Over the past two decades, the formerly low-income countries of Asia — led by China — have broken into global markets for manufactured products and a growing array of economic services. Extraordinary declines in poverty have accompanied this global integration and development. However, dozens of other poor countries, accounting for around 2 billion people, so far have been bypassed in the globalization process, and are in danger of becoming permanently marginalized. Many of these countries are found in Africa, although some are in Latin America and Western and Central Asia. For globalization to succeed, the global economy must become more inclusive. Past inequalities in education and access to resources must be redressed, and democratization of political systems will be critical to permit the poor to have a greater voice in government.
OECD agricultural subsidies — which exceed US$310 billion annually — are a barrier to increased agricultural trade for many developing countries and a disincentive to domestic production (FAO, 2003). OECD subsidies on cotton, sugar, fruits, and vegetables deny developing countries — most of which are located in tropical and subtropical latitudes — access to industrial country markets for commodities in which they have a comparative advantage. Subsidies on food crops lead to overproduction in temperate zones, which lowers world grain prices. This conspires against domestic food producers in developing countries by artificially lowering world food prices, and making it difficult to compete in global markets or even in local markets with locally produced food.
In 1970, the industrialized nations agreed to set a target of 0.7% of GNP for official foreign assistance. With the exception of some northern European nations and Canada, few OECD nations have honored that commitment. In 2000, the average OECD national contribution was 0.2% of GNP, with the United States at the bottom of the list, giving only 0.1%. Today OECD countries generate US$25 trillion in gross economic product per year. If they were to honor their previous foreign assistance pledge, there would be $175 billion in "north-south" income transfers annually, instead of the $57 billion that actually is provided in foreign assistance (UN Development Programme, 2003a). The additional transfers could make possible achievement of the Millennium Development Goals that were agreed on by 189 members of the United Nations in September 2000.
Poverty reduction and environmental protection, however, will not result from income transfers alone. Continuing, and possibly worsening, levels of corruption and greed in many low-income countries must be addressed. Ways to improve transparency and accountability must be found.
Foreign assistance programs will need to use both "carrots and sticks" more effectively in dealing with governments in developing countries. As a general rule, development assistance should become more "performance based" with poverty reduction an overriding criterion for sustaining (and increasing) support.
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