A Development Charter for the G-20

Working and discussion papers
March 2009
Various authors

The global financial crisis started in developed countries, but the global recession which has followed is having a wide-spread impact on developing countries. By the end of this year, developing countries are expected to lose incomes of at least US $750 billion. In sub-Saharan Africa, the figure is over US $50bn. The consequence is likely to be rising unemployment, poverty and hunger: an extra 50 million people trapped in absolute poverty, with the number expected to rise to 90 million; and the total number suffering from hunger already up by 75 million to nearly a billion people, rising for the first time in nearly two decades.

ODI researchers, in coordination with other developed and developing country institutes, are tracking the spread of the recession, monitoring and modelling its impacts and applying their different skills to the policy challenge of restoring growth and development in the poorest economies in the world. The G-20 cannot deliver development, but its members can aim to promote development efforts rather than hinder them. The 12 short articles in this pack do not constitute an institutional position but, taken together, they outline a Development Charter for the G-20 to help poor countries tackle the effects of the global economic recession. This includes:

  • A Global Poverty Alert System:
    • to monitor the economic impact of declines in trade, financial flows, remittances and aid. Work by ODI and its partners in ten countries in Africa, Asia and Latin America show all are affected, but in very different ways.
    • to monitor the impact on people’s lives of lost work, lower incomes and falling investment in health and education.
  • Better financial regulation and new financial rules to increase the transparency of capital flows, curb illegal transfers, and reduce the pro-cyclicality of financial flows to developing countries, for example by adjusting capital adequacy ratios over the business cycle, or promoting capital flows to developing countries using innovative financing mechanisms.
  • A significant share of the fiscal stimulus of G-20 countries to be spent in developing countries (at least $50 billion in Africa) to provide social protection, but especially to help provide the infrastructure needed to restore growth. Such a fiscal stimulus can raise welfare in the poorest countries and offset a significant part of the impact of the crisis and will also help developed countries seeking export markets.
  • A trade package which does not set unrealistic expectations about a conclusion to the Doha Round, but instead concentrates on preventing ‘beggar-thy-neighbour’ protectionism and bringing forward funding for Aid for Trade.
  • A reversal of labour protectionism, which restricts migration and hurts both sending and receiving countries.
  • Support developing country efforts for building institutions, establishing crisis management focal points, and implementing home-grown ‘rainbow’ policies that:
    • promote policies and institutions that help developing countries to grow themselves out of the crisis;
    • support the livelihoods of the poor through greatly expanded social protection schemes;
    • invest in the technology, institutions and structures necessary to deal with climate change;
  • Making sure that aid is managed to support national ownership and effective response, with fast distribution, in support of government plans, and through government budgets;
  • Using the G-20 as a platform for reform of the international system, starting with the governance of the Bretton Woods system, but also launching a wider process to strengthen the effectiveness of the United Nations.

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