Progress towards the Millennium Development Goals, Goal 8 - Develop a global partnership for development

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1 Department of Economic and Social Affairs Progress towards the Millennium Development Goals, Goal 8 - Develop a global partnership for development The Millennium Declaration embodies partnership between developed and developing countries. Millennium Goal 8 calls for more official development assistance; measures to ensure debt sustainability in the long term; an open, equitable, rule-based, predictable and non-discriminatory multilateral trading and financial system; and measures to address the special needs of least developed, landlocked and small island developing states. A meaningful partnership between rich and poor countries must also address developing countries access to technology, medicines and jobs for their growing populations. Charting the ebbs and flows of official development assistance The Monterrey Conference on Financing for Development in 2002 came at a critical time. In 1970, the United Nations General Assembly proposed a target for ODA of 0.7 per cent of donors national income. 1 For many years afterwards, the collective contributions of members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) hovered around half this 1 How the indicators are calculated Indicators of official development assistance Provision by donor countries of official development assistance is monitored on the basis of the following indicators: the total ODA to all developing countries as a percentage of donors national income, the ODA to least developed countries as a percentage of donors national income, the share of ODA that is allocated to basic social services and the share of ODA that is untied. level. But during the 1990s, it fell by about one third, reaching an all time low of 0.22 per cent in From 2002, however, aid flows began to recover as donors started to deliver on commitments made in connection with the Monterrey Conference. The ratio of ODA to donors national income rose to 0.23 per cent in 2002 and to 0.25 per cent in In 2004, it reached a record high of $79 billion. Full delivery of Monterrey-related commitments would result in an increase in ODA by a further $20 billion, corresponding to 0.29 per cent of donors national income by Only five donors have achieved the longstanding United Nations aid target of 0.7 per cent of their gross national income (see Table 1), although six more have indicated that they intend to do so before If these pledges are honoured, ODA will exceed $100 billion in Within their total aid packages, developed countries agreed to provide at least per cent of their gross national income to assist the 50 least developed countries (these are countries designated as having acute development challenges.) Even though they account for only 14 per cent of the developing world s population, the least developed countries now receive about one third of all aid flows. But this is still not enough. Aid to least developed countries fell from about 0.09 per cent of donors national income a decade ago to about 0.05 per cent in 2001, but slightly increased in 2002 to 0.06 per cent and in 2003 to 0.08 per cent of donors income. Most of the recent increase in foreign aid has been used to cancel debts and meet humanitarian and reconstruction needs in the aftermath of emergencies. Debt relief, while welcome, often goes to countries that have already ceased debt repayments, and does not necessarily provide a new source of financing for social services or poverty reduction. Similarly, emergency and disaster relief, although essential, do not address long-term development needs.

2 Fully delivering on these commitments will be a challenge for many donors, particularly given recent increases in budget deficits. More recent announcements, such as pledges to boost AIDS funding, also reflect renewed international commitment to meet the Millennium Development Goals. Nevertheless, total ODA will still be well short of the amount estimated to be required to ensure that the Millennium Development Goals are achieved. Figure 1. Official development assistance from developed countries, (constant US dollars and as a proportion of donor country gross national income) Table 1. In 2004, only five countries reached the overall level of 0.7 per cent of their gross national income for official development assistance Net ODA as percentage of OECD/DAC donors' gross national income Norway 0.87 Finland 0.35 Luxembourg 0.85 Germany 0.28 Denmark 0.84 Canada 0.26 Sweden 0.77 Spain 0.26 Netherlands 0.74 Australia 0.25 Portugal 0.63 Austria 0.24 France 0.42 New Zealand 0.23 Belgium 0.41 Greece 0.23 Ireland 0.39 Japan 0.19 Switzerland 0.37 United States 0.16 United Kingdom 0.36 Italy 0.15 Source: OECD, 11 April The proportion of ODA to basic social services The World Summit on Social Development at Copenhagen in 1995 proposed a mutual commitment between interested developed and developing country partners to allocate, on average, 20 per cent of ODA and 20 per cent of the national budget, respectively, to social programmes such as basic education, health, population, and poverty-focused water and sanitation projects. The share of bilateral aid that can be allocated to sectors and directed towards these basic social services has risen regularly from 8.8 per cent in to 12.3 per cent in , 14.6 per cent in , and almost 17 per cent in Figure 2. Gross bilateral ODA (in 2000 US$ billions). 2

3 Gross Bilateral ODA (US$ 2002 billions) Education Other government services Programme and other assistance Debt relief Health and Water Supply Production and infrastructure Emergency and reconstruction aid Some of the recovery in aid since the mid-1990s has gone to health, water and government capacity-building. About half of the assistance going to basic education, health, and water and sanitation is to promote gender equality and women s empowerment. What s worrying is that the share devoted to agriculture and physical infrastructure has diminished. This trend needs to be reversed if the poorest countries are to achieve the MDGs. Emergency and reconstruction aid has doubled as crises have multiplied and will rise further with the additional aid following the Asian tsunami. Debt relief is also up, but releases new money for development only if the debt was being repaid. Proportion of bilateral ODA that is untied It is widely recognized that tying aid to procurement from suppliers in a donor country reduces the cost-effectiveness of aid and its flexibility in implementation. Acknowledging this, members of OECD s Development Assistance Committee have raised the share of their aid that is untied from about 68 per cent in 1990 to 92 per cent in However, the share of untied aid to the least developed countries has not risen at the same rate. In 2001, the Development Assistance Committee adopted a recommendation on untying aid to the least developed countries, intended to spur progress in this area. 4 Addressing the special needs of landlocked countries and small island developing States Landlocked developing countries present special challenges. They are often far from markets and the cost of exporting goods is higher than for other countries. Most have recorded disappointing economic results. Small island developing States also face unique constraints. They have a narrow resource base and high costs for energy, small domestic markets and heavy dependence on a few external and remote markets. They also have little resilience to cope with natural disasters or resources to protect fragile natural environments. 3 Indicators on development assistance to landlocked countries and small island developing states Progress made to address the special needs of landlocked developing countries and small island developing states is assessed on the basis of the ODA received as a percentage of the recipient countries gross national income.

4 Despite their special needs, aid to landlocked countries as a percentage of their national income rose slightly at the beginning of the 1990s, but fell in 1996 and then stayed at around 6 per cent during the late 1990s until Figures for 2002, however, show an increase of the ratio to 7.6 per cent, equivalent to $8.8 billion. Figures for 2003 show a decrease in the ratio to 7.4 per cent, although, in absolute terms, the amount increased to $9.9 billion. Official development assistance received by the small island developing states as a percentage of their gross national income (GNI) fell between 1990 and 2003, from 2.8 per cent to 1.1 per cent, totalling $1.7 billion in It should be kept in mind, however, that the small island developing states include countries with very diverse incomes per capita (ranging from least developed to high-income countries) and thus have diverse ODA/GNI ratios; within the group, a number of small island developing states now need less aid, having successfully diversified their economies by developing tourism, offshore banking, or clothing or other light industries. Achieving the MDG on poverty in the least developed countries, landlocked developing countries and small island developing states remains a daunting challenge. Extreme poverty, structural handicaps, such as high international transport costs and isolation from world markets, poor infrastructure, lack of access to information and technology, and weak human capacity make them extremely vulnerable to external shocks, natural and man-made disasters, and communicable diseases. Despite the efforts of their governments to mobilize meaningful domestic resources and attract foreign investment, ODA will remain a critical source of external financing for poverty reduction and sustainable development in these countries in the years to come. Opening markets to developing countries If developing countries are to realize the potential of international trade to enhance economic growth, the main barriers to their exports need to be removed. These include tariffs (taxes) imposed by developed countries on imports from developing countries and the subsidies that developed countries provide to domestic agricultural producers. Some improvements in removing trade barriers for developing countries have been made in recent years. Initiatives in 2001 by the world s two largest markets, the European Union s Everything but Arms arrangement for the LDCs and the United States African Growth and Opportunities Act, provided increased trading opportunities for the poorest countries. Other developed countries such as Australia, Canada, Japan, Norway and Switzerland have also opened up their markets to goods from least developed countries. The Doha round of multilateral trade talks, under the aegis of the World Trade Organization (WTO), was promoted as a development round because it was expected to deliver long-sought trade reforms that would help developing countries to export their goods to richer nations, thereby spurring their economic growth. These efforts were seriously compromised by the collapse of negotiations in Cancún in September The goal of improving market access is monitored by four indicators that reflect the level and structure of tariffs imposed on exports from developing countries and the domestic subsidies provided by developed countries. Both sets of policies distort trade and restrict growth in developing countries. Duty-free access The share of exports, excluding arms, from developing countries that entered developed countries free of duty has, in , risen for developing countries and improved modestly for least developed countries. In 2000, the proportion of developing country exports eligible to enter duty free into developed country markets was 63 per cent. In 2003, the figure was 70 per 4 Indicators on market access International efforts to remove barriers to trade from developing countries are monitored on the basis of the share of exports from developing and from the least developed countries that enter developed countries free of duty, and on the basis of trends in average tariffs imposed on exports from developing countries of agricultural products, textiles and clothing.

5 cent. The figures for exports from LDCs were 77 per cent and 80 per cent in 2000 and 2003, respectively. When both arms and oil are excluded, the proportion of duty-free exports from developing countries increased from 61 per cent in 2000 to 64 per cent in 2003, and from 70 per cent to 72 per cent in LDCs over the same period. Table 2. Proportion of total developed country imports (by value and excluding arms) from developing countries and least developed countries, admitted free of duty Percentage of total developed country imports Excluding arms: Developing countries Least developed countries Excluding arms and oil: Developing countries Least developed countries Source: United Nations Statistics Division, Millennium Indicators Database, (accessed June 2005); based on data provided by the World Trade Organization (WTO). Almost two thirds of exports from developing countries now enter developed countries duty-free. When looking at the period from 1996 to 2003, the proportion of duty-free imports from both developing countries and LDCs has increased noticeably. However, when both arms and oil are excluded from duty-free imports from LDCs, the proportion has actually decreased. These different trends can be explained by two developments. First, the bias on the part of developed country in protecting products of export interest to developing countries is still prevalent, despite the reduction in tariffs arising from the implementation of the WTO Uruguay Round commitments. As the growth and volume of exports from some developing countries continue to expand, the share of these exports entering duty free will either decrease or remain constant. An improvement in this indicator, therefore, requires a change in the structure of developed country protection, or a shift in the composition of developing country exports to include a greater share of products that are not tariff constrained in developed country markets. Second, the effect of initiatives specifically in favour of LDCs are now more noticeable. Of these, of particular note is the Africa Growth and Opportunity Act of the United States. The European Union also enacted a scheme to benefit LDCs, but this has not had a significant impact on the figures since the scheme augmented an already extensive set of duty-free and quota-free market access arrangement in favour of LDCs. Figure 3. Proportion of imports from developing countries (excluding arms and oil) admitted to developed countries duty-free, (Percentage of value) 5

6 Tariffs on agriculture, textiles and clothing Developed countries tariffs remain high on goods that are strategically important to developing economies, such as textiles and farm products. Tariffs imposed by developed countries on imports of agricultural and textile products from developing countries declined marginally over the period Some of the reductions are an outcome of the Uruguay Round of negotiations, which has resulted in a reduction in overall tariffs; the remaining are due to preferential trading agreements. Ongoing multilateral trade negotiations provide an opportunity to make the markets of all countries more accessible to exports from the developing world. Two of the categories for which average tariffs are calculated were under the jurisdiction of the Agreement on Textiles and Clothing, which expired at the end of the The agreement sanctioned the use of quantity restrictions, but when these are eliminated, countries can protect their markets by raising their tariffs on imports. Figure 4. Developed countries average tariffs on imports of key products from developing countries, (percentage) Support and protection for domestic agriculture in developed countries Tariffs are not the only impediment to exports from developing countries. Subsidies to producers in developed countries enable them to sell their output at a lower price than would otherwise be the case to the disadvantage of producers from developing countries. This is particularly important for agricultural products, since they represent a large part of developing countries trade. It is estimated that trade in agricultural products without these subsidies would benefit developing countries by some $20 billion per year. Annual agricultural support by OECD countries remains at Indicators on other policies and interventions to facilitate market access Efforts by developed countries to create an open and non-discriminatory trading system for developing and least developed countries are assessed on the basis of domestic agricultural subsidies measured as a percentage of total gross domestic product in OECD countries and on the basis of the support provided to developing countries to help them build their trade capacity. around $350 billion, but has fallen as a share of their growing gross domestic product (GDP). The nature of support is also changing. Support that distorts prices and production has declined from 60 per cent to 46 per cent of total support. Yet it still accounts for a third of farmers incomes. And prices paid to rich world farmers are some 31 per cent higher than world market prices. 6

7 Figure 5. Value of agricultural subsidies in developed countries, (billions of US dollars and as a proportion of gross domestic product) Building capacity in trade At Doha, donors committed to providing increased support to help developing countries, especially LDCs, build the capacity to trade and to integrate into world markets. The World Trade Organization and the OECD have compiled the Doha Development Agenda Trade Capacity Building Database that lists and quantifies such activities by bilateral and multilateral donors from 2001 onwards. Table 3 below presents the latest available data for the proportion of ODA provided to build trade capacity. Table 3. Proportion of ODA provided to help build trade capacity (trade-related technical assistance/capacity-building) Trade-related technical assistance/capacity-building as a percent of total sector-allocable ODA Africa Americas Asia Europe Oceania Global programmes World Source: United Nations Statistics Division, Millennium Indicators Database, (accessed June 2005); based on data provided by the OECD. Easing the debt burdens of the poorest countries Over the years, developing countries have borrowed extensively from official lenders and commercial banks to finance their development. But interest charges and repayment of these loans present difficulties, especially when the amounts involved become large in relation to the funds a country has available, principally through its export earnings. Recent weakening prices for commodity exports from the poorest countries have made the problem more acute. The major current international effort targeted specifically at improving developing countries debt sustainability is the Heavily Indebted Poor Countries (HIPC) Initiative. There are 38 countries considered likely to be eligible for assistance under the enhanced HIPC Initiative. Almost all are in sub-saharan Africa. By April 2005, twenty-seven countries were 7

8 receiving debt relief under the Initiative. Eighteen of these countries had reached "completion point" and were receiving irrevocable debt relief (see table 4). These 18 countries will benefit from an agreement reached by the major developed countries in June 2005 to provide for the full cancellation of the $40 billion they owe to the World Bank, the International Monetary Fund and the African Development Bank. As many as 20 other countries could be eligible if they satisfy criteria for good governance and tackling corruption. This would eventually boost the total additional debt relief to more than $55 billion. Among these 20 additional countries, nine are between the "decision point" and "completion point" and are already receiving interim debt service relief. The remaining 11 countries are potentially eligible for the Initiative but have been beset by such persistent difficulties as internal civil strife, cross-border armed conflict, governance challenges and substantial arrears on debt payments. A few of them, however, have made progress towards establishing a track record of sound macroeconomic performance which is a requirement for qualifying for debt relief. Table 4. Enhanced HIPC Initiative: status as of April 2005 Countries that have reached Decision and Completion Points (18) Countries between Decision and Completion Points (9) Countries still to be considered for Decision Points (11) Benin Cameroon Burundi Bolivia Chad Central African Republic Burkina Faso Democratic Republic of Congo, Comoros Ethiopia Gambia Congo Ghana Guinea Côte d Ivoire 1 Guyana Guinea-Bissau Lao PDR Honduras Malawi Liberia Madagascar Sao Tome and Principe Myanmar Mali Sierra Leone Somalia Mauritania Sudan Mozambique Togo Nicaragua Niger Rwanda Senegal Tanzania, United Rep. of Uganda Zambia * Côte d Ivoire reached the decision point under the original HIPC Initiative, but has not yet reached the decision point under the enhanced HIPC Initiative. Source: International Monetary Fund and World Bank (accessed June 2005). The ratio of debt service to exports averaged around 23 per cent in low-income economies over the period 1990 to For the 27 countries that reached their decision point under the Enhanced HIPC Initiative, the ratio of debt service to exports is expected to fall from an average of 16 per cent in to 10 per cent in Small, open economies may have relatively high levels of exports (and imports) and yet may face problems in meeting debt service obligations, particularly when debt service payments due on public debt are high relative to government revenue. A large economy may have proportionately smaller exports and still find its debt payments sustainable. In addition, countries that depend on one or two commodities for the bulk of their export revenues may be particularly vulnerable when prices for commodities fall. For this reason, in forming a picture of debt sustainability, it is necessary to look at other indicators, such as the ratio of total debt to gross national income, the size of international reserves relative to total debt, and debt maturing within a year s time. 8

9 Table 5. Debt service as a percentage of exports of goods and services Ratio of debt service to exports Northern Africa Sub-Saharan Africa Latin America and the Caribbean Eastern Asia Southern Asia South-Eastern Asia Western Asia Oceania Commonwealth of Independent States CIS, Europe CIS, Asia Transition countries of South-Eastern Europe Source: United Nations Statistics Division, World and regional trends, Millennium Indicators Database, (accessed June 2005); based on data provided by the World Bank. Target 16 - In cooperation with developing countries, develop and implement strategies for decent and productive work for youth Globalization is being driven by technological advancements and improvements in labour productivity throughout the developed and developing world. But despite the many benefits of globalization, nearly half the world s 2.8 billion workers still earn less than $2 a day. More than 500 million of these workers live on half that much. Indicators on youth unemployment Efforts to provide decent and productive work for youth are monitored on the basis of the youth unemployment rate, defined as the percentage of unemployed people aged 15 to 24 in the labour force of the same age group. Reducing poverty among them requires growth in employment as well as growth in the productivity of employment. Employment challenges remain particularly worrisome for young people. Of the million people unemployed in the world, 82.5 million are between the ages of 15 and 24. Youth in developing regions are three times more likely than adults to be unemployed and more than twice as likely to be unemployed in the developed regions. The total number of youths has increased by over 115 million since 1990, to nearly 1.2 billion in 2004, and this figure is expected to grow by an additional 64 million by Whether this demographic trend represents an asset or liability very much depends on society s ability to increase the availability of decent and productive work. Overall, young people continue to suffer from marked disadvantages in the labour market when compared with older adults. Youth unemployment rates exceed adult unemployment rates in all regions (see Table 6). The ratio shows that youth unemployment rates are two to six times the rates for unemployment adults. The greatest disadvantage for young people relative to adults is in Southern and South-Eastern Asia, where young workers are six and five times, respectively, more likely to be unemployed than older workers. 9

10 Table 6. Ratio of youth unemployment rate to adult unemployment rate, Developed regions Commonwealth of Independent States Northern Africa Sub-Saharan Africa Latin America and the Caribbean Eastern Asia Southern Asia South-Eastern Asia Western Asia Oceania Source: United Nations Statistics Division, World and regional trends, Millennium Indicators Database, (accessed June 2005); based on data provided by the International Labour Organization (ILO). The youth unemployment rate increased over the decade in South-Eastern Asia, the Commonwealth of Independent States, Latin America and the Caribbean, and Eastern Asia, and decreased slightly in Northern Africa and sub-saharan Africa (see Table 7). Table 7. Youth unemployment rate (percentage), Total Women Men Total Women Men Total Women Men Developed regions CIS Northern Africa Sub-Saharan Africa Latin America and the Caribbean Eastern Asia Southern Asia South-Eastern Asia Western Asia Oceania Source: United Nations Statistics Division, World and regional trends, Millennium Indicators Database, (accessed June 2005) based on data provided by the ILO. ; 10

11 Table 8. Share of youth unemployment in total unemployment, Developed regions Commonwealth of Independent States Northern Africa Sub-Saharan Africa Latin America and the Caribbean Eastern Asia Southern Asia South-Eastern Asia Western Asia Oceania Source: United Nations Statistics Division, World and regional trends, Millennium Indicators Database, (accessed June 2005), based on data provided by ILO. The gender dimension of youth unemployment Unemployment among young women is significantly higher than that among young men in almost all regions. The gender gap is particularly evident in Northern Africa and Southern Asia, where, rather than closing, the gap has widened during the decade Only in sub-saharan Africa and Eastern Asia do data indicate higher unemployment for young men than young women. However, the relatively lower rates for women do not always reflect the availability of productive work opportunities. In sub-saharan Africa, a larger number of women cannot afford to be unemployed and thus work in subsistence agriculture, low-income jobs in smallholdings, or in other forms of unpaid and informal work. Figure 6. Growth in value added per worker, total economy (1990-the last year for which data are available) Harnessing the energy of youth There is a need for cooperation among policymakers, civil society and international organizations to address the multitude of challenges facing young people. High and persistent unemployment among youths represents a waste of the world s most valuable resource our young people. Moreover, the absence of hope and promise for youth is a potential source of unrest, conflict and violence. 11

12 Target 17 - In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries An issue that has polarized international trade negotiations and highlighted the growing rift between poor and rich countries is access to medicines. Target 17 stresses the need to make essential drugs available and affordable to those who need them. Millions of people die prematurely or suffer unnecessarily each year from diseases or conditions for which effective medicines or vaccines exist. Essential drugs save lives and improve health, but their potential can only be realized if they are accessible, rationally used and of good quality. Providing access to essential drugs is an integral part of a national health system. Progress continues to be made in increasing the availability of essential drugs to developing regions, as a result of efforts by national Governments, donors, the private sector and others. In 2001, the World Trade Organization ruled that the TRIPS (Trade-related Aspects of Intellectual Property Rights) Agreement, which, among other things, protects patents on drugs, should be interpreted so as to support countries rights to safeguard public health and promote access to medicines for all. This was followed by a decision of the General Council of the World Trade Organization taken in 2003 to ease restrictions on the importation of generic drugs by the poorest countries for the treatment of rapidly spreading high-cost diseases, such as AIDS, malaria and tuberculosis. Growing access to HIV drugs It is estimated that 39 million adults and children were living with HIV at the end of 2004 and in need of care, including antiretroviral drugs. Access to antiretroviral therapy is still very limited in developing countries. However, various initiatives to improve access are now being undertaken by international agencies, governments, non-governmental organizations and private entities. In 2004, the number of people receiving antiretroviral drugs for the treatment of HIV and AIDS doubled in sub-saharan Africa and Asia. But there are another 6 million people about three quarters of whom are in sub-saharan Africa who could benefit from treatment. Though the price of generic versions has dropped sharply as a result of collaboration between the public and private sectors, the cost of these drugs for the poorest countries is still high. Moreover, these countries face challenges in making these drugs widely available because of their weak health systems and limited capacity to reach those in need, factors that remain the biggest obstacles to treatment. In 2002, ten antiretroviral compounds recommended for the combination treatment of HIV infection in adults and children were included in the WHO s Model List of Essential Drugs. Essential ingredient for combating malaria is in short supply New combinations of drugs especially those that contain a compound derived from the Artemisia annua plant are proving effective in controlling malaria. But access to this natural substance remains difficult owing to the high cost and limited supply. As the plant has a six- to eight-month growing season, accurate forecasting of demand is a critical factor in maintaining the supply of artemisinin-based combination therapy, or ACT. Production and financing of ACT remain the major challenges to meeting the projected needs of 132 million people in Insufficient drug supplies and inadequate drug policies limit progress against tuberculosis If taken as prescribed, a combination of drugs is generally effective in treating tuberculosis. Though these drugs are relatively inexpensive in their generic forms, the cost is still too high for many of the poorest countries. In these countries and elsewhere, the effectiveness of treatment strategies including the internationally recommended protocol called DOTS (see Goal 6) and the prospect of expanding them are limited by insufficient drug supplies and inadequate drug policies. 12

13 Target 18 - In cooperation with the private sector, make available the benefits of new technologies, especially information and communications Technology enhances people s lives and can spur national economic growth. Yet access to such technology is unevenly distributed. Only 11 per cent of Indicators on access to new technologies the world s population had access to the Internet in 2003, and over 70 per cent of these people lived in developed countries. 5 The use of information and communications technology (ICT), for example, can make governments more transparent and therefore reduce corruption and lead to better governance. It can help people in rural areas find out about market prices and sell their products at a better value. It can also overcome traditional barriers to better education by making books available online and opening the door to e-learning. Mobile phone and Internet services have grown tremendously over the past decade. Yet, the gap between rich and poor in access to communications services must be reduced if the benefits of the global information society are to be shared. Bridging this digital divide has risen to the top of the development agenda. Recent data are encouraging: use of the Internet in developing countries is rising rapidly. Telephone access has more than quadrupled Access to telephone networks has more than quadrupled from 10.1 subscribers per 100 inhabitants in 1990 to 40.5 subscribers in 2003 (see Table 9). The most rapid growth occurred in the use of mobile phones from less than 0.3 mobile phone subscribers per 100 population in 1990, to 23 in 2003 (added according to Vanessa s ,10/03/05). This mobile boom has dramatically increased total (fixed and mobile) telephone access in the developing world, from 2 per cent in 1991 to 25 per cent in Mobile phone service is often the first area where competition has been introduced and private investment allowed. Competition has led to a drop in prices and market innovation. The introduction of prepaid cards for mobile networks has also driven growth, particularly in developing countries where many citizens would not qualify for conventional subscriptions. One in five people around the world now has a mobile phone, up from one in 339 in In 2003, the number of mobile telephone subscribers surpassed fixed ones, and there was strong growth in developing regions in particular. China, for instance, surpassed the United States to emerge as the largest mobile phone market in the world. Growth has been robust in Africa, where almost all countries now have more mobile than fixed telephone subscribers. As a whole, developing countries now account for 45 per cent of all telephone subscribers in the world, up from just 19 per cent in Table 9. Telephone lines and cellular phones per 100 population, 1990 and World Developed regions CIS Transition countries South-Eastern Europe Developing regions Northern Africa Sub-Saharan Africa Latin America and the Caribbean Eastern Asia Southern Asia South-Eastern Asia Western Asia Oceania Source: United Nations Statistics Division, World and regional trends, Millennium Indicators Database, (accessed June 2005); based on data provided by the International Telecommunications Union (ITU). 13 The indicators used to track progress in the availability of new technologies measure the number of telephone and cellular phone line subscribers, the number of personal computers and the number of Internet users.

14 Personal computers and access to the Internet also on the rise The number of personal computers (PCs) rose from around 120 million in 1990 to 691 million in Worldwide, PCs per 100 people stood at about 10 per cent at the end of Between 1990 and 2000, developing countries increased their share of PCs by about 10 percentage points. While they had some 20 per cent of the total PC stock in the early 1990s, they now own about 30 per cent of all PCs. Growing investment in information technology, falling prices through technological improvement and reductions in trade barriers, domestic production, and greater functionality have driven PC sales. Another major factor in the rise of PC penetration has been the use of the PC as the leading access device to the Internet. Internet usage has grown at an astounding pace. Just 27 countries had a direct connection to the global network in Today, practically every country in the world is online. It is estimated that 11 per cent of the world s population was online at the end of Over half the adult population is online in most developed countries. Internet usage has grown fastest in developing countries, which accounted for 30 per cent of all Internet users in 2003 a dramatic increase from the 2 per cent share in Figure 7. ICT users worldwide Total number of telephone subscribers, Internet users and personal computers, as a percentage of world population, A key development is the growing use of wireless technologies to access the Internet. In some countries, third-generation mobile services have been launched that provide Internet access via mobile networks at speeds higher than a dial-up telephone line. At the same time, there are a growing number of locations around the world providing high-speed wireless Internet access for suitably equipped laptop PCs at special locations (so-called hotspots ). Existing data suggest that proportionally fewer women than men use the Internet in the developed world. In the developing world this gap is further aggravated by lower female school enrolment rates and wages Fixed-line Personal computer Mobile Internet users Source: ITU World Telecommunication Indicators Database. 14

15 Table 10. Personal computers and internet users per 100 population, 1990 and 2003 Personal computers in use per 100 population Internet users per 100 population World Developed regions CIS Transition countries South-Eastern Europe Developing regions Northern Africa Sub-Saharan Africa Latin America and the Caribbean Eastern Asia South Asia South-Eastern Asia Western Asia Oceania Source: United Nations Statistics Division, World and regional trends, Millennium Indicators Database, (accessed June 2005); based on data provided by the ITU. Outlook for the future The telecommunications industry has undergone a major transformation over the last two decades. For most of the period since World War II, the industry has moved along gradually with network growth rates of between 5 per cent and 7 per cent a year. This changed in the mid- 1990s, when growth rates started to rise, peaking at a heady 28 per cent in Underlying these statistics is a period of high and sustained investment. What happened in the late 1990s was the sort of radical shift that usually only happens every 50 years or so. Such a shift is generally caused by the confluence of rapid technological change with a shift in market expectations, in this particular case associated with mobile networks overtaking fixed-line networks, and with data overtaking voice. In an effort to boost productivity, global spending on information technology products averaged around 9 per cent growth a year between 1997 and Today s entry level PC costs are roughly the same as they were 10 years ago, even though the equipment is about 40 times more powerful. The World Trade Organization s Ministerial Declaration on Trade in Information Technology Products, concluded in December 1996, stipulates that participants should completely eliminate duties on information technology products covered under the Agreement by 1 January Signatories cover 90 per cent of the market in such products. As the ICT industry enters the 21 st century, the equation has changed for many developing countries. Since computers are now readily available all over the world, the concern has shifted from scarce supply of hardware to affordability and skills to use computer technology effectively. Notes 1 United Nations General Assembly Resolution 2626 (XXV) of 24 October Switzerland and the United States have not committed to the 0.7 per cent target. 2 These figures for aid to basic social services may be underestimated, since some assistance within wider sector programmes and multisector programmes is not captured by the reporting system. 15

16 3 Data exclude technical cooperation and administrative costs and ODA from Austria, Luxembourg, New Zealand and the United States, since these countries do not report on whether their ODA is tied. 4 OECD, DAC recommendation on untying official development assistance to the least developed countries (2001), available at 5 ITU, Telecom World 2003, Reaching the Unreached, available at How the indicators are calculated Trade-related technical assistance/capacity-building Only a proportion of aid can be allocated to sectors. In order to avoid the implicit assumption that none of the aid unallocable by sector is for trade-related technical assistance or capacity-building, the denominator used is sector-allocable aid, that is, aid excluding categories such as general programme assistance (structural adjustment, budget and balance-of-payments support), debt reorganization and administrative costs of donors. Market Access Goods admitted free of duties are exports of goods (excluding arms) received from developing countries and admitted without tariffs to developed countries. Average tariffs are the simple average of all applied ad valorem tariffs (tariffs based on the value of the import) applicable to the bilateral imports of developed countries. Agricultural products comprise plant and animal products, including tree crops but excluding timber and fish products. Clothing and textiles include natural and synthetic fibers and fabrics and articles of clothing made from them. Debt relief under the HIPC Initiative Launched in 1996, the Heavily Indebted Poor Countries Initiative marked the first time that multilateral, official bilateral, and commercial creditors united in a joint effort to reduce to sustainable levels the external debt of the world s most debt-laden countries. Once a heavily indebted poor country has established an appropriate track record of good performance, made a commitment to continue to implement sound macroeconomic policies within the context of an IMF-supported programme, and developed an Interim Poverty Reduction Strategy Paper (I- PRSP) or a full PRSP, the country can reach its decision point. At this stage, the country s eligibility and the amount of debt relief are determined by the IMF and World Bank Executive Boards on the basis of a loan-by-loan analysis of the country s debt situation and according to HIPC rules. Debt relief and other assistance begin flowing on an interim basis as soon as the decision point is reached. Approximately one to three years after the decision point, the country reaches its completion p point, when the remainder of the debt relief is delivered unconditionally and irrevocably. The actual time period between a country s decision and completion points varies, depending on how quickly the country can make satisfactory progress toward implementing its full PRSP and establishing its track record by implementing the specific macroeconomic and structural measures that were identified at its decision point. Youth unemployment The youth unemployment rate (youth unemployment as a percentage of the youth labour force) is a general measure of the utilization of the labour force of young people, defined as persons aged 15 to 24 years old. Unemployment, however, is only one dimension of the employment problem faced by young people: a disproportionately large number of them are underemployed in many countries. Some are working fewer hours than they would like to and others are working long hours with little economic gain. Stagnation and decline of employment opportunities in the formal sectors of most developing countries has intensified the problem in recent years, with young women bearing a disproportionate burden. Supplementary indicators to understand the employment problem should include measures of underemployment, the informal sector, educational access and labour force participation, among others. 16

17 The youth unemployment rate gives the percentage of persons aged 15 to 24 years who are actively seeking, but unable to find employment. It is important to note that the youth unemployment rate alone cannot fully gauge the ability of youth to meet their full-productive capacity. The International Labour Organization (ILO) is currently exploring the development of an additional indicator the youth non-employment rate, which is a measure of the youth who are neither in education nor in employment as a proportion of the total youth population. It would represent a narrower construct of youth idleness by isolating from the equation youth who are still participating in the education system. The indicator takes in consideration those discouraged youths who have dropped out of the labour market. Access to essential drugs The World Health Organization regularly monitors access to a minimum of 20 of the most essential drugs in countries on the basis of their being continuously available and affordable at public or private health facilities or drug outlets that are within one hour s walk.* Essential medicines fall into a number of categories, including well-known anesthetics, analgesics, antibacterials and antimalarials. The information is generated through interviews with relevant experts on the pharmaceutical situation in each country. Countries are categorized as having low, middle, high, very high coverage where: Low means that less than 50 per cent of the population have regular access. Middle means that per cent of the population have regular access. High means that per cent of the population have regular access. Very high means that more than 95 per cent of the population have regular access. The access framework covers a number of criteria, including: (a) the rational selection of drugs appropriate for the population and the setting, (b) sustainable financing and procurement, (c) affordability, and (d) a reliable supply system. It is therefore complex to measure accurately. * World Health Organization, Model List April 2003, available from Telephone lines, personal computers and Internet users Data on telephone subscribers come from administrative records compiled by national regulatory authorities or telecommunication operators and tend to be timely and complete. However there are issues related to the practice of some countries including a virtual number of telephone lines for high-speed data services. There are also comparability issues for mobile subscribers due to the prevalence of pre-paid subscriptions. This arises from differences in the time period chosen for considering when to consider a pre-paid subscription no longer active. The precise number of personal computers is available only in few countries. The International Telecommunications Union (ITU) uses industry sales data to derive the stock of PCs for most developed and major developing countries. In cases where these data are not available, the ITU also uses PC import data to make estimates. Neither sales nor import data are available for many, mainly smaller developing countries. Another limitation of the PC data is that it is quite recent, so longitudinal time series only exist for developed nations and major developing ones. Finally, there are growing methodological issues in measuring the number of Internet users. These include wide variations in the definition of an Internet user in terms of the user s age and frequency of use and age. Another emerging issue is how to treat Internet access from mobile phones. While many developed nations now carry out Internet use surveys conducted by national statistical offices or industry associations, hardly any developing countries do so. In the case of most developing countries, Internet users are calculated based on a multiplier factor of the number of subscribers. This could be misleading since many users in developing countries are not subscribers and obtain access through public facilities such as libraries, Internet cafés and schools. 17