Equitable economic growth holds the key to long-term poverty reduction. Economic growth means employment and opportunity, yet poor countries face tremendous barriers to unleashing the economic potential of their societies. Burdensome debt payments, protectionist trade barriers, and a lack of money for development projects are among the key obstacles to achieving sustainable development.
Aid, debt relief, and trade are the primary ways that poor countries are able to pay for human development: health care, education, job creation, and other services. Money (“balance of payments” in development-speak) forms the core of each of these three elements, and it's easy to see why without addressing the issues of aid, debt, and trade, global poverty will never be solved.
Aid
International aid, also known as overseas development assistance (ODA), is perhaps the most contentious area for many, both for the Congress and the President as well as aid organizations and the poor themselves. According to the UN Millennium Project, it would an additional $70 billion annually to slash the number of people living in poverty by 2015. That number is just a fraction of what the U.S. government has allotted for their 2005 military budget—a whopping $450 billion. The U.S. currently spends a mere $16 billion on foreign aid—a mere .15 percent of its national income.
In 1992, rich countries agreed to eventually spend .7 percent of their gross national product (GNP) on ODA. Currently only a small number of countries actually give .7 percent or more: Norway, Luxembourg, Denmark, the Netherlands, and Sweden.
Debt
The second factor, debt, is perhaps clearer in its role in global poverty. Poor countries with enormous amounts of debt, known as “heavily-indebted countries” in development circles, are strapped economically, and are less able to meet the basic needs of their people, particularly if the burdensome weight of foreign debt keeps money flowing out of the country instead of invested within it.
Country debt can be forgiven, meaning that donor countries can cancel all current debts of a borrowing country. Many aid organizations after Asia’s tsunami in December 2004, for example, advocated the debt cancellation of the hardest hit countries, including Indonesia. One international aid group remarked that global poverty "of which debt repayments are a major cause" kills as many people as the tsunami every week.
Trade
Trade is often a polarizing topic between countries. In the latest round of trade negotiations known as the Doha Round, poor countries called on rich countries to lower agricultural and textile subsidies. Rich countries find this politically difficult to do since many domestic farmers and workers depend on these subsidies to make a living. Without fair access to markets where their products are competitive, poor countries will never be able to economically sustain their populations.
What is being done
In July of this year, the British government will be hosting the G-8 Summit to discuss a range of pressing global issues, and at the top of their agenda will be fighting poverty. The British are now pushing a sweeping plan for wealthy nations to dramatically increase aid to the developing world and to forgive 100 percent of Africa's $70 billion in debt. Sadly, so far the only opposing force to the plan is the United States.
