A Guest Post by Porter McConnell, policy advisor for aid effectiveness, Oxfam America
The US and other G20 nations meeting in Seoul, South Korea last week announced a Seoul Consensus on Development intended to replace the failed “one-size fits all” Washington Consensus. But will the Seoul Consensus prove itself to be different?
As the first non-G8 member to host a G20 summit, South Korea has made development a central part of the agenda, with a focus on boosting the growth of poor countries. And in September, President Obama released a Global Development Policy at the MDG Summit that hit similar notes, like going beyond aid and harmonizing policies on trade, food security, and climate change that affect millions of poor people. But did these two policies meet in Seoul?
This G20 meeting was an opportunity for the US to learn from the experience of G20 nations like South Korea. Half a century ago, South Korea’s annual per capita income was just $82, less than half that of Ghana at the time. Today it stands at $19,000 – an astonishing 200-fold increase. South Korea’s success is a story of self-determination. The South Korean government demanded full ownership over their development agenda, including foreign assistance. Often at odds with donors, the South Korean government diverted funding towards programs they felt could assist them, highlighting how poor countries can and need to create their own solutions, and rich countries need to concede the policy space for them to do that.
Ironically, many of the strategies South Korea and other Asian tigers used to become roaring economies are now unavailable to other developing countries, due to rules under the World Trade Organization, and enforcement by the International Monetary Fund. One promising idea on the table at the G20 was for developed countries to provide duty-free, quota-free market access to all least-developed countries, essentially opening their markets to the poorest countries. But the proposal did not survive intense negotiations. President Obama focused instead on the unrealistic goal of finishing the stagnant WTO Doha Round trade negotiations, without committing to reconsider the US negotiating position. By not committing to “duty free, quota free”, President Obama missed the opportunity to deliver a concrete outcome of the new global development policy and bring other developed nations along. Sadly, the G20 taking duty-free, quota free access for poor countries off the table sends the unfortunate message to poor countries that developed countries aren’t willing to take the immediate steps that matter.
Focusing solely on pro-growth policies won’t be enough to tackle poverty. When the Washington Consensus was at its height, the world economy grew by $19 trillion from 1981-2001, but people living in extreme poverty received only 1.5% of that wealth. In these difficult economic times, the G20 must pay special attention to the needs of low-income countries and poor people. The triple shocks of economic, climate and food price crises have pushed millions into extreme poverty. And many developing country governments now face yawning budget gaps that could force brutal cuts to healthcare, education and social support. While continued aid to poor countries may not be sufficient, it is necessary.
The US and other rich countries should not use the economic crisis or the G20’s focus on growth to wriggle out of their commitments to the world’s poorest at a time when they need help more than ever.
The lack of progress in the global fight against climate change is one such instance. Poor people are on the frontlines of climate change and will shoulder the biggest burden, despite doing little to cause the crisis. Much of the advances we have made in the fight against poverty risks to be quickly wiped out by the devastating impacts of climate change. But with less than a month to go before the Cancun summit, the G20’s lack of progress – or even a commitment to progress – on climate change is very disappointing. Business leaders meeting at their “B20” business summit did what the G20 governments couldn’t do, demonstrating that they at least understand the urgency of climate change and put concrete proposals on the table. The US and other G20 members need to support the creation of a new, fair and accessible global climate fund, including provisions for country ownership and a participatory, inclusive and accountable process so climate finance is fully integrated into a country’s broader development strategies.
For the Seoul Development Consensus to stick, the G20 must resist the temptation to sing the same old song of failed economic policies and narrow self-interest. They must sing a new song by making the world economy work for poor people, and allowing countries the space to make their own destiny.