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Human Development Report 2005 Internationalcooperationatacrossroads: Aid,tradeandsecurityinanunequalworld 5 I Human Development Report 2005 Internationalcooperationatacrossroads Aid,tradeandsecurityinanunequalworld Publishedforthe UnitedNations Development Programme (UNDP) Copyrighted Copyright©2005 bytheUnitedNationsDevelopmentProgramme 1UNPlaza,NewYork,NewYork,10017,USA Allrightsreserved.Nopartofthispublicationmaybereproduced,storedina retrievalsystemortransmitted,inanyformorbyanymeans,electronic,mechanical, photocopying,recordingorotherwise,withoutpriorpermission. ISBN0-19-530511-6 987654321 PrintedbyHoechstetterPrintingCo.onchlorine-freepaperwithvegetableInksand producedbymeansofenvironmentallycompatibletechnology. Coverandlayoutdesign:Grundy&NorthedgeInformationDesigners,London Informationdesign:GeraldQuinn,QuinnInformationDesign,CabinJohn,Maryland Technicalediting,layoutandproductionmanagement:CommunicationsDevelopment Incorporated,Washington,D.C. Editor:CharlotteDenny,Wellington,NewZealand ForalistingofanyerrorsoromissionsinHDR2005foundsubsequenttoprinting,please visitourwebsiteathttp://hdr.undp.org Teamforthepreparationof HumanDevelopmentReport2005 Directorandleadauthor KevinWatkins Research,writingandstatistics Statisticaladviser:TomGriffin HaishanFu(ChiefofStatistics),Ricardo Editor:CharlotteDenny Fuentes,ArunabhaGhosh,ChiaraGiamberar- ProductionManager:MartaJaksona dini,ClaesJohansson,ChristopherKuonqui, Technicaleditingandproduction: AndrésMontes,DavidStewart,CeciliaUgaz CommunicationsDevelopmentIncorporated (SeniorPolicyAdvisor)andShahinYaqub. Coverandlayoutdesign:GrundyScNorthedge InformationDesigners Informationdesign:G.QuinnInformation Design TheHumanDevelopmentReportOffice(HDRO) TheHumanDevelopmentReportistheproductofacollectiveeffort.MembersoftheNational HumanDevelopmentReportUnit(NHDRU)providedetailedcommentsondraftsandadviceon content.TheyalsolinktheReporttoaglobalresearchnetworkindevelopingcountries.TheNHDRU tPeabalmoisMeljeidab,yMSaarrayhABnunrd-MSwhaanrgpsi(aDnedpTutiymoDtirheyctSocro)tta.nTdhceomHpDriRseOsSahdamirnmiisltaraKtuirvuekutleaasmurmiaykae,sJutahne officefunctionandincludesOscarBernal,MamayeGebretsadikandMelissaHernandez.HDRO operationsaremanagedbyYvesSassenrathwithAnaMariaCarvajal.HDRO’soutreachand communicationsprogrammeismanagedbyMarisolSanjinesandNenaTerrell. , Foreword Thisis,sadly,thelastHumanDevelopmentReportforwhichIwillwritethefore- word,asIwillstepdownasUnitedNationsDevelopmentProgramme(UNDP) AdministratorinAugust.WhenIarrivedatUNDPin1999,1saidthatthtHuman DevelopmentReportwasthejewelinthecrownoftheorganization’sglobalintel- lectualandadvocacyefforts.Sixyearsandsixreportslater,Icanreportwithsome pridethatitslustrehasonlygrown. Buildingonthepowerfulfoundationlaiddur- HumanDevelopmentReport2003draw- HinugmtahenRDeepvoertl’ospmfiernsttdReecpaodret,swihnetrnodsuuccecedssainvde sipngonosnormeudcUhNofMtihleleeanrnlyiuwmorPkrojoefctt,helaUidNoDuPt-a fleshedouttheconceptofhumandevelop- detailedplanofactionforhoweachGoalcould ment,theReportshavegonefromstrengthto beachieved.Butevenassignificantprogresshas strength.Fromexamininghowbesttomake beenmadeinmanycountriesandacrossseveral npeeowplteecahlniokleotgoiehsigwholrikghftoirnrgicthhepecorpitliecaalnidmppooorr- Gisoanlese,deodv.erEaalrllpierrogtrheisssysetailrltfhaellsUsNhorStecorfetwahrayt- tanceofstrengtheninghumanrightsanddeep- General’sownfive-yearreviewoftheMillen- emnoisntgvdulenmeorcarblaec,ytthoepHruotmeactnaDnedveelmoppomweenrtRteh-e nreipuomrtDoefcltahreatUiNon,MdirlalweinnngiuhemavPirlojyeoctn,tlhaeidfionuatl porthassteadilywidenedtheintellectualfron- abroadagendaforhowthiscanbeachievedby tiersofhumandevelopmentinthenewmil- buildingonthe2001Monterreyconsensus. lennium.Andthatshifthasbeenincreasingly Thecornerstoneofthathistoriccompactisa mirroredindevelopmentpracticethrough commitmentbydevelopingcountriestotake workbyUNDPanditsmanypartnersonthe primaryresponsibilityfortheirowndevelop- groundinallthesecriticalareas. ment,withdevelopedcountriesensuringthat Inshort,asarobustlyindependentand transparent,credibleandproperlycostedna- daroteiscunloattenveociecsesatrhiatl,ywrheiflleectspUonNsoorreUdbNyDUPNDpPol,- tsiuopnpaolrtdetvheeylonpemeednttosmtereattegtiheesMrielcleievnenituhemDfuel-l icy,theHumanDevelopmentReportsoverthe velopmentGoals. yearshavewonawelldeservedglobalreputa- But,asthisReportpersuasivelyargues,that tionforexcellence.Theyhaveplayedanindis- agendasimplywillnotsucceedunlesswecande- pensablecatalyticroleinhelpingframeand cisivelyresolvebottleneckscurrentlyretarding forgeconcreteresponsestothekeydevelop- progressatthepaceandscalethatareneeded mentpolicydebatesofourtime.Today,asthis overthenextdecadeinthreebroadareas:aid, RlatehrenegpguoMearibftllalycmeitannhgkneetiwhsuoemrcdllDedeeva—vre,elilostpothmpheeemnsecitnhnatcglloGlemeonamgglrueesnaoibtfeytsmytteh—eecthatiaannlrdg-- chtfaaerlcnatsdaseirveaaeannsaddntahdclieoyslnsifiRvlsieecorptsno.rahAtocctrwoaomktspehsesilsealcaiacfnnrhgesbohaefndltdoohoenckseoe—matcpraritntehid-e- getdateof2015. donenow.Theyear2005willberemembered HUMANDEVELOPMENTREPORT2005 V oasppaoyretaurniotfychaoticteh,ewUhNenSweoprtledmbleeardeSrusmhmaidtthteo Omfafkicee.clTeharetshtartentghtehHaunmdadnepDtehvoefloitpsmeannatlyRsei-s turnpledgesandpromisesintoconcreteac- portandthelegacyofhumandevelopmentit tionstohelperadicateextremepovertyinour representsandsymbolizescouldnotbeinsafer world.Itisanopportunitywecannotaffordto hands.Iwishhim,hisdedicatedteamandmy missifwearetobequeathasafer,moresecure ownsuccessor,KemalDervis,alltheverybest andmorejustworldtoourchildrenandfuture forthefuture. generations. Finally,whilethismaybemyownlastRe- portasAdministrator,itmarksthefirsttobe writtenundertheleadershipofKevinWatkins MarkMallochBrown asDirectoroftheHumanDevelopmentReport Administrator,UNDP TheanalysisandpolicyrecommendationsofthisReportdonotnecessarilyreflecttheviewsoftheUnitedNationsDevelop- mentProgramme,itsExecutiveBoardoritsMemberStates.TheReportisanindependentpublicationcommissionedby UNDP.ItisthefruitofacollaborativeeffortbyateamofeminentconsultantsandadvisersandtheHumanDevelopment Reporttem.KevinWatkins,DirectoroftheHumanDevelopmentReportOffice,ledtheeffort. vivi Acknowledgements ThisReportcouldnothavebeenpreparedwithoutthegenerouscontributionof manyindividualsandorganizations.Theauthorswishtoacknowledgetheirspecial debttoAmartyaSen,whoseworkhasshapedtheevolutionoftheHumanDevel- opmentReportovertheyears.MarkMallochBrown,theoutgoingAdministrator oftheUnitedNationsDevelopmentProgramme(UNDP),hasprovidedconsis- tentsupportandencouragement.Hispersonalcommitmentisdeeplyappreciated. TheReportbenefitedgreatlyfromdetailedandsubstantivecommentsfromKemal Dervis,thenewlyappointedAdministratorofUNDP.Errorsofcommissionand omissionarethesoleresponsibilityoftheauthors. Contributors forInternationalComparisonsattheUniver- Backgroundstudies,papersandnoteswerepre- sityofPennsylvania,DevelopmentInitiatives, paredonawiderangeofthematicissuesrelat- EconomicandSocialCommissionforAsiaand ingtotheReport.ContributorswereCharlie thePacific,EconomicandSocialCommission Arden-Clarke,CatherineBarber,HelenBarnes, forLatinAmericaandtheCaribbean,Euro- GrahamK.Brown,OliBrown,SarahBurd- peanCommission,FoodandAgricultureOr- Sharps,SimonChesterman,BernardChoulai, ganization,GlobalIDPProject,International GiovanniAndreaCornia,JohnCrabtree,Car- InstituteforStrategicStudies,International olynDeere,NelsonGiordanoDelgado,Yuri LabourOrganization,InternationalMonetary Dikhanov,KateDyer,XiboFan,JuanAlberto Fund,InternationalOrganizationforMigra- Fuentes,TonyGerman,JayatiGhosh,Peter tion,InternationalTelecommunicationUnion, Gibbon,AlissaGoodman,AdeleHarmer,Ruth Inter-ParliamentaryUnion,JointUnitedNa- Hill,CatherineHoffman,MichaelFriisJensen, tionsProgrammeonHIV/AIDS,KaiserFam- AlisonJohnson,NailaKabeer,RomanKrznaric, ilyFoundation,LuxembourgIncomeStudy, ArnimLanger,MatthewMartin,RuthMayne, OrganisationforEconomicCo-operationand KierenMcGovern,CalumMiller,TanniMuk- Development,StockholmInternationalPeace hopadhyay,CiruMwaura,SimonNangiro, ResearchInstitute,UnitedNationsChildrens AdrianoCampolinadeOliveiraSoares,Trudy Fund,UnitedNationsConferenceonTrade Owens,FranzetskaPapadopoulou-Zavalis,Cin- andDevelopment,UnitedNationsDevelop- tiaQuiliconi,JudithRandel,AndrewRoger- mentFundforWomen,UnitedNationsEdu- son,JorgeOswaldoRomano,DianeRowland, cational,ScientificandCulturalOrganization EmmaSamman,TimothyScott,AbbyStod- InstituteforStatistics,UnitedNationsHigh dard,DianaTussieandPatrickWatt. CommissionerforRefugees,UnitedNations Severalorganizationsgenerouslyshared OfficeonDrugsandCrime,TreatySection, theirdataandotherresearchmaterials:Car- UnitedNationsOfficeofLegalAffairs,United bonDioxideInformationandAnalysisCen- NationsPopulationDivision,UnitedNations ter,CaribbeanCommunitySecretariat,Center StatisticsDivision,UNMillenniumProject, HUMANDEVELOPMENTREPORT2005 WorldBank,WorldHealthOrganization, MichèleGriffin,BrianHammond,Daniel WorldTradeOrganizationandtheWorldIn- Hanspach,LottaHarbom,RubinaHaroon, tellectualPropertyOrganization. NickRenéHartmann,RanaHasan,Sukehiro Hasegawa,AlanHeston,CatherineHoffman, AdvisoryPanel ValeriaIzzi,KareenJabre,LisaJones,Alberic TheReportbenefitedgreatlyfromintellectual Kacou,DouglasKeh,ReetikaKhera,Frederik adviceandguidanceprovidedbyanexter- Kok,SurajKumar,MuthuswamyLakshmina- naladvisorypanelofexperts.Thepanelcom- rayan,AndreaLall,JeanLangers,FionaLegg, prisedEkremBeqiri,NancyBirdsall,Francesca ClareLockhart,CharlesLufumpa,Frances Cook,JustinForsyth,FreneGinwala,Rich- Lund,NyeinNyeinLwin,EsperanzaC.Mag- ardJolly,DonaldKaberuka,NanakKakwani, pantay,CarlosMaldonado,LaminManneh, RashidS.Kaukab,TonyKillick,A.K.Shiva KierenMcGovern,MarceloMedeiros,Al- Kumar,Jean-PierreLandau,CallistoMadavo, varoMelendez,JorgeMernies,JohanMisti- MoisésNaim,DeepaNarayan,BennoNdulu, aen,JaimeMoll-de-Alba,BrunoMoro,Céline DaniRodrik,MohammadSahnoun,Rans- Moyroud,ChristineMusisi,CiruMwaura, fordSmith,RehmanSobhan,FrancesStewart, SuppiramaniamNanthikesan,JohnOhiorhe- PaulStreeten,AnaToni,ShritiVadera,Ngaire nuan,SaeedOrdoubadi,SaidOuldA.Vof- WoodsandSusanL.Woodward.Anadvisory fal,PaolaPagliani,AmyPate,PaulAndréde panelonstatisticsmadeaninvaluablecontri- laPorte,MohammadPournik,SeetaPrabhu, bution.ThepanelmemberswereCarlaAbou- WilliamPrince,AgnèsPuymoyen,JanVan Zahr,TonyAtkinson,HubertEscaith,Andrew Ravens,LucaRenda,YueRenfeng,Rodolfo JK.rFilzatmta,nR,ebIeacnaDG.ryMnascpraend,ieG,arAentnhaJoNne.s,MaIjreeln-a ERloiqzuaebeFtuhenStkeosn,s,DiJaenleenRaoSwmloalnjda,n,AnSuojpahiSainSgho,- antle,JohnMale-Mukasa,MarionMcEwin, mogyi,DeviSridhar,PetterStalenheim,Mark FrancescaPerucci,TimSmeeding,EricSwan- Stoker,MichelThieren,MandyTurner,Fabio son,PervezTahirandMichaelWard.Theteam Veras,LottaViklund,YanWang,Michael isgratefultoBrianHammond,IanMacredie, Ward,SiemonWezeman,IanWhitman,Tony AngelaMeandDavidPearce,thestatistical WilliamsandEduardoZepeda. peerreviewerswhoscrutinizedthedatainthe TheReportteamgratefullyacknowledges Reportandlenttheirstatisticalexpertise. thestimulatingcontributionoftheScenario Buildingworkshopparticipants:LarryElliot, Consultations AlisherIlkhamov,BruceJenks,WilliamKa- Manyindividualsconsultedduringtheprepa- lema,NawalKamel,MelindaKimble,Claudia rationoftheReportprovidedinvaluablead- Martinez,PeiMinxin,DavidMorrison,Arch- vice,informationandmaterial.TheReport bishopNjongonkuluW.H.Ndungane,Shoji teamthanksYuhannaAboona,CarlaAbou- Nishimoto,PreciousOmuku,SurinPitsuwan, Zahr,YasminAhmad,SergeAllegrezza,Anna JorgeQuiroga,JoseRamosHorta,MattiaRo- AlvazzidelFrate,JacobAssa,ChristinaBar- mani,AdnanShihabEldin,RobertoSoares, rineau,BobBaulch,ElenaBernaldo,Izzy AngelaWilkinson,HRHPrinceWillem-Alex- Birch,EvaBusza,ShaamelaCassiem,Duang- anderoftheNetherlandsandNgaireWoods. kamonChotikapanich,GiovanniAndreaCor- nia,FrancescaCoullare,AngusDeaton,Yuri UNDPReaders Dikhanov,AdamaDiop-Faye,ShermanDorn, AReadersGroup,madeupofcolleaguesin HubertEscaith,JensEschenbaecher,Gonzalo UNDP,providedextremelyusefulcomments, FanjulSuárez,SallyFegan-Wyles,AngelaFer- suggestionsandinputsduringthewriting riolMuruaga,MarziaFontana,Marc-André oftheReport.TheReportteamisespecially Franche,EnriqueGanuza,RosarioGarcia gratefultoHakanBjorkman,PhilipDobie, Calderon,LeonardoGasparini,PatrickGer- GhaithFariz,Marc-AndréFranche,Cherie land,PeterGhys,ErlindaGo,LucGrégoire, Hart,GilbertFossounHoungbo,BruceJenks, HUMANDEVELOPMENTREPORT2005 IngeKaul,BrunoLemarquis,KamalMalhotra, DavidMorrison,BillOrmeandElizabeth LamínManneh,RosemaryNuamah,Eleanor ScottAndrews.Translationswerereviewed O’Gorman,HafizPasha,StefanoPettinato, byJeanFabre,VladimirScherbov,Moustapha RichardPonzio,LilianadeRiz,TurhanSaleh, Soumare,FayizSuyyaghandOscarYujnovsky. BenSlay,RamaswamySudarshan,MarkSuz- TheReportalsobenefitedfromthededi- man,MounirTabet,JanVandemoortele,An- catedworkofNohaAboueldahab,MariaKris- tonioVigilanteandLouisaVinton. tinaDominguez,LaurelGascho,TugbaGo- kalp,RamziMabsout,AurélieMazel,Agueda Editing,ProductionandTranslation Perez,GillanRichards,FredericRozeirade Thereportbenefitedfromthemaineditor MarizandHannaSchmitt.OzerBabakoland CharlotteDenny.Technicalandproduction MatthewBellmadevaluablecontributionsto editingandlayoutwereprovidedbyMeta thestatisticalteam. deCoquereaumont,ThomasRoncoli,Bruce DanielaCostantinoandMicheleJackof Ross-Larson,ChristopherTrott,Timothy theUNOfficeofProjectServicesprovided WalkerandElaineWilsonofCommunica- criticaladministrativesupportandmanage- tionsDevelopmentIncorporated.TheReport mentservices. (includingcover)wasdesignedbyGrundy& NorthedgeInformationDesigners.Statistical siingfnoerdmabtyiGon.QauppienanriInngfoirnmtahteioRneDpeosritgnw.asde- /¡¡¡i.yA_ Theproduction,translation,distribution andpromotionoftheReportbenefitedfrom KevinWatkins thehelpandsupportoftheCommunications Director OfficeoftheAdministrator:MaureenLynch, HumanDevelopmentReport2005 HUMANDEVELOPMENTREPORT2005 Contents Chapters Overview Internationalcooperationatacrossroads:aid,tradeandsecurityinanunequalworld 1 Chapter1 Thestateofhumandevelopment 15 ProgArdevssanacnedssienthbaucmkasnindehvuemlaonpmdeenvte—loapmgelnobtalsnapshot 1189 Progressviewedthroughthehumandevelopmentindex 21 Thelimitstohumandevelopment 24 Theendofconvergence? 25 ScenISancreeiqnouaa2rl0iiot1y52a—0n1d5prp—oosopprrecocojtuesncttfrioiorensts'hnesoMhtiaplrrleeedonifnciituinmocnrDseeavseedlogplmoebanltwGeoaalltsh 334690 Changingcourseandgettingontrack 45 Chapter2 Inequalityandhumandevelopment 49 Whyinequalitymatters 52 Socialjusticeandmorality 52 Puttingthepoorfirst 53 Growthandefficiency 53 Politicallegitimacy 53 ChaiPCnuosbuloniftcedrpio-slaairdcvgyaugnmoteaanlgtses——icnoeuqnutaleirteydwithincountries 555445 LUanyeeqrusalofcihnaenqcuaelsi—tychoenaslttrhaiinneqliufaelcithioeisceasndtheMDGs 5619 Thehumandevelopmentpotentialofpro-poorgrowth 64 Improvingthedistributionofgrowth 64 Achievingpro-poorgrowth 69 Chapter3 Aidforthe21stcentury 73 Rethinkingthecaseforaid 77 Aidasmoralimperativeandenlightenedself-interest 77 FinaAnicdinagnadidh—umtahnedreecvoerldo,ptmheentproblems,thechallenge 7893 Aidquantity 84 AidandtheMDGs:canrichcountriesaffordthem? 92 Canmoreaidbeabsorbed? 96 X HUMANDEVELOPMENTREPORT2005

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