How could the EU tackle inequality in developing countries? Panel report from the European Development Days

29 Oct

The European Commission’s new proposed development strategy – Agenda for Change – puts ‘inclusive and sustainable growth for human development’ at its centre. At the 2012 European Development Days conference, the European Think-Tanks Group (ETTG) hosted a high-level panel debate putting the word ‘inclusive’ under the spotlight, focusing specifically on the challenge to EU development policy posed by inequality in developing countries.

The panel included:

  • Joyce Banda, President of the Republic of Malawi
  • Dr Thomas Boni Yayi, President of the Republic of Benin, Acting Chairperson of the African Union
  • Andris Piebalgs, European Commissioner for Development
  • Charles Goerens, Member of the Development Committee, Rapporteur on ‘Agenda for Change’, European Parliament
  • Paul Engel, Director, European Centre for Development Policy Management (ecdpm)
  • Mark Furness, Researcher, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)
  • Simon Maxwell, Senior Research Associate, ODI (chair)

The discussion looked first at inequality within countries. President Banda noted two distinct levels of inequalities within countries: at the family level – with inequalities in gender and age; and at the grassroots level – with inequalities in access to resources, the means of production, health, education and political power.

The panellists discussed the complexities of inequality, recognising that the interconnected nature of different inequalities mean that trade-offs must be made when making policy decisions. With regards to inequalities in middle-income countries (MICs), the Agenda for Change proposes that grant-based bilateral aid should no longer apply to 19 MICs, some of which have high levels of income inequality and pockets of poverty. The EU has a role to play in sharing technical knowledge with these countries; its own historic experience in reducing inequality suggests it has a lot to offer.

Inequalities are deeply rooted in societies, are often politically and culturally sensitive to target and require significant institutional shifts to affect change.  All agreed that inequality within countries cannot be tackled without legitimacy, support and commitment from within the countries. While visionary leadership is critical, it must be accompanied by deep social engagement through national parliaments and social movements.

Suggestions were made that the European Commission should focus more on improving its partnership commitments with developing countries, to better devise joint priorities and commitments. Commissioner Piebalgs highlighted that the Agenda for Change allows for a stronger dialogue with partner countries, and more differentiated development approaches, according to the outcome of dialogue. Where there is strong internal support for joint priorities, the European Commission will favour providing budget support. Where support for joint priorities is weaker, the European Commission will find other ways to support change, for example through initiatives with civil society groups. Where the second option is pursued, greater accountability, on the side of the donor, will be essential.

The discussion then focussed on a key point of contention: should the European Commission be more, or less, demanding in pursuing its values of good governance and democracy? Both President Banda and President Boni Yayi warned that this must not come at the expense of the principles of partnership. They noted that often donors do not listen to national governments enough and their work does not align with priorities established nationally. Voices in the audience echoed these concerns. It was agreed that donors cannot force values, or conditionality, on partner countries; but that these principles must be jointly agreed through dialogue, as equal partners. Charles Goerens recognised that the EU should learn from the problems experienced in negotiating the Economic Partnership Agreements.

The discussion then explored inequalities between countries – focussingon income inequality, inequality in global power structures and the threats these pose to global public goods.

Over the past decade, global income inequality has decreased, largely resulting from the accelerated economic development of many MICs. However, many countries still fall behind, and key European policies on tax, extractive industries, trade and agriculture can have anti-developmental outcomes. The panellists agreed that a renewed and serious commitment to the policy coherence for development agenda must be made, but they also recognised the political challenges.

The discussion then focussed on the ‘beyond-aid’ agenda and the future of development cooperation. It was noted that discussions at Rio+20 focused on how implementation gaps can be bridged to achieve greater integration among the three pillars of sustainable development – the economic, the social and the environmental. An impromptu audience vote revealed that a significant majority believe that action at the international level can be more important than aid, in terms of development outcomes.

Current inequalities in international organisations and fora mean that developing countries are often isolated, their perspectives not heard. As one audience member argued, ‘you can’t talk about Africa without Africa being present’. The EU should do much more to support more developing country seats at the UN Security Council, and on the boards of the IMF and the World Bank.

Paul Engel noted that inclusive development is about inclusive governance – both at the global and national levels. Discussions around the post-MDG framework present the opportunity to make global governance more inclusive, and to work for the benefit of all countries. Mark Furness suggested that post-MDG goals should focus more on distributional issues within countries, thus requiring more indicators to measure inequality, which must be developed in partnership and dialogue with developing countries.

In concluding, Simon Maxwell synthesised the key messages of the discussion noting: ‘The development agenda is on the cusp of a big change. The MDGs were really valuable; they provided a focus on the issues of poverty and inequality. Ten years from now we will be marching on the streets for global public goods like the climate, air, water and the environment. Global governance will be central to that, and we won’t achieve it without a really strong partnership’.

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