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The Sabotage of Our Fight Against Global Poverty

In 2005 renowned economist Jeffrey Sachs published his book, The End of Poverty. In the book, Sachs wrote about the future in which we could “realistically envision a world without extreme poverty by 2025.” It was arguably a time of optimism. Muhammad Yunus had won the Nobel Peace Prize for efforts to “create economic and social development from below” through the innovative use of microfinancing. India and China were emerging economies that were frequently cited as soon-to-be superpowers that would disrupt the geopolitical world order. And new media and communication platforms were being founded, exemplified and galvanised by the spectacular growth of Myspace, Facebook, Twitter and YouTube.

It was also, however, a time of upheaval. Disastrous wars were ongoing in Iraq and Afghanistan, and the Global Financial Crisis of 2007-2008 would send the world into the most severe global recession since the Great Depression of 1929. But even so, progress was being made in the Millennium Development Goals’ objective of halving the share of people living in extreme poverty by 2015. The share of the world’s population living on less than $2.15 a day plummeted from 37.8% in 1990 to 16.3% in 2010. As UN Secretary General Kofi Annan wrote in his book, Interventions: A Life in War and Peace, “I personally witnessed how the MDGs served to transform the agenda of the world’s leaders.”

In 2015 a new set of goals, the Sustainable Development Goals, was adopted by all United Nations Member States, committing to a renewed drive to “ending poverty in all its forms and dimensions, including by eradicating extreme poverty by 2030″. Considerable progress has been made in this endeavour despite the setbacks of a global pandemic and persistent regional conflicts. But the transformative “agenda” Kofi Annan once wrote about has been questionable in its implementation.

The 17 United Nations Sustainable Development Goals.
The United Nations Sustainable Development Goals.

International development aid is a controversial topic. Many people have decried the giving of aid, labelling it a waste of money. It could fall into the hands of a corrupt leader or government and not reach the people that need it most. We’ve sent billions in financial aid. What has it achieved? This is a valid concern, but it’s not something that’s borne out by research. In fact, the vast majority of the literature finds that aid is effective in promoting growth, and by implication in reducing poverty.

And how much has been given exactly? If we look at things from a per capita perspective, the huge amounts that are claimed to have been disbursed aren’t quite as large as they first seem. In fact, it has historically been very low. In 2002, US foreign aid to sub-Saharan Africa was $3 per sub-Saharan African. Taking out consultant costs and administrative costs, the total amount given per sub-Saharan African was a mere 6 cents.

Now, if we go back a bit farther in time, we can see a more pernicious side to the international development agenda. In Africa during the 1980s, millions of people had been infected by HIV/AIDS and had lost their lives. By the late 1990s antiretroviral drugs had entered the scene, stalling the progression of AIDS in treated patients. The problem, however, was the cost of treatment. At $10,000 per patient per year, the price was simply out of reach for many.

In their desperation those suffering from AIDS decided to acquire imitation drugs from other developing countries, which could produce and sell drugs at a fraction of the price of the original pharmaceutical manufacturers. Doing this was quite literally a matter of life and death. Instead of supporting this drive to save lives, the pharmaceutical companies of the developed world turned their back on the international community and threatened legal action, putting in jeopardy the lives of millions of people. The untold costs of the AIDS epidemic finally had a light at the end of the tunnel but was being blocked by pharmaceutical companies that were more interested in securing profits.

Prescription drugs capsules
Anti-retroviral drug treatment was originally priced at $10,000 per person per year.

At the turn of the century when internet access was still relatively limited globally, information flows and knowledge transfers from the developed world were instrumental in helping developing countries progress. These transfers ranged from managerial expertise to textbooks to the aforementioned procedures to make antiretroviral drugs. However the enforcement of Intellectual Property Rights (IPR) disproportionately affected the developing world. Because richer countries have been stricter in imposing their IPR and since the
majority or IPR-holders are from rich countries, it became more expensive for poorer countries to obtain the knowledge they needed to progress. In economist Ha-Joon Chang’s book, Bad Samaritans, he suggested in 2007 that technology license payments alone would cost developing countries an extra $45 billion, equivalent to almost half of the total foreign aid given by rich countries in 2004-2005.

This counter-productive approach is reflective of institutions that exist to support developing countries such as the World Bank and International Monetary Fund (IMF). Over the years they’ve developed a negative reputation, stemming from the provision of advice that ended up being harmful, not helpful. Economic historians will recall the ‘structural adjustment’ era of the 80s and 90s in which the developed world rebuked developing countries for not being the free-market oriented, deregulated success they could be. These policies would be criticized for being counterproductive for target economies and devastating for local populations, and hypocritical to boot. The rich countries of today have a history of protectionism, tariffs, banning competitor products, government intervention and even industrial espionage. Yet once they’d achieved a superior level of economic and technological progress, free-trade was supposedly the answer.

As Ha-Joon Chang wrote in Bad Samaritans, sending his 6 year old son to the job market without letting him grow up and without getting an education was equivalent to the absurd line of argument of free trade economists in that “developing country producers need to be exposed to as much competition as possible right now.”

For as much as the world has made progress in economic growth and reductions in poverty, unproductive policies have been widespread. And now, we stand on the precipice. The United Nations points out that we’ve entered an age of polycrisis, in which conflict, climate change and a host of other global challenges coalesce to derail progress on the Sustainable Development Goals. However despite humanity’s setbacks, it’s also useful to take stock in what we’ve achieved; the end of slavery, walking on the moon, internet-powered globalisation and the eradication of smallpox. Muhammad Yunus wrote in his book, Building Social Business, “we have entered into an age when dreams have the best chance of coming true.” Humanity has and continues to achieve a lot, and as long as we can dream, we still have a chance.

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