Rebeca Grynspan: Remarks on the Launch of the 2013 Human Development Report in Australia
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UN Under-Secretary-General and UNDP Associate Administrator
Launch of the 2013 Human Development Report
The Rise of the South: Human Progress in a Diverse World
23 May, 2013
Thank you Peter for your kind introduction.
Peter, distinguished guests, I am delighted to be here in Sydney to launch the 2013 Human Development Report - The Rise of the South: Human Progress in a Diverse World. This Report examines our fast-changing world – in terms of new actors and trends – and the implications for development.
I am particularly honored to present this report in Australia, a country which has been a long-standing friend, supporter – in fact a champion - of human development and of UNDP. This is, Peter, the only country I know where the National Treasury has a wellbeing framework that draws on Amartya Sen’s thinking. Amartya together with Mabuk Ul Hak, of course, was the founder of the human development approach.
The recent, 2013 OECD-DAC Peer Review of Australia – strongly complements the country’s dynamic approach to being “a good international citizen, punching at or above its weight”. It finds that Australia promotes development through several avenues other than the aid programme. Its contribution to the development landscape focuses on building a successful global system that benefits all countries. Political leaders and government officials champion global policy issues including climate change, peace and stability and the Millennium Development Goals. These are very impressive achievements, indeed.
Australia has been among partner countries at the forefront of strategic engagements with multilateral organizations including the UNDP. In October 2012, based on the findings of the ‘Australian Multilateral Assessment’ (AMA) – which scored UNDP as being “strong” – AusAID developed a “Multilateral Engagement Strategy for Australian Aid Programme (2012 – 2016)”. The main priorities of this multilateral engagement strategy include: (1) Improving multilateral organisation performance and results; (2) Improving value for money, due diligence and safeguards; (3) Improving donor and multilateral organisation coordination; and (4) Pursuing greater focus on Asia and the Pacific. UNDP remains committed to working closely with the Australian Government on all of these fronts.
The cooperation that Australia has provided for so long to many countries and people around the world has helped to advance human development worldwide. Many skeptics question the effectiveness of cooperation and no doubt we all have to work harder for every dollar to be well spent, and to really help men and women struggling around the world.
But progress has to be highlighted, so we can re-double our commitment to achieve the remaining challenges and support the efforts of the millions of people still waiting for an opportunity to take their families out of poverty and discrimination to build more fair, equal, and rights-based societies.
It also helps when you practice what you preach like this country does! This year Australia is 2nd in the global rankings of the Human Development Index, once again just behind Norway. Indeed, if you look at the HDI component based on health and education – that is ignoring the contribution to the HDI that comes from national income – you should be very proud to hear that Australia is number one in the world together with New Zealand!
This Report, the 22nd in the Human Development global series, has two key messages I want to focus on:
• First, that the transformation of many developing countries into dynamic major economies with growing political influence and innovative social policies, is having a significant positive impact on human development progress around the world; and,
• Second, that this positive trend and impact will be difficult to sustain without new thinking, particularly around sustainability and equity, and global governance arrangements.
The Rise of the South
We stand at a tipping point in global history. For the first time in 150 years the combined economic output of the three major economies from the South – Brazil, China, and India – is now about equal to that of six large economies from the North in terms of purchasing power parity (PPP).
By 2020, according to projections developed for the Report, the combined economic output of these three leading developing countries will surpass the aggregate production of the United States, Germany, the United Kingdom, France, Italy, and Canada. And by 2050 those same three countries are predicted to have double the output of those 6 northern countries, again, in terms of PPP.
A significant amount of this dynamism is being driven by trade, foreign direct investment, and technology partnerships within the South itself. But is also part of the Globalization dynamic since this phenomenon has happen together with a trend towards more and more open economies, not with inward looking development, although some re-balancing has to take place now.
The South–South share of merchandise world trade, for example, has increased from less than eight per cent in 1980 to more than twenty five per cent in 2011, with particularly remarkable growth happening in the last decade.
Innovation and entrepreneurship in the South is also expanding as the Report notes. And more policy options and solutions to development challenges are coming from within the South itself, making the recognized truth that "there is no one size fits all" solutions to development clearer and more concrete.
But these changes go well beyond changes to economies. They encompass genuine human development. Across every continent, living conditions and the prospects of millions of people have been lifted as I have said before.
As standards of living have risen worldwide, the global middle class has grown, defined as those earning or spending $10 to $100 per day. By 2030, today’s developing countries will be home to more than four-fifths of the world’s middle class. And a growing middle class means a growing number who expect better education and health care, better services, and who demand more effective and accountable governments.
As this slide shows, the Asia-Pacific region is leading the charge. By 2020 it will be home to about half of the world’s middle class. By 2030 two in three middle class people will live in the region.
Simultaneously, rapid technology diffusion, including information and communication technologies, is enabling much greater numbers of people to interact across borders, and share their expectations with the rest of the world.
The Report argues that this increased connectivity has both economic and political implications. From cellular banking, which is both cheaper and easier than traditional banking, to a growing global civil-society network advocating for different development issues from climate change to affordable drugs to political action (Arab Spring).
Rapid Human Development Progress
It is not enough simply to describe the Rise of the South and observe these trends, however. The challenge is to understand the drivers of what is happening in order to accelerate human development progress in more countries. The 2013 Report contributes to this by:
• documenting the current status of human development progress, including persisting inequalities, exclusion and discrimination which reduce the pace of human development; and
• reviewing the experiences of countries which made stronger progress than expected in their HDI scores between 1990 and 2012, to inform policy choices elsewhere.
The Report finds that over the last decades almost all countries have lifted human development according to the Human Development Index (HDI). This reflects significant advances in education, health, and income across the globe. Indeed, since 1990, all but two countries – namely Zimbabwe and Lesotho - have made notable improvements in their HDI score. We should celebrate this.
But progress has also been uneven, and gross inequities persist. For instance, the Report shows that:
• Average Gross National Income in the group of very high HDI countries is more than twenty times that of low HDI countries;
• Life expectancy is more than a third longer in the very high HDI countries than in the low HDI countries with more extreme values at either end (for example more than 81 years in Norway, Japan and Australia compared to less than 50 years in Chad, the Central African Republic, Afghanistan, and more); and
• A child in a high HDI country can expect to spend almost twice as long in school as one from a low HDI country (again the range is much greater at the country level - for example reaching almost 20 years in Australia, but only 4.5 in Sudan and 4.6 in Eritrea);
Inequities also persist within countries – and although the HDI represents a national average of human development achievements, in 2010 additional indices were developed to complement the HDI’s power in explaining inequality, deprivation and exclusion, the so called “missing dimensions” of the HDI.
The Inequality-adjusted HDI (IHDI) tries to capture the ‘loss’ in potential human development due to inequality reflecting inequality in each dimension of the HDI : life expectancy, schooling, and income. For the 132 countries for which data was available for 2012, the average loss to HDI due to inequality was 23 per cent.
Reviewing trends for 66 countries since 1990 in the inequality adjusted HDI (IHDI), this graph shows that on average countries lost some 28 percent of their HDI value to inequality. Over time, income inequality increased offsetting the inequality declined in health and education.
This year’s data on the Gender Inequality Index (GII), which reflects gender-based disadvantage in three dimensions – reproductive health, empowerment, and the labour market, suggests that the average loss in achievements (in dimensions of the index) was 46.7 percent.
Finally, the Multidimensional Poverty Index (MPI) recognizes that poverty is not only about inadequate income, and examines deprivations at the household level across the three dimensions of the HDI (living standards, health, and education) and their overlap. Using this measure, the report finds that 1.56 billion people are living in multi-dimensional poverty, a significantly larger number than 1.14 billion estimated using the $1.25/day value.
Yet, the story of the Rise of the South told in this Report is one of optimism. It not just about Brazil, China, and India, but about more than forty countries which made stronger progress than expected in their HDI scores between 1990 and 2012, and about how more countries can accelerate progress into the future.
The Report pays particular attention to the eighteen countries shown on this graph to describe their diverse paths to success, demonstrating that rapid people-centered development can take root in many places – in countries with very different histories; with very different starting points; and with different natural resources. This includes a diverse set of high-achievers countries, big and small, and from all regions of the world: Ghana and Uganda in Sub-Saharan Africa; Bangladesh and India in South Asia; Tunisia from the Arab States; China, Indonesia and Vietnam in East Asia; and Brazil, Chile and Mexico in Latin America.
By looking in depth at these countries, the Report identifies three key factors contributing to fast progress:
• a strong, proactive, state focused on development;
• successfully tapping global markets while simultaneously pursuing inclusive growth; and
• benefiting from innovative social policies.
Our analysis confirms a message found in every Human Development Report: economic growth does not automatically translate into human development. Significant investments in people - in education and skills, and in nutrition and health, are vital. I say “investments” because spending money in this way should be seen as an investment, not as a cost. And because these investments should, at the same time, be viewed as part of the explanation of the rapid growth experience. It is important to explicitly note this, since a lot of attention has been put in infrastructure investment to explain part of the successes of the South while the investments in education, health and nutrition sometimes are overlooked.
At the same time successful countries have recognized that growth must be inclusive if it is to be sustained. We see again and again a virtuous circle of growth, job and work creation and reducing inequality. Excess inequality is bad not just for the poor. It is bad for everyone.
Few countries have sustained rapid growth without substantive levels of public investment, not just in infrastructure but also in social policy, particularly in health and education.
Innovative social protection programs, including cash-transfer programs such as Oportunidades in Mexico and Bolsa Familiar in Brazil have helped improve conditions for poor and marginalized groups, narrowing gaps in income, health, and education and therefore reducing inequalities in some domains. In fact, while income inequality has increased in recent years in many parts of the world, including the North, it has declined for the majority of Latin American countries.
The Report focuses heavily on the importance of social policies noting a range of success stories. Ghana and Indonesia invested in high quality education systems. Mexico and Rwanda boosted healthcare. And Brazil, India and China, although in different ways and scopes, built broad-based systems to protect the most vulnerable and boost development.
Sustaining the Momentum
But past successes are no guarantee for the future. The key question for the globe now, both North and South, is how can we sustain human development for generations to come?
The report deals with a range of challenges, and suggests four priority areas for sustaining the momentum, namely:
• managing demographic change;
• confronting environmental pressures;
• promoting equity and fighting exclusion and discrimination, including between men and women; and,
• enabling greater voice and participation of citizens, including youth.
Allow me to briefly touch on each of these.
In countries with rapidly growing populations, pressure on infrastructure, resources, and ecosystems must be managed. In other countries whose populations are rapidly aging, challenges include finding the resources needed to care for the elderly. But, as the Report argues, demography is not destiny. Countries can benefit from a so-called “demographic dividend” as their share of working-age population rises. For this, good education and labor policies are critical to ensure young people entering the labour force can find decent work. And policies supporting the care economy and women’s integration to the labour market and paid work are also key!
The Report also recognizes the risks to global development from environmental threats. These risks impact on us all, but are greater for those countries with the least capacity to adapt, and for the poorest within them. Climate change is already intensifying environmental threats and impacting on people’s livelihoods.
The Report points to the high cost of inaction: it predicts that an additional 3 billion people could live in extreme poverty by 2050 if the worst environmental scenario materializes. Specifically, as shown in this graph, adding 1 billion poor to both Sub Saharan Africa and Asia, which in the baseline cases would have seen the number of people living in poverty drop. It therefore calls for greater ambition and commitment to tackling environmental degradation.
Third, the Report argues that promoting greater equity is not only an important goal in its own right: it is also central to lifting human development. It is vital for stability and sustainability. Indeed, an analysis of 132 developed and developing countries for this Report, finds an inverse relationship between inequality and improvement in human development. In other words, inequality slows development and we know that Governments which do not respond to citizens’ needs and to widen opportunities for inclusive growth and political participation, risk losing their legitimacy.
The Rise of the South and Global Structures and Development
Moving beyond policy recommendations at the country level, a clear message of the Report is that the Rise of the South has implications for global governance and decision making, as well as for how development is financed.
It argues that as the planet becomes increasingly interconnected – through trade, migration, information and communications technologies, and more – and emerging development challenges cross national boundaries, coordinated action and greater co-operation between North and South is required to tackle them successfully.
For this, the 2013 Report argues that global governance arrangements must be updated. Arrangements are needed which are legitimate, accountable, and transparent, which recognize changing geopolitics and so give greater voice to countries of the South.
Equally, the Report argues that the South itself can be a powerful force in global development, as countries in the developing world are not only major trade and investment partners for other developing countries, but are increasingly also providers of South-South development co-operation
Very substantial foreign exchange reserves are held by developing countries for example. Some two-thirds of the world’s $10.2 trillion – and about three-quarters of the $4.3 trillion in assets controlled by sovereign wealth funds worldwide - are in the South. Prudent investment of these resources can make a considerable contribution to human development.
This Report on the Rise of the South comes at the very time when the international community is considering what the post-2015 development agenda might look like, and the sustainable development goals.
I hope this Report will be seen as valuable to this process and other conversations, as it refreshes our understanding of the current state of global development and demonstrates how much can be learned from the successes of the South.
The challenge now – for UNDP, for Australia, for everyone - is to maintain progress, but to do so creating a balance between social and economic policies, and within the boundaries set by nature.
We must capitalize on the growing influence of the South and on the global cooperation between all countries to propel our world onto a sustainable and inclusive development path for all.