Many industrialised countries are facing heavy debt and slow economic growth, so it is no surprise when the media admonish that there is no money for global development and social needs.
Yet the global economy produces astonishing wealth.
This article is one in a series of ‘In my view’ pieces written by prominent authors on issues covered in the Development Co-operation Report 2014: Mobilising resources for sustainable development.
Many industrialised countries are facing heavy debt and slow economic growth, so it is no surprise when the media admonish that there is no money for global development and social needs. Yet the global economy produces astonishing wealth. There are more billionaires across the globe today than ever before – the number of wealthy individuals increased by 28% between 2009 and 2011 – and many companies are making astronomical gains. The way wealth is generated, where it is generated and how it is distributed is changing, however, and this affects both the haves and have-nots.
To meet the needs of the poorest people on our planet, we will need to harness the opportunities offered by the changing global economy. This means being innovative in how we finance development. It means bringing on board new, sustainable revenue flows – derived directly from the revenue and capital that characterise the 21st century global economy – to complement official development assistance (ODA). It is true that the excesses of financial innovation have brought the world economic system to the brink, but it is also true that financial innovation can be used for the good of humanity.
For example, take the international solidarity levy on air tickets. Many people have no idea, when they board a plane from France, Morocco or Chile – or from six other countries – that their airline ticket helps UNITAID buy AIDS medicine for children. Yet travellers have generated more than €2.5 billion, thanks to which 8 out of 10 children in the world are receiving AIDS treatment and some 350 million people have access to anti-malaria treatments – a disease that kills one child every 40 seconds. UNITAID raises and spends its funds in ways that create leverage in the marketplace for the interests of patients in the poorest countries of our planet – and ultimately for the security of us all.
The UNITAID example can be applied to other sectors of the global economy – for example, to the extractive industries. In Africa, oil and gas generate almost US$150 billion in revenue per year. As a member of the Advisory Board of the Innovative Finance Foundation – which generates funding for social infrastructure – I proposed examining the feasibility of using innovative instruments such as a micro-levy on Africa’s extractive industries to combat stunting (reduced growth rates resulting from malnutrition). Stunting affects a staggering 165 million children under five years of age, more than 90% of whom are in the in the developing world; the highest rates are in Africa (36%) and Asia (27%) (UNICEF/WHO/World Bank, 2011). IFF’s initial research indicates that such action could not only generate funding for health and education; it could also support governments in good natural resource management.
In my view, innovative financing is about making capitalism work better for all people, so that they can share equitably in the world’s wealth for their health, education, nutrition and other development needs. It enables everyone to participate in the global economy, no matter where they live.
Follow #DCR2014 on Twitter for more information on the report, released on 7 October 2014.