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Number 8 of the Millennium Development Goals calls on the world's countries to "develop a global partnership for development." Like the other seven, this is a worthy goal. But Goal 8 is special: It addresses not only what needs to be done to improve quality of life in the developing world, but also how rich countries can help.

Boiled down, Goal 8 calls on rich countries to give more aid, cancel more debt, and reduce the trade barriers that shut out crops, clothing, and other exports from poor countries. It is a welcome innovation in the discourse on development, because it recognizes the important ways that rich countries influence the economic and physical environment in which poorer countries operate. Rich countries largely set the rules that govern flows of trade, investment, and migration, and they are the major sources of development aid. At the same time, their environmental policies affect the world, including poor countries, disproportionately.

Goal 8 has particular significance for the Americas, where countries span the spectrum of affluence and poverty and are closely connected by migration and trade. The hemisphere's richer countries provide development aid that has been critical for financing, among other things, health sector reform in Latin America. But at the same time, trade barriers in the north hurt countries to the south, foreclosing export opportunities for developing countries and making their products less competitive.

Goal 8 is of crucial importance, yet unlike the first seven goals, it does not include specific numerical targets and deadlines. Instead, its language is vague and open-ended, inviting slippery commitments that reduce accountability. To remedy this, the United Nations has suggested a list of 17 indicators of progress, and the World Bank has launched a new Global Monitoring Report, which monitors rich and poor countries' policies on trade and aid. The Washington, D.C.–based Center for Global Development has created another tool that can be used to measure progress in these areas, the Commitment to Development Index (CDI), which quantifies and compares rich countries' policies as they relate to the developing world.

Foreign aid is the first thing that comes to most people's minds when they ask how rich countries can help poorer ones achieve the millennium goals. Poor countries depend on aid to supplement their governments' spending on everything from building schools to training nurses. Poor countries that cannot access private sources of money are often in the greatest need of aid. Examples include poor Latin American countries such as Haiti and Nicaragua. Furthermore, many higherincome countries such as Mexico, have pockets of extreme poverty and may benefit from donor support for poverty reduction and other human development goals. In 2002, Latin America received about $5 billion in aid, not insignificant but far less than what sub-Saharan Africa receives. While aid is not a panacea for development, poorer countries will make greater headway in such key areas as education, health, and sanitation if both the quantity and quality of aid increase.

Aid "quality" means many things. For example, the United States “ties” about 80 percent of its aid to the purchase of its own goods and services. Studies suggest that such restrictions can reduce the value of aid by 15–30 percent, because they prevent poor countries from using the cheapest suppliers. Also, aid often comes laden with burdensome bureaucratic requirements. In a single year, for example, Tanzanian officials had to prepare 2,400 reports and host more than 1,000 meetings for donors.

What's more, the effectiveness of aid is diluted by unsustainable debt. Highly indebted countries, such as Nicaragua, often lurch from month to month scrambling for funds to cover debtservice payments, casting a cloud of uncertainty over government decisionmaking. Debt relief is essential for ending this cycle.

Recent developments in foreign aid do harbinger improvement. The Group of Eight industrial countries pledged in June to continue and “top up” debt relief for poor countries. The United States appropriated $1 billion for this fiscal year for the Millennium Challenge Account, a new initiative that supports poor countries that perform well on economic and governance indicators. Among the 16 recipient countries selected this year were Bolivia, Honduras, and Nicaragua.

Ranking the rich
The Center for Global Development's Commitment to Development Index (CDI) scores 21 of the world's richest countries in seven policy areas pertaining to Millennium Development Goal 8... [Read more]

Fulfilling Goal 8 requires more than aid. Free trade can be a major force for development and poverty reduction. Recognizing this, the U.N. targets developed for Goal 8 explicitly call for removing trade barriers against poor countries. Latin American exports were valued at $350 billion in 2002, about 5 percent of total world exports. This figure would have been a good deal higher if not for rich countries' tariffs, quotas, and subsidies.

Ironically, rich countries' highest trade barriers most often apply to imports from poorer countries, such as textiles and agricultural goods. Last year the United States collected more than seven times as much in tariffs from Guatemala as from Ireland, even though U.S. imports from Ireland are almost nine times greater in value. In a recent case brought by Brazil, the World Trade Organization (WTO) found that U.S. cotton subsidies unfairly distorted global prices and violated existing trade rules. Even Mexico, which enjoys improved market access through the North American Free Trade Agreement (NAFTA), has faced unfair competition. According to one study, U.S. agricultural subsidies allowed exporters to sell corn in Mexico at 30 percent or more below the cost of production during 1999–2001.

The United States' geographic proximity and traditionally close trade relationship with Latin America make its policies particularly relevant to the region. Despite its high-profile barriers, however, the United States is a relatively "fairer" trading partner, with lower tariffs and subsidies than the European Union, Canada, or Japan.

Looking ahead, proposed regional free trade agreements, such as the Free Trade Area of the Americas and the Central American Free Trade Agreement, could give Latin American countries increased access to large markets. Poorer countries, however, often have weak bargaining positions in these negotiations, with little leverage to demand concessions in such critical areas as agriculture. A more promising forum is the WTO, in which poor countries sharing similar concerns have a greater opportunity to join forces.

Indeed, the last WTO meeting in Cancún in September 2003 saw the emergence of a new alliance of poor countries. Even so, rich countries' reluctance to reduce agricultural subsidies and tariffs remained a major stumbling block, and the negotiations ended in a stalemate. The European Union has recently announced its willingness to place export subsidies for agriculture on the negotiating table. Although these account for only 4 percent of tradedistorting agriculture subsidies, the offer could at least put the trade negotiations back on track.

Like trade, foreign investment can be a major engine of development. But it can also be a major source of instability and corruption. Argentina and Brazil have both suffered from recent financial crises stemming from the flight of foreign capital. Natural oil wealth in countries such as Ecuador has attracted foreign investment that has bred corruption and economic mismanagement. In contrast, Mexico has benefited from recent foreign investment, which consists of not only money but also technical and managerial knowledge. Declarations at the U.N. Conference on Financing for Development—held in Monterrey, Mexico, in March 2002—highlight private international capital flows as an important source of resource flows to poor countries, while also urging increased efforts to fight corruption and reform tax rules.

Although the U.N. targets for Goal 8 do not explicitly discuss migration issues, migration policy is one of the most important ways that rich countries affect the lives and prospects of the world's poor. Open migration policies give people from poor countries a chance to work, gain new skills, and send money home through so-called "remittances." Indeed, the World Bank estimates that developing countries received about $93 billion in remittances last year, an increase of more than 200 percent over 1990. Latin America and the Caribbean absorb nearly a third of these flows—almost $30 billion in 2003, or about six times what the region receives in foreign aid. Of course, migration can also lead to problems such as a "brain drain," where talent leaves in search of better prospects overseas. However, workers may also return home with new skills and invest in their home countries. The recent software boom in Bangalore, India, has been fueled by just such investment.

Both Canada and the United States have relatively open migration policies, while Europe and Japan are more restrictive. However, even in countries that are doing well, there is room for improvement. U.S. legislators are considering several proposals for guest-worker programs that would increase opportunities for immigrants to work legally in the United States. Policy changes could also make migration more advantageous to the world's poor. For example, one study estimates that reducing transaction fees on remittances by five to 10 percentage points would yield an additional $5 billion to $9 billion in annual flows.

The seventh Millennium Development Goal highlights the importance of environmental policy within poor countries. However, rich countries' environmental policies have a particularly large effect on the global environment. Rich countries disproportionately consume natural resources and emit greenhouse gases. Poor countries, on the other hand, run the risk of being disproportionately harmed. With weak infrastructure and poor social services, they are particularly vulnerable to the potential effects of global climate change, such as floods, droughts, and the spread of infectious diseases.

Security is another key area where rich countries' policies can promote development, yet the U.N. Goal 8 targets fail to address security issues. This is a serious oversight, as threats from within and without can undermine a country's stability and prosperity and exact a tremendous human toll. When violence consumed Haiti earlier this year, aid workers fled, and citizens were left without even the most basic social services. The international community can play a vital role in preventing and responding to such security threats.

New technologies can be critical drivers of growth and development in Latin America and in other developing regions, benefiting the poor as both producers and consumers. Cell phones, for example, have revolutionized communications in Latin America—with 118 million subscribers today. Vaccines have eradicated polio from the Western Hemisphere. East Asia saw unprecedented growth in the second half of the 20th century, due in large part to its production of consumer electronics first developed by rich countries.

Goal 8 asks rich countries to ensure that the poor can benefit from new technologies, particularly in such areas as essential drugs and information and communication innovations. Typically, new inventions are protected with intellectual property rights, which give inventors temporary monopoly rights over their creations through patents or copyrights. This results in higher prices in the short term but creates an important incentive for people and companies to invest in developing new technologies. The rules in this game are currently governed by a WTO agreement that dictates minimum standards in all countries. In the developed world, and even in richer developing countries such as Brazil, strong intellectual property measures encourage innovation with benefits that usually outweigh the costs. But in poorer countries, fewer innovators benefit from intellectual property rights protection, while the costs—in the form of reduced access to essential technologies—are more severe. Rich countries face the challenge, then, of encouraging innovation while also ensuring poor countries' access to essential technologies.

The importance of these dynamics can be seen in the controversy over AIDS drugs. At the end of 2003, an estimated 40 million people were infected with HIV/AIDS, about 2 million of them in Latin America. After acrimonious debate, the WTO agreed last year that poor countries could import patented generic pharmaceuticals during health emergencies. This was a significant step, but the agreement left other important issues unresolved. The world's poorest countries continue to face strict intellectual property rules that keep prices high in other critical areas such as agriculture and communications. These strict rules also hurt producers, since imitation is often the first step toward industrialization in poor countries. Should the same rules that govern richer and more industrialized countries also apply to poor countries? Thus far, the WTO has not revisited this controversial question. Moreover, in regional trade negotiations, rich countries have sometimes asked for intellectual property rules even more demanding than the WTO's. Such rules are not in the interest of Latin America's poor.

Just as technology dissemination is important, the development of new technologies is also vital to poor countries. In particular, poor countries often have different climates and needs from rich countries', requiring unique technological solutions. Support for new development-friendly technologies—from a malaria vaccine to drought-resistant seed varieties—is essential to the partnership envisioned in Goal 8.

In an increasingly interconnected world, rich countries can both affect and be affected by the world's poor in many new ways. For example, poverty often leads to emigration—legal and otherwise—and is also the source of much economic and political instability in the world. Similarly, rich countries' aid, trade and other policies are of great importance for Latin America and other developing regions. Given their affluence and influence, the rich countries clearly call the shots, and they clearly have a long way to go in fulfilling their Goal 8 promises to the world's poor.

Some rich countries do better than others in creating coherent policies that promote development. But just as poor countries are encouraged to develop action plans for achieving the first seven goals, rich countries all need to start rethinking their own benchmarks. Topping their agenda should be:

• Eliminating agricultural tariffs and subsidies;
• Raising the quality and quantity of foreign aid;
• Opening borders to migration and eliminating biases against low-skilled immigrants; and
• Increasing international efforts to reduce greenhouse gas emissions.

The world is watching. Will rich countries deliver on their millennium promises to the poor? The stakes are high, for rich and poor countries alike.

Alicia Bannon is a research assistant and David Roodman is a research fellow at the Center for Global Development in Washington, D.C.

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