive and have access to world markets. The domestic private sector can support the Goals by making investments to increase productivity and create jobs. In some situations, it can also help support service delivery through public-private partnerships. The private sector should furthermore support the Goals by promoting transparency and corporate governance initiatives, by advocating for the Goals, and by engaging responsibly with the government in economic policy discussions.

Major international businesses should support the Goals through corporate philanthropy, such as donations of life-saving technologies, and through differential pricing to enable the poor to gain access to needed technologies. When investing in developing countries, multinational firms should be responsible, law-abiding corporate citizens. As an important demonstration of corporate social responsibility, we recommend that all large international businesses, especially those that have signed up to the UN Global Compact, report their contributions through a Millennium Development Goals scorecard in their annual reports.

Escaping the poverty trap. When a country's capital stock (including physical, natural, and human capital) is too low, the economy is unproductive. Households are impoverished, and the environment is degraded. This leads to several problems:

• Low saving rates. Poor households use all their income to stay alive, and so cannot save for the future. The few who can afford to save often have no access to formal banking.
• Low tax revenues. Governments lack the budgetary resources for public investments and public administrations using qualified managers and modern information systems.
• Low foreign investment. Foreign investors stay away from economies without basic infrastructure—those with costly and unreliable roads, ports, communication systems, and electricity.
• Violent conflict. Resource scarcity can often fuel latent tensions among competing groups.
• Brain drain. Skilled workers leave the country because of low salaries and little hope for the future.
• Unplanned or ill-timed births and rapid population growth. Impoverished people living in rural areas have the highest fertility rates and the largest families. Rapid population growth and shrinking farm sizes make rural poverty worse. Poor people (in rural and urban areas) have less access to information and services to space or limit their pregnancies in accord with their preferences.
• Environmental degradation. People in poverty lack the means to invest in the environment and the political power to limit damage to local resources, resulting in soil nutrient depletion, deforestation, overfishing, and other environmental damage. These degraded conditions undermine rural incomes, and contribute to poor health and rural-urban migration, leading to new settlement in environmentally fragile peri-urban areas.

All these adverse results reinforce and amplify poverty. Without private saving, public investment, and foreign investment, there is no improvement in productivity. With brain drain, population growth, environmental degradation, and ongoing risk of violence, the situation continues to degenerate.

The key to escaping the poverty trap is to raise the economy's capital stock to the point where the downward spiral ends and self-sustaining economic growth takes over. This requires a big push of basic investments between now and 2015 in public administration, human capital (nutrition, health, education), and key infrastructure (roads, electricity, ports, water and sanitation, accessible land for affordable housing, environmental management).

This process is helped by a voluntary reduction in fertility, which promotes greater investments in the health, nutrition, and education of each child. We thus strongly support programs that promote sexual and reproductive health and rights, including voluntary family planning. Critical to overall success in economic growth and poverty reduction, they can help countries meet the Goals, freeing them from the poverty trap and their dependence on aid.

Geographical conditions make poverty traps more likely. Some countries and regions are more vulnerable than others to falling into a poverty trap. While a history of violence or colonial rule or poor governance can leave any country bereft of basic infrastructure and human capital, physical geography plays -special havoc with certain regions. Some regions need more basic infrastructure than others simply to compensate for a difficult physical environment. Here are some of the barriers that must be offset by investments:

Adverse transport conditions:

• Landlocked economies.
• Small island economies far from major markets.
• Inland populations far from coasts and navigable rivers.
• Populations living in mountains.
• Long distances from major world markets.
• Very low population densities.

Adverse agroclimatic conditions:

• Low and highly variable rainfall.
• Lack of suitable conditions for irrigation.
• Nutrient-poor and nutrient-depleted soils.
• Vulnerability to pests and other postharvest losses.
• Susceptibility to the effects of climate change.

Adverse health conditions:

• High ecological vulnerability to malaria and other tropical diseases.
• High AIDS prevalence.

Other adverse conditions:

• Lack of domestic energy resources (fossil fuels, geothermal or hydropower potential).
• Small internal market and lack of regional integration.
• Vulnerability to natural hazards (tropical storms, earthquakes, -volcanoes).
• Artificial borders that cut across cultural and ethnic groups.
• Proximity to countries in conflict.

Sub-Saharan Africa is especially burdened by poor geographical endowments ( table 3 and map 4 ). Africa has the highest agriculture risk (tied with South Asia), the highest transport risk, and by far the highest malaria risk. Africa is also uniquely vulnerable to drought conditions. Human vulnerability in 1980 was inversely correlated with economic growth during 1980–2000.

Table 3: Agriculture risk, location risk, and malaria risk, by region

Map 4: Human vulnerability index, 1980

Africa's vulnerability is very high but not insurmountable. Indeed, our message is that geographical vulnerabilities can and need to be offset by targeted investments in infrastructure, agriculture, and health. Countries far from markets can be brought closer by adequate investments in roads and railways. Countries with nutrient-depleted soils and inadequate rainfall can be helped by special programs for soil nutrient replenishment and water management for agriculture (such as irrigation and water harvesting). Countries -suffering from malaria and other endemic diseases can combat them with appropriate programs of prevention and control. Yet such investments are costly—too costly for the poorest countries to bear on their own—and so require much greater help from the donor countries.

Most economies experience considerable variation in household incomes, so even middle-income countries may have large numbers of extremely poor households, especially large countries with considerable regional and ethnic diversity. Economic development often leaves some parts of an economy, or some groups in society, far behind. This occurs both in lagging regions and in cities, where a growing proportion of the poor live in slums. In many countries there are cities within cities—a dual reality of haves and have-nots in close proximity. In many cases, geographical disadvantages (distance from markets) are worsened by the political disempowerment of minority groups.

The major policy implication for middle-income countries is to ensure that critical investments—in infrastructure, human capital, and public administration—get channeled to lagging regions, including slums, and to social groups excluded from the political process and economic benefits. Some notable lagging regions include:

• Western China, burdened by great distance from the eastern coast.
• Southern Mexico, burdened by tropical diseases, agronomic risks, great distances from the major U.S. market, and political marginalization of the indigenous peasant populations.
• Northeastern Brazil, burdened by vulnerability to drought and a long history of heavily concentrated land ownership.
• The Gangetic states in India, burdened by low-productivity agriculture, long distances to coastal trade, and a large landless population.

Some Goals are not being met simply because policymakers are unaware of the challenges, unaware of what to do, or neglectful of core public issues. Environmental policy is often grossly neglected because of politically weak environmental ministries, even weaker law enforcement, and considerable deficiencies in information and in the capacity to act on that information. Also common are gender biases in public investment and social and economic -policies. -Throughout the developing world and even in middle-income countries, maternal mortality ratios remain appallingly high. High maternal mortality and morbidity have a specific major remedy: access to emergency obstetric care. Despite its life-saving potential, there has been a pervasive underinvestment in this service and in the health systems to deliver it. Adolescents are also widely underserved for life skills, nutrition information, education and employment opportunities, and sexual and reproductive health information and services. Investments in child and neonatal health have also been grossly insufficient. All of these areas of neglect could be addressed through strengthening the management and service delivery of district-level health systems.