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Monday, 20 August 2012

Speech on MDG's

Opening Speech
for the UNDP Millennium Development Goals Workshop
20-22 August, Papua New Guinea University of Technology UNITECH, Lae.

Dr. Albert Schram
Twitter: @albertschram

Dear students and alumni, honourable Minister, distinguished visitors, UNITECH faculty, professional staff, ladies and gentlemen,

I am honoured and excited today to welcome you at the opening the MDG workshop. I am delighted UNITECH is again host to an event where issues of national importance are addressed through collaboration of national academic and officials, with international experts. I would like to thank especially the UNDP, the major sponsor of this event.

In the coming days, you will deepen your understanding of the MDGs, and acquire some skills in the field of statistics. For this, you will be rewarded with a certificate of participation, if you manage to participate in a meaningful manner during the full 3 days of the course.

Now I would like to share some thoughts with you, not on the MDG but on development itself. These ideas are not new, but they may be somewhat controversial and thus stimulate meaningful interactions amongst yourselves and with your trainers.

As Stephen Covey wrote maybe "The way we see the problem is the problem".


Let us define the main concepts. Economic growth is conventionally measure as yearly percentual growth in Gross Domestic Product of a country. GDP is the size of the economy as measured by the statistical offices following UN system of national accounts.

One of the main engines of economic growth is technological innovation which increases productivity of labour, land and other production factors. Another important engine for growth is international trade. Countries that grow rich through trade, follow a so-called export-led growth model.

Economic development is measured either by GDP per capita, or by a composite measure such as the Human Development Index, which includes mainly dimensions such as health and education. The MDG's reflect such a broader definition of development. For practical purposes, the economic growth and development measures are strongly correlated.

Official Development Aid

We all know that PNG is a developing country. We also know that PNG as a developing country, somehow, is entitled to development aid in a manner that an OECD country like Korea, for example, is not. This workshop is financed, for example, through development aid budget.

In order to pay development aid, rich countries set aside part of their budget for development aid. A number of like minded Northern European countries – the Netherlands and Scandinavian countries – have even pledged to set aside 0.7% of GDP for aid. The support for this level of spending, however, is quickly eroding, due to lack of results, and increasing fear of globalization in those countries. Due to economic growth of 9% and over, only China and India have made substantial progress towards achieving all MDG goals.

Apart from a small-minded debate on the legitimacy of this spending per se, there is a broader public debate on aid transparency, or how to ensure that other feedback loops can ensure a degree of necessary corrective steering, where normal democratic feedback can not. The aid budget, is one of the items of the national budget where the beneficiaries are not part of the electorate. Bill Easterly of New York University has tried to document the lack of transparency in development aid delivery. A major finding of this research is that multi-lateral aid delivered through the World Bank or the UNDP is quite transparent, but the bi-lateral agencies, with the exception of USAID and DFID, are doing much worse.

The second public debate about aid is the one about aid effectiveness. What percentage of aid actually reaches the intended recipients, or is it all boomeranged back to consultants and companies in the rich countries of origin?

Some authors, such as Oxford University's Peter Collier or Columbia University, Jeffrey Sachs believe that by tinkering with the delivery mechanisms of aid, aid effectiveness can be dramatically improved.
Others, such as Dambisa Moyo from Zambia (formerly World Bank economist, Morgan Stanley and now Barrick Gold) argue in her book "Dead Aid" that aid is part of the problem not the solution.
Despite almost 600M spend on aid to African countries since independence, for example, the typical African country today is no richer than 40 years ago. Most developing countries seem to have wasted the first 4 or 5 decades of independence, while receive huge amount of aid. Developing countries are not developing at all. Why is this?

There are several explanations, but one of them is Dutch disease. Large inflows of money into an economy – whether from aid or mining – encourage corruption and outright stealing, and through currency markets cause the national currency to appreciate, thereby making exports more expensive, or inhibiting the development of an export sector all together.

Countries rich in natural resources which fail to develop, such as Nigeria, suffer from what is called the natural resource curse. There is no limit to the damage bad policies and institutions can do, but lamentably there is a limit with what you can achieve with good policies and institutions. There is nothing inevitable, however, about Dutch disease or the natural resource curse. Through enlightened policies – such as by parking the money in sovereign wealth funds - the effects of aid or mining booms can be neutralized. In those cases, - notably some of the Gulf states - the financial resources can be put to good use, and can be invested in infrastructure, health and education.

Steps towards a brighter future

Development happens not through aid or mining booms, but through homegrown efforts of conventional or social entrepreneurs – who create jobs and mobilize communities -, and social and political reformers – who clamp down on stealing – and make sure resources are directed to infrastructure, health and education, and create effective mechanisms for service delivery.

The MDGs form a set of specific and internationally agreed specific, measurable, achievable, relevant, and time-bound SMART goals. They provide necessary focus, and invite cooperation and coordination between different public authorities and stimulate partnerships with private sector.

The challenge is now how to achieve the MDG's in PNG. I hope during this workshop you will find some answers to address this challenge. This week, international and national professionals are here to work with you, shoulder to shoulder, sharing knowledge and experience, not making you dependent but empowering you to lead.

All the trainers are  here to help, but will not stay forever. Take maximum advantage of their presence, and ask them lots of questions during the workshop, but also during the lunches and coffee breaks.
Part of the problem is defining the problem as one of not enough aid, while growing dependent on the resources and leadership of others. This is the wrong problem definition, and therefore not a basis fo a sustainable solution.

In the end, PNGeans themselves must determine their own development model, and direct their efforts towards achieving the MDGs by 2015, and the goals of Vision 2050.

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