Oxfam comments on the Human Development Report 2001
The HDR holds a special place in the affections of organisations like Oxfam. Over the years it has been a major weapon in our advocacy and campaigning work, providing the intellectual underpinning for a model of development focussed on human welfare. During the ten years of its existence, the HDR has acted as a powerful voice in challenging received wisdom, and in forcing the interests of the poor on to the development agenda.
Among the many achievements of the HDR, two stand out as being of special significance. First, the Report has changed the way that we think about poverty. Ten years ago, poverty and development were perceived largely in terms of income and GNP. It was the HDR under the leadership first of Mahbub-ul-Haq and then Richard Jolly that redefined development as a process of expanding choice, and of enhancing health and education, rather than just increasing income. The fact that most World Bank poverty assessments now come dressed in HDR clothing is a tribute to its authors and, of course, to the formidable influence of Amartya Sen.
Second, the HDR has played a pivotal role in bringing the issue of inequality to the centre of debates on poverty. Not only has the report scrupulously monitored the obscene gaps in life-chances separating rich and poor countries, and rich and poor people; it has also ruthlessly highlighted the power relations at the heart of these inequalities. One of the most constant refrains of the HDR has been that power, political, rather than technical economic considerations, shape market outcomes: people enter markets as unequal players, and they leave them with unequal rewards.
The underlying message of successive HDRs has been that changing power relations both at a global level in the management of world trade and finance, and a national level in the distribution of assets and opportunity, is a precondition for changing distributional outcomes.
HDR 2001: the record on human development
Like all HDR's, this one is essential reading for the development community. It provides a comprehensive overview of key development indicators, and its core theme of technological innovation is of crucial importance to prospects for achieving greater equality and poverty reduction.
In keeping with tradition, the HDR starts with a thirty-year appraisal of the record on human development. It rightly concludes that astonishing have been achieved - and that much remains to be done. As ever, the statistical evidence is comprehensive. The problem is in the interpretation of the evidence, and in emphasis.
On the question of interpretation, should we be enthused by the distance that we have come, or depressed by the shortfall from 2015 targets set by the international community? Yes poverty has fallen, but the overall record is one of sustained under-performance. Income poverty is falling at an abysmal rate: the share of the world's population living on less than $1 a day stood at 23 per cent in 1998, which was just 5 per cent lower than in 1987. The share of people living on less than $2 a day shows a roughly similar trend. The upshot is that 1.1 billion people are still living in extreme poverty, and that there are now more people in this position in Africa and South Asia than there were in the mid-1980s.
As research by the Overseas Development Institute has shown, the world is now comprehensively off track for achieving the 2015 goal of halving world poverty. And for all the advances in reducing child deaths, the gap between 2015 target and projected outcome represents around 4 million deaths annually.
The record is scarcely more impressive on universal primary education. On current estimates, at least 75 million primary school children will still be out of school in 2015. This prospect surely has a significance that merits for more attention in the HDR. After all, good quality universal primary education is one of the fundamental requirements for developing the skills and capacity needed to close the technological divide.
Yet aside from some cursory references to rates of return in primary education, the HDR has little to say on this. Surely it could have challenged the international community to deliver on the bold commitment made at the World Conference on Education for All in Dakar, where governments pledged that no credible national plan aimed at achieving universal education would be allowed to fail for want of finance.
The problem in emphasis concerns inequality. The HDR does note the widening income gap between the richest and poorest 10 per cent of the world's population. Household data research cited in the HDR also points unambiguously to a broader increase in inequality (though the report does not mention this conclusion). Nor does it acknowledge that widening inequalities (for instance, between urban and rural India, and coastal and inland China) are slowing the rate of poverty reduction.
Oxfam would have like to see the HDR attaching far more weight to the issue of inequality - and to the challenge of achieving better distributional outcomes. Extreme inequality matters for a number of reasons. It slows the pace of poverty reduction and, as the HDR notes, it is bad for growth. But the shockingly high levels of inequality prevailing at both a global and national level also matter because they say something fundamental about the state of our world, and about the value and political choices that shape it.
Three decades ago, the Pearson Commission referred to the widening gap between rich and poor countries as "the central problem of our time". It is still is. That is why Oxfam would like to see the next HDR attach more weight to the issue of global redistribution through aid, debt relief and trade reforms, and to national redistribution.
Technology and development: the HDR message
Like its predecessors, HDR 2001 tackles a development issue of profound importance. Technology is transforming social and economic relations within and between countries. The opportunities for wealth creation are enormous, as is the threat of increased marginalisation and rising inequality.
To counteract the threat and seize the opportunity, the HDR calls for "a new partnership between technology and development." It argues powerfully that technology has the potential both to act as a catalyst for growth, and to distribute the benefits of growth more widely. In addition to a general endorsement of technology, the HDR comes down firmly on the side of a positive role for biotechnology, subject to caveats concerning regulation and public safety.
Oxfam welcomes the decision to focus on technology. The interaction of new technologies in information and communications, genetics and other areas with globalisation has profound implications for the communities and countries that we work with. HDR 2001 will play an important role is informing a much-needed public debate.
Of course, there is a danger that any debate in this area will degenerate into a dialogue of the deaf between rival camps characterising each other as die-hard 'technophobes' or 'technophiles'. The HDR 2001 inevitably will be accused of having a foot in both camps, which may be no bad thing. But NGOs and others will use the Report as a springboard for future debate.
Turning to the content of the HDR, there is much to commend. Much of what is said in Chapter 2 on the pace of technological change, the spread of the Internet and the associated digital divide, the shift in production patterns may not be new, but it is set out in compelling style.
The Report also captures some important examples of how poor countries and poor communities are reaping the benefits of the technological revolution. The use of new technologies to create low-cost 'phone systems in Tanzania, low cost Internet access in India, and low cost computers in Brazil. Similarly, the use of Internet and mobile phones by organisations of the poor to share meteorological information, and information on credit and other markets, illustrates the scope for technology transfer.
For the HDR, the adaptation of new technologies at a micro-level is mirrored in the emergence of 'technological hubs' such as Bangalaore, Sao Paulo and El Ghazala, and in examples of developing countries attracting foreign investment bearing new technologies. All of which is presented as evidence in support of the central thesis that latecomers have the advantage of gathering the fruits of technological innovation, without having to meet the capital costs of producing it.
Some problems with the HDR's techno-optimism
At one level, it is difficult to criticise the HDR. Every argument in favour of new technology is closely followed by warnings about the need for adequate regulation, the protection of public health, and the need to integrate technology into coherent development strategies. And every warning is followed by an optimistic assessment of the potential for leaping the technological divide. But Oxfam does have some serious concerns. These relate to the treatment of patents, the assessment of biotechnology, and the analysis of technology transfer.
Patents, power and (the absence of) transnational companies.
Chapter 5 of the HDR addresses the issue of patenting and pharmaceutical products. Oxfam has a special interest in this issue. Our Cut the Cost the campaign has highlighted the detrimental impact of TRIPS rules on patents for the prices of medicines, and hence for the access of poor people to those medicines. We have also worked with partners and governments in South Africa, Brazil, India, Thailand to highlight the threat posed by the influence of pharmaceutical companies in implementing the TRIPS agreement, notably with regard to their ability to persuade the US Trade Representative to threaten trade sanction. In Oxfam's view, the TRIPS agreement bears all the hallmarks of an arrangement geared towards the pursuit of corporate self-interest at the public expense. Ultimately, it has been an exercise in power politics. Yet the issue of power is absent from the HDR's treatment of patenting.
While the HDR acknowledges some of the problems in the design and implementation of TRIPS, it solution, stated several times over, is to argue that "the TRIPS agreement must be implemented fairly."
Reasonable as this may seem as a starting point, it overlooks the fact that the TRIPS agreement itself was the product of a distinctly 'unfair' bargaining process, in which the pharmaceuticals industry, along with computer industry, dictated the rules. It also overlooks the fact that the agreement was weighted heavily in favour of rich countries.
This is reflected in the financial balance sheet. Since 1990, royalty payments to the US have tripled, to $37bn. On the other side of the coin, developing countries are now spending $15bn a year on technology license payments, compared to $2bn in the mid-1980s. This increase in transfers has taken place without any countervailing effort to facilitate technology transfer.
Obviously, TRIPS realpolitik is a fact of life. Oxfam's view is that implementing a bad agreement in a fair way is not a good starting point. After all, reinforcing corporate monopolies designed to raise the cost of technology transfer and vital medicines is not a good starting point for the type of outcomes that the HDR wants to promote.
Realpolitik aside, Oxfam has three concerns about the way in which the HDR addresses - or, more accurately, fails to address - the problems posed by strong patent rules for pharmaceutical products.
First, power politics is conspicuous by its absence from the pages of the HDR, and conspicuous by its presence in the real world of TRIPS implementation. The HDR ignores the threatened use of trade sanctions, notably by the United States, to back-up the demands of the phamaceuticals industry through the threat of trade sanctions under Section 301 of the Trade Act. Currently, at least fifteen countries are on the 'Section 301' Watch List, most of them for seeking to implement policies on compulsory licensing, data disclosure, and parallel importing that, one hopes, the HDR would see as integral to an affordable medicines policy.
Second, the Report ignores the fact that the concerted might of the global drugs industry was brought to bear on the South African government for seeking to develop a cheap drugs policy on HIV/AIDS drugs. And it says nothing about the supine response of most northern governments to the combination of corporate power and big stick trade diplomacy that is guiding implementation of the TRIPS agreement.
Third, there is no assessment of the extent to which corporate power has been abused - or of the measures needed to counteract such abuse in developing countries. It is worth pointing out in this context that the US Office for Fair Trading is now so alarmed at cartel price fixing practices in pharmaceutical products that it has initiated an investigation into the activities of 90 companies.
What worries Oxfam most about the HDR is its failure to acknowledge the realities of corporate power, and its apparent willingness to rubber stamp an agreement which is manifestly not in the best interests of poor people and poor countries. Surely, the HDR should be challenging what is, at heart, a profoundly unfair set of rules, as many developing countries are now starting to do. And is it really in keeping with the best traditions of the HDR to accept a global patent system built on the principle of 'one-size-fits-all', regardless of the interests of the poor?
To those who regard any challenge to the TRIPS agreement as incipient
Luddism, Oxfam notes that the chorus of critics is growing steadily. It
includes not just NGOs but renowned free trade economists like Jagdish
Bhagwati, the Financial Times, the Economist and eminent scientists, all
of whom are calling for more limited patent protection in the interests
of public welfare. Oxfam would like to see the next HDR climb off the
fence on the TRIPS issue and use its authority to work for something better.
Biotechnology and the poor
The HDR advisedly warns of the potential risks associated with biotechnology, but it nonetheless comes down firmly on the side of an optimistic assessment. It argues, in my view unfortunately, that consumers in rich countries tend to worry about food safety, bio-diversity, and Monarch butterflies, while "farming communities in developing countries are more likely to focus on potentially higher yields and greater nutritional value." Oxfam is concerned that the HDR overstates the potential inherent in biotechnology and understates the problems, while at the same time failing to consider more basic and intermediate technologies.
In evidence of the potential benefits of biotechnoloigal innovation,
the Report points
There are problems at a number of levels with this argument. Perhaps the most fundamental concerns corporate control over the process of biotechnological innovation. In virtually all cases, short-term economic considerations have driven the selection of genetic interventions, rather than choices based on the interests of public health and the poor.
Companies have sought transgenic manipulations that enhance the value of their own patents, notably in the cases of Buctril and Roundup. Both Du Pont and Monsanto have concentrated their research efforts of transferring into seeds those genes that confer resistance to their own herbicides. Their efforts have been guided by a concern to maximise coroprate profit by locking farmers into the use of their products.
But there are three wider problems with the HDR perspective. First, it is not true, in the case of India at least, that the Green Revolution, at least in its first twenty years, resulted in lower food prices or increased per capita food consumption. What it did do was to increase inequalities between states and between farmers. Important (though erratic) as the productivity gains were, the new technologies were not integrated into an effective strategy for poverty reduction and enhanced food security.
The second problem concerns risk. Britain and most of Europe has elected to impose a moratorium on GM crops. We know from countless surveys that the vast majority of consumers are resolutely opposed to their development. The scientific community is divided over the risk of unleashing new genetic structures, and over the appropriate time period for assessing that risk. As Professor Stephen Jones, a geneticist at London University has argued, when a new gene structure is exposed to nature "it is impossible to know what it is going to do next."
Against this background, is it really appropriate to advocate what amounts to a two-tier system in which the citizens of poor countries take what may be extreme health and environmental risks in order to achieve uncertain productivity gains?
The third, and most important, issue concerns the benefits of biotechnology. According to the HDR, these are potentially momentous is terms of productivity gains, though the jury is still out on this. The HDR team also points to potential health gains of GM crops. The Report cites Golden Rice, genetically engineered to contain beta carotine, a Vitamin-A precursor, as an example of a GM crop that could unleash huge public gains. This reinforces other arguments - notably those advanced by the Monsanto corporation in its 'feed the world' advertisements - that biotechnology holds the key to reducing world hunger.
Such arguments are unconvincing. Countries such as Vietnam, Indonesia and the Philippines have dramatically reduced Vitamin A deficiency through relatively low-cost health monitoring systems. More generally, three-quarters of all malnourished children in the developing world live in countries with food surpluses. Some of the developing world's most successful agricultural exporters - such as Brazil - have become more adept at feeding European cows with high protein grains than at feeding their own vulnerable populations.
The problem in these countries is that people are hungry either because they lack the income to buy food, or the land to grow it. Their deprivation is the product not of food availability, but of public policy choices that reinforce their poverty. All of which suggests that efforts to tackle hunger should start with poverty. Agrarian reform, investment in infrastructure, the redirection of public spending towards crops produced by the poor, the development and provision of accessible intermediate technologies, social insurance arrangements and so on are likely to have far more powerful effects than biotechnology.
Despite the absence of compelling evidence on its benefits, the biotechnology bandwagon is gaining momentum. In India, the government of Andhra Pradesh, advised by that well respected development body, the McKinsey Corporation, is about to embark on a massive transformation of its agricultural system. Under its Vision 2020 plan, the government is proposing to introduce Golden Rice, GM cotton and, according to some reports, Roundup Ready soybean.
This plan has been the subject of a Citizens Jury, of the type advocated by the HDR. Like the Action Aid jury cited in the report, the Andhra Pradesh jury came down strongly against the introduction of GM crops.
Technology hubs and the Technology Achievement Index
The HDR places great weight on the adoption of new technologies - and rightly so. But there are some problems with the way in which it approaches this issue. Oxfam believes that more weight should be attached to the way in which technology is integrated into and linked with local production systems.
Success in international trade depends increasingly on success in climbing the technological ladder into higher value-added areas of production, and value-added is increasingly synonymous with technology. Since 1980, the share of high- and medium-technology products in world trade has risen from one third to one half, while the share of primary products has fallen by half to 12 per cent. This trend will continue, with labour intensive manufacturing goods already starting to suffer some of the terms of trade effects experienced by primary commodity producers.
In order to assess the performance of developing countries in climbing the technological ladder, the HDR looks at two indicators. It borrows from the ultimate 'techy' journal Wired an assessment of technological hubs. Wired's ranking system indicates that Bangalore ranks alongside Cambridge, while Sao Paulo outperforms Singapore.
Such outcomes, of course, point to the absurdity of the criteria used. From a development perspective, what is significant about both Bangalore and Sao Paulo is that the absymal performance of both India and Brazil in tackling mass exclusion from educational opportunity. Mean year of schooling in India is only 5, and Brazil has a primary school completion pattern more typical of sub-Saharan Africa than a hi-technology economy. HDR acknowledges the problem. But the conclusion is that far more attention should have been paid to strategies for overcoming inequalities in education.
There are similar difficulties with the Technology Achievement Index (TAI). This measures a range of indicators, including the share of high and medium-technology exports in total exports. On this indicator, countries like Mexico and the Philippines perform relatively well.
The problem is that the indicator is flawed. In Mexico, the surge in high-technology exports is the product of relocation by US industry. For the most part, this has involved the export of products to be assembled in Mexico for re-export to the US. Over 90 per cent of maquiladora supplies come from the US. Since they are mainly foreign owned and bent on shipping products out as cheaply as possible, they have no interest in developing local linkages, investing in skills training, or supporting education. This partly explains why the maquiladora boom has been more successful in creating jobs than in raising wages.
In terms of developing the TAI, Oxfamwould argue strongly for more sensitive indicators capable of capturing linkages with the local economy, skills upgrading, and the absorbtion of new technologies. In particular, more weight should be attached to the presence or otherwise of domestic technological inputs (rather than final assembly and export data), and to local value-added.