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TARGET 1 Halve, between 1990 and 2015, the proportion of people whose income is less than $1 a day TARGET 2 Halve, between 1990 and 2015, the proportion of people who suffer from hunger TARGET 3 Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling TARGET 4 Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels of education no later than 2015 TARGET 5 Reduce by two-thirds, between 1990 and 2015, the under-ﬁve mortality rate TARGET 6 Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio TARGET 7 Have halted by 2015 and begun to reverse the spread of HIV/AIDS TARGET 8 Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases TARGET 9 Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources TARGET 10 Halve by 2015 the proportion of people without sustainable access to safe drinking water and basic sanitation TARGET 11 Have achieved a signiﬁcant improvement by 2020 in the lives of at least 100 million slum dwellers TARGET 12 Develop further an open, rule-based, predictable, nondiscriminatory trading and ﬁnancial system (including a commitment to good governance, development, and poverty reduction, nationally and internationally) TARGET 13 Address the special needs of the least developed countries (including tariff- and quota-free access for exports of the least developed countries; enhanced debt relief for heavily indebted poor countries and cancellation of ofﬁcial bilateral debt; and more generous ofﬁcial development assistance for countries committed to reducing poverty) TARGET 14 Address the special needs of landlocked countries and small island developing states (through the Programme of Action for the Sustainable Development of Small Island Developing States and the outcome of the 22nd special session of the General Assembly) TARGET 15 Deal comprehensively with the debt problems of developing countries through national and international measures to make debt sustainable in the long term TARGET 16 In cooperation with developing countries, develop and implement strategies for decent and productive work for youth TARGET 17 In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries TARGET 18 In cooperation with the private sector, make available the beneﬁts of new technologies, especially information and communication Source: United Nations. 2000 (September 18). Millennium Declaration. A/RES/55/2. New York. United Nations. 2001 (September 6). Road Map towards the Implementation of the United Nations Millennium Declaration. Report of the Secretary General. New York. Note: The Millennium Development Goals and targets come from the Millennium Declaration signed by 189 countries, including 147 heads of state, in September 2000. The goals and targets are related and should be seen as a whole. They represent a partnership of countries determined, as the Declaration states, “to create an environment—at the national and global levels alike—which is conducive to development and the elimi- nation of poverty.” Report Overview Yet in spite of this optimistic outlook, the Broad-based global economic growth in international community faces a much more 2006, and more generally since 2000, pro- demanding agenda in advancing the MDGs as vides grounds for optimism about progress 2015 draws nearer. Despite progress, nearly 1 in advancing the Millennium Development billion people remain in extreme poverty. All Goals (MDGs). For low-income countries, regions are off track to meet the target for real per capita income growth in Sub-Saha- reducing child mortality; nutrition is a major ran Africa and South Asia has been stronger challenge, with one-third of all children in in the period since 2000 than at any time developing countries underweight or stunted; since the 1960s, and stronger than at any time half the people in developing countries lack since transition in Europe and Central Asian access to improved sanitation. countries. Based on this strong growth per- Action to scale up development efforts formance, the estimated number of extremely needs to accelerate, but steps forward still poor people (living on $1 per day) fell by 135 appear tentative. Nearly seven years after million between 1999 and 2004. the Millennium Summit and ﬁve years after Although still uneven, progress with pov- the Monterrey summit, there has yet to be a erty reduction is evident across all regions. country case where aid is being signiﬁcantly Sub-Saharan Africa reduced the share of peo- scaled up to support a medium-term pro- ple living in extreme poverty by 4.7 percentage gram to reach the MDGs. While there has points over ﬁve years to 41 percent, although been modest progress in Paris or Brussels or high population growth left the same absolute London to address the well-recognized prob- number of poor, at nearly 300 million. South lems in designing and delivering international Asia, Latin America, and East Asia all appear aid—proliferation of aid channels, weak to be roughly on track to halve extreme pov- coordination, lack of resource predictability, erty by 2015 from 1990 levels. Europe, Central misalignment with country strategies, and so Asia, and the Middle East and North Africa on—viewed from the capitals of Ethiopia, have largely eliminated extreme poverty. There Madagascar, or Bolivia, this progress appears are also hopeful signs that international devel- to be slow. opment efforts may be gaining momentum, This Global Monitoring Report (GMR) and new innovations in resource mobilization highlights two areas that require greater inter- for development are taking shape. national attention if higher global growth trends are to translate into sustainable devel- about environmental policies that are beyond opment outcomes and if the gains are to be the scope of this report but may be tackled in shared more evenly: future GMRs. Risks from failure to advance multilateral Gender equality. The ﬁrst of these arises trade liberalization and expand market access from gender inequality and lost opportu- are also highlighted in this year’s report. The nities for all people to help generate and Doha Round of trade negotiations was effec- participate in the gains from economic tively suspended in July 2006, but early in growth. The choice to focus the 2007 2007 there was an informal agreement to report on the third MDG—the promotion resume talks. Failure to make progress means of gender equality and empowerment of depriving many countries of vital opportuni- women—reﬂects a recognition by the inter- ties for accelerating their growth through national community that more is needed trade. to support equality for the half of human- To address these risks and advance the ity disadvantaged through less access than MDG agenda there is a pressing need for bet- men to rights (equality under the law), to ter aid coordination to strengthen aid quality resources (equality of opportunity), and to and scale-up assistance. This requires efforts voice (political equality). by all parties—donors, international ﬁnancial Fragile states. The second risk arises institutions (IFIs), and developing countries. from the especially difﬁcult development Agreement needs to be forged at the global challenges and greater needs facing frag- level on practical mechanisms and instruments ile states. Fragile states—countries with to scale up aid and on measures to reduce the particularly weak governance, institu- costs of aid fragmentation. Progress with tions, and capacity—comprise 9 percent scaling-up will require more and better aid of the developing world’s population but resources (donors); sound, sequenced devel- over one-fourth of the extreme poor. They opment strategies (developing partners); bet- represent an enormous challenge: how ter technical support for strong strategies (the can the international community provide IFIs); and a more coherent “aid architecture” resources to support efﬁcient service deliv- to reduce the costs of fragmentation. ery, postconﬂict recovery, and reform? Without addressing these development challenges the fragile states pose risks that can cross borders—through civil conﬂicts, Growth and Poverty Reduction risks to public health, and humanitarian crises. The world economy is growing at a pace last seen at the beginning of the 1970s. This is Two additional risks pertain to environ- welcome news for developing countries in mental sustainability and securing the gains view of its implications for trade, aid, private from trade liberalization. Natural resource ﬁnancial ﬂows, and remittances. Both low- depletion and environmental degradation and middle-income countries have beneﬁted pose risks to both the quality of growth, and from the trend. Performance varies widely the potential for sustaining future growth. across regions, but there is a favorable trend Growth based on the depletion of natural evident in East Asia, South Asia, Eastern wealth, rather than through increasing wealth Europe, and Central Asia, and particularly for current and future generations, is unsus- Sub-Saharan Africa, where the sustained tainable. The “adjusted net savings rate” and rising growth performance since the late measures national savings after accounting 1990s is in sharp contrast to the weak per- for resource depletion and damage to the formance evident over the last three decades. environment, raising broad policy questions Average per capita income growth in Sub- Growth is reducing poverty, but not everywhere or always sustainably. Continued strong growth is generating signiﬁcant progress in poverty reduction globally. But many countries are failing to beneﬁt, especially fragile states, and for some others the sources and quality of growth (unsustain- able resource extraction; accumulating pollutants) undermine environmental sustainability and future growth potential. Investing in gender equality and empowerment of women is smart economics. Greater gender equality helps to create a fair society, raises economic productivity, and helps advance other devel- opment goals. Major gains have been achieved, particularly in education, while in other areas progress is lagging. Better monitoring and mainstreaming of women’s empowerment and equality into policy formulation and programs of international assistance are therefore vital to the develop- ment agenda. Fragile states are failing to keep up—speed and stafﬁng by development agencies are critical. The largest “MDG deﬁcit” is in states with weak institutions and governance, and often in conﬂict—the “fragile states.” With 9 percent of the developing world’s population, they account for over one- fourth of the extreme poor and nearly one-third of child deaths and 12-year olds who do not com- plete primary school. Efforts to support their transition from fragility must be deepened through improving response time to crises and opportunities, increasing ﬁeld presence, better interagency collaboration, and building on lessons from successful state-building transitions. Quality lags quantity—children enroll in school but don’t always learn. Advancement in pri- mary school completion has been rapid and encouraging in many countries. Yet cross-country evaluations suggest improvement in cognitive skills has often not kept pace. Quantity and quality in education and health need to proceed in tandem. More effort is needed to monitor outcomes (especially student learning). This provides an essential platform for tracking over time whether policies and incentives are truly producing more effective service delivery. Scaling up “quality” aid requires greater coherence among donors, developing countries, and international agencies. Donor commitments to scaling up aid have so far been unrealized as real aid ﬂows have faltered and a more complex aid architecture—proliferation of donor channels, fragmentation of aid, ear-marking of funds—undermines aid quality and effectiveness. Scaling-up aid to meet the MDGs requires more and better aid resources (donors); sound, sequenced develop- ment strategies (developing partners); better technical support for strong strategies (the IFIs); and a more coherent “aid architecture” to reduce the costs of fragmentation. Saharan Africa has recently been at about along with marked improvements since the 3 percent and is forecast to continue at this late 1990s. The share of people in poverty fell level in 2007. By contrast, growth among by nearly 7 percentage points between 1996 low- and middle-income countries in Latin and 2004, although the absolute number of America, and the Middle East and North poor has stagnated. Africa, continues to be more modest. Preliminary estimates suggest that, on Evidence suggests that better growth is average, growth (in GDP) during the late translating into declining poverty levels. The 1990s through 2003/04 resulted in lower most recent data show that all regions except poverty incidence: for a sample of 19 low- for Sub-Saharan Africa are on track to reach income countries, 1 percent of GDP growth the MDG1 poverty target. In Sub-Saharan was associated with a 1.3 percent fall in Africa the share of people living in extreme the rate of extreme poverty and a 0.9 per- poverty has declined little from its 1980 level, cent fall in the $2-a-day poverty rate. For but this masks the protracted deterioration middle-income countries the impact of GDP during the 1980s and ﬁrst half of the 1990s, per capita growth on poverty was much less, and average poverty has not declined with MDGs. The two regions that lag the most recent growth. Moreover, changes in income are South Asia and Sub-Saharan Africa. As distribution have not, on average, reduced regions they remain off track on all the goals; the impact of income growth on poverty however, there is considerable variation reduction in low-income countries, whereas within regions. MDG trends in fragile states income inequality widened on average in are also examined; while there is variance middle-income countries. within the group, fragile states have lower One factor behind this favorable perfor- absolute performance and slower improve- mance has been the continuing strength of ment than nonfragile ones. macroeconomic policies, as evident through It must also be recognized that there have continued moderate inﬂation rates and aver- been some signiﬁcant successes. Since 2000, age ﬁscal balances that shifted from deﬁcit over 34 million additional children in devel- into balance in low-income countries during oping countries have gained the opportunity 2006. The quality of macroeconomic poli- to attend and complete primary school—one cies, particularly ﬁscal policy, in low-income of the most massive expansions of schooling countries shows considerable improvement access in history. Over 550 million children over recent years. have been vaccinated against measles, reduc- The stronger growth performance in low- ing death from measles in Sub-Saharan Africa income countries is encouraging, particu- by 75 percent. By mid-2006 the number of larly in Sub-Saharan Africa where the higher AIDS (acquired immunodeﬁciency syndrome) growth may mark a potential turnaround patients with access to antiretroviral treat- from the region’s protracted stagnation. ment had increased nearly sevenfold to over However, this has to be interpreted with cau- 1.6 million from 2001 levels. There is little tion. Concerns persist over the potential for a question that the MDG targets have helped growth slowdown resulting from a disorderly stimulate more rapid expansion of basic unwinding of global imbalances, protection- health and education services. ism, the future behavior of world oil prices, Nutrition (MDG1). Nearly one-third of or a possible global pandemic triggered by all children in developing countries are esti- avian inﬂuenza. mated to be underweight or stunted, and Optimism over the prospects for improved an estimated 30 percent of the total popu- growth and poverty reduction, however, does lation in the developing world suffers from not apply to the many fragile states. Extreme micronutrient deﬁciencies. Undernutrition poverty is increasingly concentrated in these is not only a threat to progress with poverty states: by 2015 it is estimated that given pro- reduction; it is the underlying cause of over jected growth performance, extreme poverty 55 percent of all child deaths, linking nutri- levels in nonfragile states will decline to 17 tion directly to reduction of child mortality percent, more than achieving the MDG1 tar- (MDG4). In striking contrast to the region’s get, while levels of extreme poverty in fragile strong growth performance, the highest rates states will remain at over 50 percent, higher of malnutrition are found in South Asia: than the level in 1990. underweight prevalence is estimated between 38 and 51 percent in the large countries, none of which appears on track to meet the nutri- Progress with the Human Development tion goal. Sub-Saharan Africa is estimated to MDGs have a 26 percent prevalence of child mal- Broad MDG trends do not change appre- nutrition, and in some countries— Burkina ciably year to year, and remain much as Faso, Cameroon, Zambia—trends are wors- described last year: all regions are off track ening. East Asia, Latin America, and Eastern on the child mortality goal, and some regions Europe show better performance although all are off track on at least some of the other have some countries that are off track. Universal primary completion (MDG2). 2005. This success appears in large measure Globally the primary school completion rate attributable to implementation of the inte- rose between 2000 and 2005 from 78 to 83 grated management of childhood illness and percent and the pace of progress in many points to the serious need to strengthen policy countries has accelerated. Gains are especially coherence and improve donor coordination strong in North Africa, Sub-Saharan Africa, in the health sector. and South Asia. But 38 percent of developing Maternal health (MDG5). Ninety-nine countries are unlikely to reach 100 percent percent of maternal deaths, about 500,000 primary completion by 2015 and another annually, occur in developing countries. Lack 22 percent of countries, which lack adequate of direct data on maternal mortality requires data to track progress, are also likely to be off the use of “skilled attendance at delivery” as a track. The most intractable groups to reach proxy measure. Survey evidence shows prog- with primary education are those that are ress in 27 of 32 countries but also suggests “doubly disadvantaged”: girls from ethnic, that this is highly concentrated among richer religious, or caste minorities. About 75 per- households—equity gaps in access to skilled cent of the 55 million girls who remain out of attendance are larger than for any other health school are in this group. But recent data also or education service. Evidence on the main reveal countries that have made remarkable constraints to reducing maternal mortality progress in recent years; six of the seven top in three low-income countries reafﬁrms the countries in expanding primary completion importance of early recognition of the need for rates (all by over 10 percent per year between emergency medical attention, access to ade- 2000 and 2005) were in Sub-Saharan Africa quate medical facilities, and receiving appro- (Benin, Guinea, Madagascar, Mozambique, priate treatment. But it also underscores the Niger, and Rwanda). The weakest performers essential need for skilled attendance at birth. were also primarily in Africa, however, show- AIDS, malaria, and tuberculosis (MDG6). ing the sharp contrasts across countries in By end-2006 an estimated 39.5 million peo- the region. And in Asia, Cambodia has made ple were living with the human immuno- exceptional progress. deﬁciency virus (HIV), up 2.6 million since Child mortality (MDG4). Progress on 2004. An estimated 3 million people died child mortality lags other MDGs, despite the from AIDS in 2006. While the spread of this availability of simple, low-cost interventions disease has slowed in Sub-Saharan Africa, that could prevent millions of deaths each it is a rapidly growing epidemic in Eastern year. Oral rehydration therapy, insecticide- Europe and Central Asia. Recent experience treated bednets, breastfeeding, and common in combating the spread of AIDS has demon- antibiotics for respiratory diseases could pre- strated some important messages: reversing vent an estimated 63 percent of child deaths. its spread is possible, treatment is effective in Yet in 2005 only 32 of 147 countries were the developing world, but prevention efforts on track to achieve the child mortality MDG. need to be intensiﬁed. Moreover, 23 countries reveal stagnant or Annually there are an estimated 300 to worsening mortality rates. Problems in fragile 500 million cases of malaria, and 1.2 million states are particularly severe: nearly one-third deaths, mainly among children and mostly in (31 percent) of all child deaths in developing Sub-Saharan Africa. Several new initiatives countries are in fragile states, and only two hold promise for making inroads against of the 35 states currently considered fragile malaria: with support from the Dutch and are on track to meet MDG4. The experience the “Roll Back Malaria” initiative, the World of countries that have achieved rapid gains is Bank is leading efforts to implement a global also noteworthy, including in Eritrea which, subsidy for artemisinin-based combination despite per capita income of only $190, cut therapy, the most promising new treatment child mortality in half between 1990 and available because resistance to traditional drugs has grown. The Malaria Booster Pro- it rebounded somewhat after 2003, it still has gram, which supports country-led efforts to not returned to the 2000 level. Recent efforts deliver concrete and measurable results, such to ramp up ﬁnancing for WSS, especially for as delivery of insecticide-treated bed nets and Africa, through such initiatives as the Africa malaria treatment for young children and Infrastructure Consortium and the Rural pregnant women, is currently operating in 10 Water Supply and Sanitation Initiative—even countries and aims to expand to 20 over the if successful—will take some time to have clear next ﬁve years. impact on the WSS target, given the long lead Tuberculosis (TB) is estimated to have led time for investments. to 2 million deaths in 2004, and 9 million new A continuing concern for all these aggre- cases. While incidence of TB is falling in ﬁve gate data is whether poor households partici- of six regions, global growth of 0.6 percent pate in the progress made. Demographic and annually is attributed to rapid increases in Health Survey data allow comparison across infections in Sub-Saharan Africa, linked to income quintiles on relative progress. While the greater likelihood of TB appearing from gaps in access between rich and poor house- latent infections in HIV carriers. The Directly holds remain signiﬁcant, they are narrowing; Observed Treatment, Short-course (DOTS) the poor have had equal or faster rates of is the main strategy to combat TB, and has progress in child mortality reduction, immu- expanded rapidly, with high-burden countries nization coverage, and primary completion showing large decreases in TB incidence due in most countries. to DOTS (for instance, Cambodia and Indone- sia). In 2006 a new strain of TB—extensively Financing Trends and Alignment in drug-resistant TB—was discovered in South Health and Education MDGs Africa. International efforts to stop its spread are being led by the World Health Organiza- External ﬁnancing for health and education tion (WHO) and the Stop TB Partnership. has nearly doubled in real terms since the Water supply and sanitation (MDG7). MDGs were adopted. Aid for health con- There has been signiﬁcant progress on water tinued to rise from 2004 to 2005, whereas supply; globally access has increased from 73 education ODA commitments showed their percent in 1990 to 80 percent in 2004, but only ﬁrst decline, reﬂecting lower commitments to Latin America and South Asia are considered China and India. Aid commitments for educa- on track to meet this part of the goal (although tion are expected to have increased again in more than one-quarter of developing countries 2006 and beyond, owing in part to a major lack data). However, within Africa there are initiative announced by the United Kingdom. some promising trends: 5 of the 10 countries Funding for health has grown even more making fastest progress are in Africa, and 17 strongly, from private sources such as the of the 36 countries for which data are available Gates Foundation; from global partnerships are on or almost on track. By contrast, global such as the Global Fund for AIDS, TB, and progress on sanitation has lagged, increasing Malaria; and from bilateral donors: France, only from 35 percent in 1990 to 50 percent Norway, Spain, and the United States have in 2004 and only three regions (East Asia and increased health funding between two- and the Paciﬁc, Latin America, and the Middle East fourfold since 2000. Innovative ﬁnancing and Northern Africa) are on track. Only 2 of mechanisms targeting the health sector are the 32 African countries for which data are also getting off the ground: the international available are on track. Despite its importance ﬁnance facility for immunization ($1 billion for achievement of multiple MDGs, ofﬁcial in 2006), advance market commitments for development assistance (ODA) for water sup- vaccines ($1.5 billion expected in 2007), ply and sanitation (WSS) declined signiﬁcantly and the airline ticket tax implemented by 21 from the mid-1990s through 2002. Although countries ($300 million expected in 2007) are all mobilizing new funds for health interven- Figure 1 illustrates weak learning out- tions. Despite this inﬂux of funds for health, comes and the gap across countries between there remains a large shortfall relative to education level and cognitive skills. By age ﬁnancing needs to reach the health MDGs, nine reading skills in developing countries conservatively estimated at between $25 bil- can signiﬁcantly lag those in developed coun- lion and $50 billion annually. tries. While over 96 percent of children in While increased external funding is crucial Sweden, Latvia, and the Netherlands can for progress on the health MDGs, there are read above the lowest—threshold—level of growing concerns about policy coherence, literacy on OECD-benchmarked tests by age aid alignment, and transactions costs in the nine, less than half the children in Argentina, sector, given the number of players and the Colombia, and Morocco can read at this absence of effective coordination mecha- level. Results from a regionally benchmarked nisms—a topic taken up below. assessment for Southern African countries are similarly distressing: in several countries, less than 50 percent of children are able to The Role of Quality in MDG Progress read by age 12. Evidence is emerging that in many countries It does not follow from this that there rapid progress in improving schooling enroll- exists an inherent trade-off between quantity ment and completion is not translating into and quality in education. In fact, cross-coun- better cognitive skills. New research suggests try data show a strong positive correlation that this may have a high cost for countries: between schooling coverage and cognitive returns to investment in education appear to skills, at least over the long term. There are accrue to the skills of the population and not also numerous countries that have increased to the quantity of schooling attained. learning outcomes at the same time as they Learning levels of primary school–aged children Source: Fourth-grade test: International Association for the Evaluation of Educational Achievement (IEA), Progress in International Reading Literacy (PIRLS) 2001, Sixth-grade test: Southern African Consortium for Monitoring Educational Quality (SACMEQ). Enrollment data: Demographic and Health Surveys. have expanded access. While this is not easy and create incentives to accelerate progress, to do, and there are many cases where qual- alongside efforts to expand school comple- ity has been strained as countries rapidly tion rates. scale up access, it is important to focus on The same concerns over quality arise in the strategies for managing expansion better. health care—and data are even harder to Many poor countries are far from achiev- collect. Creative efforts have been made to ing universal primary completion and must measure the quality of health care provid- accelerate service delivery to reach the MDG ers across countries and measure the overall by 2015. Slowing expansion would harm the quality of care. The extent of misdiagnosed poorest and most marginalized groups most. ailments, failure to complete basic check- The challenge must be to expand access while lists for major diseases, and mal-adherence enhancing learning outcomes. to recommended protocols is alarming. The Progress on this challenge requires stron- implication is that there are gaps between ger efforts to monitor student learning in the what health providers know is right and what developing world; most countries today lack they do. It suggests that greater attention to national assessment systems and extremely work incentives and institutional settings is few have engaged in any internationally needed rather than reliance on input-based benchmarked tests. Regular tracking of stu- approaches, such as raising training require- dent learning is essential for accountability ments or expanding medical schools. Perfor- in education—for equipping teachers to man- mance contracting is one promising approach age their class time better, for empowering for effectively improving health coverage and parents to hold schools accountable, and for quality. Greater attention is also needed to allowing administrators to evaluate the effec- bring greater coherence and donor coordina- tiveness of education spending. tion to health sector strategies, as discussed There is a strong case for donor support below. in developing benchmarked standards of competency linked to critical thinking skills Governance Indicators: An Update expected by the end of primary school—in other words, basic learning goals for primary Recently released aggregated governance education to complement the quantitative indicators (Kaufman-Kraay) suggest patterns goal of universal primary completion. An of performance that reinforce key messages internationally benchmarked test to mea- from the 2006 GMR. Governance is mul- sure end-of-primary learning levels could be tidimensional, and there is no unique path expensive and technically difﬁcult to produce, from poor to good governance. Actionable but there is a clear public goods argument for indicators to track performance are being such an investment. Precisely at a time when developed in several areas, including contri- the global community is scaling up aid for butions from independent civil society orga- the education MDG, a globally benchmarked nizations: Global Integrity released 43 new assessment covering large numbers of devel- country reports, the Afrobarometer network oping countries would provide the strongest released the results for 18 African countries platform yet for generating knowledge on of its third round of surveys, and a new index “what works” to promote learning in differ- that monitors transparency in public bud- ent country contexts. gets—the Open Budget Index—was released Moving a proposal for basic learning after four years of development. The World goals for primary education forward will Bank Group also released publicly for the involve costs and face political and technical ﬁrst time its Country Policy and Institutional obstacles. But an internationally supported Assessment (CPIA) scores—an important effort in this area could help countries build step in strengthening transparency and dis- national capacity to track learning outcomes closure of these scores, which play an impor- tant role in allocating concessional ﬁnancing. women, families, and society. The disadvan- By contrast, Public Expenditure and Finan- tage of women in rights (equality under the cial Accountability (PEFA) assessments made law), resources (equality of opportunity), and less encouraging progress. While the use of voice (political equality) restricts basic free- PEFA indicators has greatly expanded and dom to choose and is unfair. This inequal- many new country assessments are planned, ity is reﬂected in the poorer performance by so far only 4 of 33 country reports have been women and girls across many of the MDGs. made public, limiting the potential beneﬁts “Improving gender equality and empow- from this valuable tool for analysis. ering women” (MDG3) thus stands on its own merits as a development objective. In addition to this intrinsic importance, gender equality and women’s empowerment are also important channels to attain other MDGs. Gender equality and women’s empower- ment promote universal primary educa- The Importance of Promoting Gender tion (MDG2), reduce under-ﬁve mortality Equality (MDG4), improve maternal health (MDG5), The 2006 World Development Report and reduce the likelihood of contracting HIV/ on equity and development refers to gen- AIDS (MDG6). der inequality as the “archetypal inequal- Improving gender equality also inﬂu- ity trap,” pointing to the sharp differences ences poverty reduction and growth directly between men and women in access to assets through women’s greater labor force partici- and opportunities in many countries, and the pation, productivity, and earnings as well as negative consequences for the well-being of indirectly through the beneﬁcial effects of Pathways from increased gender equality to poverty reduction and growth Source: World Bank staff. women’s empowerment on child well-being. Rwanda, and South Africa). Of the 14 fragile Figure 2 identiﬁes the main pathways lead- states for which data are available, 9 are not ing from gender equality to both current expected to achieve the primary and second- and future growth and poverty reduction. ary enrollment targets. One path is through increasing the produc- The female tertiary enrollment rate lagged tive opportunities and higher incomes that behind the male rate in 63 countries (of 130 women have, raising consumption and sav- countries with data) and exceeded the male ings that help to raise investment rates. rate in 65 countries. The female disadvantage Another is through improving women’s was evident mainly in Sub-Saharan Africa, control over decision making in the house- South Asia, and in fragile states. hold. Several studies have shown that the Progress in basic literacy skills and school greater the mothers’ control over resources, enrollments over the years has resulted the more resources households allocate to in higher literacy rates among youth (age children’s health, nutrition, and education. 15–24), but gender gaps remain: the United Better maternal education also beneﬁts chil- Nations Educational, Scientiﬁc and Cultural dren through improved hygiene practices, Organization (UNESCO) estimates that of better nutrition, lower fertility rates, and the nearly 137 million illiterate youths in the hence higher per child expenditures. Taken world, 63 percent are female. The female-to- together, these contribute to future growth male literacy ratio is lowest in Sub-Saharan and poverty reduction. Africa, Middle East and North Africa, and South Asia—regions that also have female disadvantages in primary and secondary Progress toward Meeting MDG3 enrollment. The four ofﬁcial MDG3 indicators—measur- Progress is also evident in women’s share ing gender equality in enrollments, literacy, of nonagricultural wage employment, which and the share of women in nonagricultural increased modestly in all regions during employment and national parliaments—pro- 1990–2005, and with signiﬁcant variation vide an important, albeit incomplete, snap- across regions and countries (ﬁgure 3). In shot of progress toward gender equality. 2005 the share of women in nonagricultural Thanks to efforts to achieve universal pri- employment was highest in Europe and Cen- mary education (MDG2), girls’ enrollments in tral Asia (47 percent), lowest in the Middle all levels of schooling have risen signiﬁcantly East and North Africa (20 percent), and in- (ﬁgure 3). Most low-income countries made between in Latin America and the Caribbean substantial progress between 1990 and 2005. and East Asia and the Paciﬁc (over 40 per- By 2005, 83 developing countries (of 106 cent). Trends and patterns in this indicator with data) had met the intermediate MDG3 are difﬁcult to interpret without accounting target of parity in primary and secondary for country circumstances, such as the share enrollment rates. Most of these countries of nonagricultural employment as a percent- are in regions where enrollment has histori- age of total employment. A favorable score cally been high—East Asia and the Paciﬁc, on this indicator might on the surface seem Eastern Europe and Central Asia, and Latin to indicate equitable conditions for women in America and the Caribbean. In the Middle labor markets, but it may capture conditions East and North Africa, most countries met for only a very small proportion of the total the target by 2005, but some still have a sig- labor force. niﬁcant female disadvantage in enrollments. The fourth ofﬁcial MDG3 indicator is In Sub-Saharan Africa performance has been the proportion of seats held by women in varied; less than one-quarter of countries met national parliaments (with no set target). the enrollment targets for 2005, but some Between 1990 and 2005, all regions except have attained parity (for example, Botswana, Europe and Central Asia increased women’s Progress in ofﬁcial indicators of gender equality and women’s empowerment, by region, 1990–2005 Source: World Bank Indicators. The regional averages are calculated using the earliest value between 1990 and 1995 and the latest value between 2000 and 2005. The averages are weighted by the country population size in 2005. proportion of the seats in national parlia- and amenability to policy intervention. Indi- ment, but starting from a very low level (ﬁg- cators that met all the three criteria but were ure 3). However, in no region did the average highly correlated with other indicators were proportion exceed 25 percent, at either the dropped from the list. beginning of the period or the end. This proposed list draws on the recommen- dations of the UN Millennium Project Task Force, but is more parsimonious. It takes into Strengthening Ofﬁcial Indicators account data availability, additionality (does The shortcomings of the ofﬁcial indicators it add new information), and the high costs for monitoring progress in attaining MDG3 associated with imposing additional moni- are widely recognized (see, for example, the toring burdens on already taxed national sta- report of the UN Millennium Project Task tistical ofﬁces. It also draws on a proposal to Force on Education and Gender Equality, reﬁne the existing MDG indicators that was UN Millennium Project 2005). Five supple- put before the UN Secretary General’s ofﬁce mental indicators to better measure gender for consideration in March 2007. equality are proposed to address this (table Four of the ﬁve indicators monitor gen- 1). These indicators, complementary to the der equality in the household; the remain- ofﬁcial MDG3 indicators, meet three crite- ing indicator monitors gender equality in ria: data availability (wide country coverage), the economy. No additional indicators are strong link to poverty reduction and growth, recommended to monitor gender equality in Recommended additional indicators for MDG3 Household Economy and markets Modiﬁcations of ofﬁcial MDG indicators Additional indicators Additional indicators Primary completion rate Percentage of 15- to 19-year-old girls Labor force participation rates of girls and boys (MDG2)a who are mothers or pregnant among women and men aged with their ﬁrst childb 20–24 and 25–49b Under ﬁve mortality rate for girls and boys (MDG4) Percentage of reproductive-age women, and their sexual partners, using modern contraceptives (MDG6) Source: World Bank staff. a. Recommended by the UN Millennium Project Task Force on Education and Gender Equality. b. Under consideration by the Inter-Agency and Expert Group for MDGs. the domain of society, because none of the However, in spite of strong donor policy indicators considered for inclusion met the commitments to gender equality objectives, criteria of data availability. Three of the rec- implementation has been disappointing. ommended indicators are modiﬁcations of Self-evaluations of nine donor agencies’ per- ofﬁcial indicators already being monitored as formance reﬂect a gap between words and part of the MDGs, while two are indicators deeds. One of the reasons for this gap is the not currently part of the ofﬁcial set. diffusion of responsibility that resulted from the shared responsibility gender mainstream- ing called for: all staff were responsible for Strengthening International Support promoting it, yet no one group in particular for Gender Equality was held accountable for results. The success in increasing girls’ enrollments These self-assessments have helped reen- in schooling shows that progress in gender ergize donors’ commitments. Donors are equality is possible. This progress, however, revamping their approaches and setting requires political will (high-level leadership) more realistic targets to both strengthen and concerted effort from countries and inter- mainstreaming and introduce speciﬁc actions national development agencies. Donors and to advance gender equality. There is wide the multilateral development banks (MDBs) agreement that high-level leadership, techni- need to signiﬁcantly improve the support cal expertise, and ﬁnancial resources remain and coordination for gender equality issues key to implementing donor agencies’ gender to accelerate progress toward MDG3; these policies. issues should become central in their dialogue The MDBs have made similar progress in with partner countries. Since the 1995 Beijing advancing their support for gender equal- Women’s conference, which marked a mile- ity and women’s empowerment. Systems to stone in international commitment to gen- monitor progress with mainstreaming gender der equality issues, donor support improved equality policies have been introduced, and somewhat, and more resources are devoted suggest there has been modest but steady to gender equality targets, particularly in the progress. Most MDBs have recently adopted social sectors. Overall, a quarter of bilateral Gender Action Plans to make their gender aid by sector—around $5 billion annually— mainstreaming policies more strategic and is now focused on gender equality. operationally effective. Nonetheless, signiﬁcant gaps remain. der equality and women’s empowerment in Progress has been greater in the social sec- the results agenda, in leading international tors (especially health and education) than efforts to strengthen MDG3 monitoring, and in productive sectors (agriculture, infrastruc- in better assisting client countries in scaling ture, private sector development, and the up MDG3 interventions. The business case like). There is also evidence that attention to for MDBs’ investments in MDG3 is strong— gender issues is greater in project design than it is nothing more than smart economics. in implementation, and there has been little effort to monitor or evaluate outcomes. Insti- tutions have generally been slow to develop and adopt measurable indicators of progress in gender equality, and the rating systems Fragile states are generally characterized by primarily measure good intentions rather weak institutional capacities and governance, than results. Nor can the resources spent on and by political instability. These countries are gender mainstreaming be measured. Clearly the least likely to achieve the MDGs and they much more is needed to strategically realize contribute signiﬁcantly to the MDG deﬁcit. the comparative advantage that the MDBs They account for 9 percent of the population have in knowledge generation and analysis, of developing countries, but 27 percent of the in their convening and coordinating roles, in extreme poor (living on US$1 per day, see leading high-level dialogue, and in helping table 2), nearly one-third of all child deaths, formulate development policy strategies. The and 29 percent of 12-year olds who did not MDBs should utilize their comparative advan- complete primary school in 2005. Of all low- tage and take up a visible leadership role in income countries that are unlikely to achieve investing dedicated resources to include gen- gender parity in primary and secondary enroll- Fragile states face the largest deﬁcit in most MDGs Total in developing Total in fragile states Indicator countries (millions) (in millions and % share) Extreme poverty 985 261 (27%) Malnourished children 143 22.7 (16%) Children of relevant age that did not complete primary school in 2005 13.8 4 (29%) Children born in 2005 not expected to survive to age ﬁve 10.5 3.3 (31%) Unattended births 48.7 8.9 (18%) TB deaths 1.7 0.34 (20%) HIV+ 29.8 7.2 (24%) Lack of access to improved water 1,083 209 (19%) Lack of access to improved sanitation 2,626 286 (11%) Source: World Bank staff estimates; for notes see table 2.9. ments, half are fragile states. Their weak per- from conﬂict, the sequencing and coherence formance is clearly linked to chronically weak of support for security, electoral efforts, and institutional capacity and governance and to aid-ﬁnancing to boost growth and employ- internal conﬂict, all of which undermine the ment are critical for minimizing the risk of capacity of the state to deliver basic social and reversion to conﬂict. Donors need to con- infrastructure services and offer security to sider whether current instruments provide citizens. adequate continuity of support to minimize Conﬂicts are a major reason why coun- risks of renewed conﬂict. tries slide into fragility; they extract high Second, engaging in fragile states requires costs in terms of lives and physical damage, the IFIs and other donors to review their busi- they reduce growth and increase poverty. ness practices and procedures, to ensure that While there are fewer conﬂicts in low-income these are adapted to low-capacity and some- countries than before, conﬂicts have become times volatile environments. Taking advantage shorter and more intense, with an enormous of new peace-building or governance reform negative impact on GDP growth averaging opportunities, or adjusting programs in the about 12 percent decline per year of conﬂict. event of a crisis, requires a rapid response from Despite the enormous challenges of poverty all international partners engaged in these in fragile states, progress against the MDGs countries. Supporting reforms in low capacity is possible. A number of countries (Mozam- states also requires increased ﬁeld presence. bique, Uganda) have made a successful transi- Third, fragile states are especially vulner- tion from weak institutions and/or the legacy able to donor fragmentation and its potential of conﬂict to sustained gains in growth and burden on government capacity. This makes poverty reduction. In countries that remain implementation of the Principles for Good fragile, successful progress against the MDGs International Engagement in Fragile States has been achieved: Timor-Leste, Eritrea, and and advancing principles of the Paris Declara- the Comoros, for example, decreased child tion on Aid Effectiveness particularly impor- mortality by 7.1 percent, 4.2 percent, and 3.5 tant. The IFIs need to work both between percent, respectively, between 2000 and 2005. themselves and with other international Aid is particularly important in fragile partners to develop common approaches and states because it constitutes the main source of operating principles in fragile states, in par- development ﬁnance. However, IFIs account ticular through efforts to improve coordina- for only about 8 percent of total Development tion and division of labor with organizations Assistance Committee (DAC) ODA ﬂows to leading peace-building efforts, such as the fragile states, with the rest coming from bilat- United Nations and regional institutions. eral sources. The IFIs, nevertheless, have an important role to play in ﬁnancing postcon- ﬂict reconstruction, in aid coordination, and in policy dialogue and technical assistance. The MDBs have recently started to converge around four areas of specialized response to The expansion in global aid has stalled, and the development challenge in fragile states: two years after the Gleneagles summit the (1) strategy, policy, and procedural frame- trends in real aid ﬂows suggest that DAC works; (2) exceptional ﬁnancial instruments; donors’ promises of higher aid to Sub-Saha- (3) customized organizational and stafﬁng ran Africa appear increasingly unlikely to approaches; and (4) partnership work. materialize. Seven years after the Millennium Accelerating progress toward the MDGs Summit at which the MDGs were adopted, in fragile states requires attention to sev- there is yet to be a single country case where eral issues and lessons of recent experience. aid is being scaled up to support achieving First, since many fragile states are emerging the MDG agenda. Most “low hanging fruit” identiﬁed in the Millennium Report of 2005 that DAC donors have moved out of. have yet to be harvested. Progress with mul- Progress with scaling up aid to Africa has tilateral debt relief was rapid after the Gle- been disappointing. Five years after the Mon- neagles meetings in 2005, demonstrating how terrey Conference and two years since the G-8 quickly initiatives can advance when there is a pledges at Gleneagles, country examples of strong international commitment. The lack of programs to scale-up aid to support the MDG progress with multilateral trade reforms in the agenda are lacking. Beyond debt relief (impor- Doha Round similarly demonstrates just how tant to improving future growth opportunities), weak international commitment and consen- most countries in Sub-Saharan Africa are see- sus stymies change. Forging an international ing stagnant or declining aid inﬂows. Exclud- consensus beyond rhetoric is needed to accel- ing Nigeria (a recipient of exceptional debt erate progress. relief) real bilateral ODA from DAC members to the region fell in 2005 and was unchanged in 2006. Aid Volumes Trends: Bringing Actions There is evidence that aid allocation is in Line with Commitments becoming increasingly selective on the basis Although aid was on an upward trend through of need (poverty) and the quality of policies 2005 as DAC members, non-DAC donors, and (governance). Selectivity varies across differ- nontraditional donors expanded assistance to ent aid instruments. Flexible ODA—aid that developing countries, in 2006 the level of real can be used toward regular project and pro- aid from DAC members fell. After reaching a gram support as opposed to special-purpose record level in 2005, total DAC member aid grants such as technical or emergency assis- fell by about 5 percent to about just below tance—has been the most responsive to coun- $104 billion in 2006. These trends suggest that try improvements in governance and greater real aid delivery is falling well short of donor need. Technical assistance (much of which is commitments. Doubling of aid to Africa by for consultants and never leaves donor coun- 2010 looks increasingly unlikely. tries) is the least responsive. There has also been a continuing concen- Attention by donors to the needs of fragile tration of aid in a small number of coun- states is beginning to translate into increased tries, leaving the majority of countries with assistance. Overall aid to fragile states rose little or no real increase. Between 2001 and by more than two-thirds in 2005 to nearly 2005, real aid volumes grew by more than $20 billion (in 2004 dollars), of which about 50 percent, but nearly 60 percent of Inter- half was in debt relief and humanitarian assis- national Development Association (IDA) tance. Fragile states are seeing an improving countries saw a decline or little change in trend in aid received per capita, although aid over this period. Such heavy concentra- they receive somewhat less aid (excluding tion is not consistent with efforts to broadly humanitarian assistance and debt relief) than accelerate progress toward the MDGs. Even other low-income countries. Aggregate trends as assistance from DAC donors has declined mask the wide variation across different types in 2006, aid from nontraditional donors is on of fragile states: those emerging from violent an upward trend: Non-DAC OECD donors conﬂict typically receive much more aid than are expected to double their assistance to other fragile states, and more than other low- over $2 billion by 2010; Saudi Arabia and income countries. other Middle East countries provided nearly $2.5 billion in assistance in 2005; and other Progress with Harmonization emerging donors, China in particular, are and Aid Effectiveness also rapidly expanding aid and becoming signiﬁcant foreign creditors. Much of this aid A critical agenda for improving aid effec- targets infrastructure and productive sectors tiveness is progress with harmonization and alignment of aid with country strategies, both aid for the health sector in Rwanda illustrates by donors and the international aid agencies. some key problems on the ground. First, the There is evidence of some progress in these government’s ability to achieve policy coher- efforts. Two-thirds of donors place strategic ence is undermined by donors channeling the priority on implementation of the Paris Dec- majority (86 percent) of total reported aid for laration on aid effectiveness, and efforts to health outside the Ministry of Health through monitor its implementation are gaining trac- direct transfers to local NGOs, local govern- tion. However, translating this good intent to ments, and other providers. Second, most outcomes on the ground remains extremely on-budget donor funding is earmarked for challenging: the greatest need for better aid HIV/AIDS and malaria (85 percent in 2005), harmonization is often in countries least to the relative neglect of capacity building, capable of leading donor coordination them- human resource development, and other sec- selves. torwide needs. Only 1 percent was allocated A baseline survey for monitoring the Paris to child health. Third, aid is volatile as much Declaration was undertaken in mid-2006, is committed for only 1 to 2 years, constrain- yielding benchmarking data on the con- ing ability to scale up health services which straints facing donors and partner countries. require mainly stable recurrent expenditures On ownership by partnership countries it for salaries and facility maintenance. Finally, ﬁnds the story is mixed: while comprehen- there is a sharp disparity between donor fund- sive national strategies are being developed, ing for health, which has increased sharply, they lack well-speciﬁed prioritization and and infrastructure and agriculture, which sequencing of objectives and actions, leav- have been neglected. These factors point to ing them operationally weak. Less than one- the need for coordination among donors, ﬁfth of countries had developed operational agencies, global programs, and developing strategies at the time of data collection. The countries, to develop an adequate coordinat- survey also ﬁnds that overall public ﬁnancial ing mechanism and more coherent approach. management systems are weak in over one- Harmonization in the health sector is par- third of countries, and moderately strong or ticularly difﬁcult: the number of donors is better in less than a third. large and includes numerous vertical pro- Regarding donor actions, it ﬁnds that grams; there is usually no critical mass of about 40 percent of aid is disbursed using a health ﬁnanciers “on the ground” who can partner’s public ﬁnancial and procurement meet regularly to coordinate and harmonize. systems; about two-thirds of aid is disbursed There is also an inherent tension between on time; nearly half of technical cooperation the goals of harmonized aid through coun- is already coordinated—which is the 2010 try systems and the explicit mandates of ver- target, although different interpretations of tical funds—whose successful advocacy for “coordination” require caution. The survey speciﬁc global health issues depends criti- ﬁnds that donors are trying to harmonize. cally on their ability to show direct results. Forty-two percent of aid is provided through A viable harmonization strategy may be to program-based approaches such as direct move toward a country-led arrangement budget support or sectorwide approaches. whereby (1) all donor support is “on plan” One-third of missions and one-ﬁfth of coun- and aligned with government priorities and try analytic work is joint. However, strategic initiatives; (2) funding is primarily through partnership “satisfaction” surveys in Africa the government budget, and where this is not suggest increased dissatisfaction over donor possible a share is speciﬁed for support to reporting requirements and coordination of system capacity building; and (3) reporting donor support. to donors is less frequent and done through Pledges of harmonization remain abstract multipurpose reports that meet multiple unless tested in the ﬁeld. A recent review of donor needs. The Rwanda health sector example points completion point under the Heavily Indebted more broadly to challenges posed by the Poor Countries (HIPC) Initiative. Twenty- evolving and more complex aid architecture. two postcompletion-point HIPCs (and two The proliferation of new aid sources—donors, non-HIPCs) have beneﬁted from the MDRI private foundations, global funds—increases to date, providing $38 billion, in nominal total resources, but also the difﬁculty of coor- terms, in debt relief. The ongoing HIPC ini- dination and coherence, and the costs posed tiative also saw substantial progress, and 30 by fragmentation and resource earmark- HIPCs had reached the decision point and ing. The average number of ofﬁcial donors were receiving debt relief as of end-2006. has tripled since the 1960s, and since 1990 the number of countries with over 40 active Developments in Global Trade bilateral and multilateral donors increased from zero to over 30. Emerging donors are World trade in 2006 continued the strong also expanding their presence rapidly, along growth trends of recent years. Merchandise with global funds, although these are dif- exports expanded by 16 percent in value, ﬁcult to track due to insufﬁcient data. The well above the average of 8 percent experi- problem of a large number of aid channels is enced during 1995–2004. Developing-coun- compounded by the trend towards small size try export growth continued to outpace the of funded activities, which declined on aver- global average, growing by 22 percent. In age from $1.5 million to $1 million between addition to cyclical factors, trade perfor- 1997 and 2004, while their number surged mance reﬂects continuing unilateral trade from 20,000 to 60,000. reforms. Average tariffs in developing coun- This places particular stress on countries tries have fallen from 16 percent in 1997 to with weak capacity. Countries with lower around 11 percent in 2006. As the pace of institutional capacity are found to have higher global integration accelerates, harnessing the aid fragmentation, with negative implications new opportunities and managing the risks for aid quality through higher transaction places a premium on a strategy of greater costs and a smaller donor stake in country openness, coupled with behind-the-border outcomes. Clearly excessive fragmentation is reforms. a serious problem and measures to address it, Owing to the steady reduction of tariffs, possibly through donors limiting their focus overall trade restrictiveness has declined in countries, providing larger funds, or adopt- recent years. With the exception of a num- ing more efﬁcient vehicles (including through ber of African countries, most economies multilateral channels), and donors commit- are now less trade restrictive than they were ting to delegate authority to lead donors, in 2000. Much of this observed liberaliza- could help reduce transactions costs and tion pertains to manufacturing. Much less improve aid effectiveness. has been done in agriculture. For a number of countries (such as India) the agricultural sector is now more restrictive than six years Developments in Debt Relief ago; in the European Union there has been The past year saw important progress in no change, while Canada and the United deepening debt relief to the poorest countries. States have registered a small decline since The African Development Fund (AfDF), IDA, 2000. and the International Monetary Fund (IMF) Progress with the Doha Round. Despite all implemented the Multilateral Debt Relief intensive efforts to conclude the Doha nego- Initiative (MDRI), described in the 2006 tiations in 2006, they were effectively sus- GMR. This initiative provides 100 percent pended in July amid disagreement on the level debt relief on eligible claims to countries that of ambition in agricultural market access and have reached, or will eventually reach, the over reductions in domestic support. However, in early 2007 there was an informal agree- Evolving Roles ment by World Trade Organization members A number of commissioned reports or initia- to restart talks, providing a narrow window tives were completed in the last 12 months of opportunity to reach agreement in the ﬁrst with implications for the changing demands half of 2007 on the key elements of a deal. on IFI resources and responsibilities. Discus- Failure to conclude the Doha Round sions have highlighted ﬁve key challenges: would send a strong negative signal to the support to the poorest countries; strength- world economy about the ability of coun- ened engagement in middle-income countries; tries to pursue multilateral solutions. It responding on critical global public goods; could weaken the multilateral trading sys- promoting coherence and collaboration; and tem, which provides developing countries strengthening the voice and representation with guaranteed nondiscriminatory market of developing countries. Reports released in access; the rules-based settlement of disputes; September 2006 included the IMF’s Medium- and the transparency of trade regimes. But Term Strategy and the Report of the Interna- the biggest risk of failure is to countries’ own tional Task Force on Global Public Goods; in economic growth, as trade reform is funda- the same month the Middle Income Country mentally about self-interest. Strategy Report was reviewed by the World Aid for trade. Progress was made on aid Bank’s Board. The Review Committee on for trade in 2006. Donors indicated that they IMF–World Bank Collaboration released are prepared to offer large increases in aid its report in early 2007. In addition, initial for trade to help developing countries address measures were taken to address the need for the supply-side constraints to their increased changing voice and participation in the IMF participation in global markets and any tran- and the World Bank. sitional adjustment costs from liberaliza- These reports conclude that there is sig- tion. How much of this would be additional niﬁcant progress in assisting poor countries to existing aid remains unclear. Also, more toward achieving the MDGs and in working remains to be done to operationalize this to promote country-led efforts in partner- agenda. ship with other donors. Connecting results and resources remains a major challenge, however. There is broad recognition of the importance of continuing to engage with Enhancing IFIs’ effectiveness in advancing the middle-income countries, which are home to MDG agenda requires adapting their strate- some 70 percent of the world’s poor, but also gies and developing capacity to be responsive of the need to improve the responsiveness of to (1) changing demands, including those the IFIs and tailor support to speciﬁc coun- related to globalization and global public try conditions. Critical public goods include goods; (2) growing differentiation among cli- international ﬁnancial stability, a strong ents; (3) the availability of alternative ﬁnan- international trading system, preventing the cial resources; and (4) the growing number of emergence of infectious diseases, generating actors on the development landscape. Several knowledge, and tackling climate change. commissioned reports and events in 2006 Cooperation among MDBs is underpinned reﬂect on the evolving responsibilities of the by Memoranda of Understanding between IFIs and the need to strengthen performance them, and in 2006 the managing director of and collaboration. More coherent efforts the IMF and the president of the World Bank may be needed to strengthen the results man- commissioned an external review of collab- agement capacity of the IFIs, both to support oration between the two institutions. The capacity building in partner countries and to report noted many examples of good collabo- reﬂect on their own performance. ration, but also identiﬁed scope for improve- ment, including clarifying the role of the IMF These trends suggest that while demand in low-income countries. Concerning voice for MDB lending from middle-income coun- and representation, a program of revisiting tries has increased, the supply of concessional quotas and governance reforms in the IMF funds to low-income countries is now stag- was launched in 2006 to be completed by the nant. This has implications for the role of 2008. The ﬁrst step was to revise quotas for MDBs in the future, particularly their ability a group of the most underrepresented coun- to respond to demands for scaling up multi- tries: China, the Republic of Korea, Mexico, lateral assistance. Viewed from the perspec- and Turkey. The changes approved in 2006 tive of overall ODA ﬂows, the share of MDB increased these countries’ total IMF quotas ﬁnancing has fallen signiﬁcantly since 1998; by 1.8 percent, raising their share to 7 per- if disbursements continue to stagnate while cent of total voting shares. Further steps are donors scale up bilateral ODA, the MDBs under way to develop a new formula for a will represent only about 6 percent of total second-round quota adjustment, and prepa- ODA ﬂows by 2010. This poses important ration of a proposal to increase basic votes questions for the international community in order to enhance the voice of low-income over the implications of declining multilat- countries. Consultations on voice and rep- eralism, or of the shifting multilateralism to resentation are also under way in the World other agencies, primarily the UN system and Bank. the European Union. Debt relief under the MDRI has further potential repercussions for IFI ﬁnancing, in Assessing Effectiveness: Financial Flows, particular for AfDF and IDA, which have Results, Harmonization, and Alignment provided debt relief extending out to 40 Assessing the effectiveness of the IFIs poses years. The MDRI commits donors to provid- difﬁcult challenges. Development results ing additional resources, on a “dollar-for-dol- often lag policies and programs, and are lar” basis over four decades, to ensure that the hard to measure, but the bigger problem is cost of debt forgiveness does not undermine that of attribution of results. Each IFI has an these institutions’ overall ﬁnancial integrity independent evaluation agency that plays an or ability to provide future ﬁnancing. Firm important evaluative role, but it remains dif- ﬁnancing commitments cover 10 percent of ﬁcult to address the results and attribution the total cost, and qualiﬁed commitments problems. Three aspects of international another 56 percent, leaving a gap of 34 per- ﬁnancial institutions’ performance—ﬁnan- cent between total costs and commitments for cial support, results-based management, and the MDRI. IDA 15 will be an important test progress toward harmonizing and aligning of donors’ intentions regarding the MDRI aid through the Paris Declaration—are high- and future role of the MDBs. lighted. Results management. The Third Round- Financial ﬂows. Despite the rapid growth table on Managing for Development, held in private capital ﬂows to developing coun- in Hanoi in February 2007, provided a tries, the ﬁnancing role of the IFIs remains an venue for many country delegations to com- important one. In 2006, the ﬁve MDBs dis- pare experiences and learn from them. The bursed $43 billion, up 20 percent over 2005 Roundtable included a meeting of the Asian levels. It is premature to assess whether this Community of Practice, and the launching increase is a temporary trend. Nonconces- of a similar Community of Practice in the sional gross disbursements increased by 29 Africa region. Five factors were highlighted percent to $32 billion. After strong growth in as important in building country capacity concessional gross disbursements since 2000, to manage for development results: leader- peaking at just over $11 billion in 2004, ﬂows ship and political will, strong links between slightly declined in 2005 and 2006. results and planning practices, evaluation and monitoring tools to generate feedback tors, limiting performance comparisons over on programs, mutual accountability between the two years. A number of ﬁndings emerged, donors and country partners, and statistical including the need to better communicate the capacity (both to supply, and help generate results of COMPAS within each MDB. greater demand for, managing for results). IFIs and the Paris Declaration. Results of The need to scale up both ﬁnancial and tech- the country-level monitoring of the imple- nical support for statistical capacity-build- mentation of the Paris Declaration’s mutual ing was underscored as an essential element commitments, which took place for the ﬁrst of the agenda—particularly as the ﬁnancial time in 2006, will serve as a baseline to review costs of strengthening systems are relatively progress in 2008 and against the 2010 tar- modest. gets. They suggest that substantial actions are The Common Performance Assessment being taken by the MDBs in many areas of System (COMPAS) is an interagency effort to harmonization and alignment, including the develop a common system across the MDBs use of joint or collaborative country assis- for monitoring their results orientation, par- tance strategies, but that continued efforts ticularly with regard to their internal prac- will be needed to achieve the 2010 targets. tices. Its three-pillar structure was described Over half the country analytic work of the in detail in the 2006 GMR. A report for MDBs is joint with other donors and/or part- 2006, prepared under the leadership of the ner governments, relative to the target of 66 Inter-American Development Bank (COM- percent, but only 21 percent of MDB mis- PAS’ chairmanship rotates), examines the sions are joint with other donors, relative to seven performance categories that were devel- a target of 40 percent, and there is an urgent oped for the 2005 report. In 2006, however, need to reduce the large number of parallel changes were made to improve the indica- implementation units.
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