The fight against poverty needs to focus aggressively on the health and education of the young and vulnerable, said non-government organization and development officials who spoke at the Milken Institute Global Conference in Los Angeles recently.
World Bank President Jim Yong Kim said that social unrest will spread without a focus on meeting basic human needs and taking a businesslike approach to philanthropy. The critique comes as a powerful new player, China, forges a major role in international development and as the World Bank prepares a ranking of nations to reflect investments in people.
One in 10 people around the world lives in extreme poverty, which the World Bank defines as earning less than $1.90 a day. Nearly 6 million children under the age of 5 die every year, many from preventable diseases like pneumonia, diarrhea or malaria.
Malnutrition, stunted growth, and cognitive impairment affect more than 150 million young children around the world, especially in sub-Saharan Africa and South Asia, leaving citizens unprepared for the automated economy of the future, said Kim. In Afghanistan, half of all young children are stunted in their development, along with one in three in Indonesia. Kim said the numbers are improving, but not fast enough.
“Many, many, many people will find themselves undereducated and without the skills to be able to compete in the economy of the future,” he said, “and so many countries are going to go down the path of fragility, conflict, violence, and then of course, extremism and migration.”
Kim said the mindset has to change. Too often, he said, national leaders and finance ministers pursue investments in “roads and railways and industrial parks,” ignoring the data that Kim said shows links among health, education and productivity. The World Bank plans to release a nation-by-nation ranking measuring health and education in its first Human Capital Index in October, which Kim said will shame some countries and prod leaders to view social investments more seriously.
There are success stories in the battle against disease and illiteracy, said a former U.S. aid official who now leads the Rockefeller Foundation.
“When you look at countries like Rwanda,” said Rajiv Shah, the foundation's president, “they’ve achieved a 70 percent reduction in child mortality in just one decade. So, we know that nations can be successful. What it takes, though, is more political will, more focus on science and technology.”
Shah said improvements in health and education produce measurable economic results. “A dollar invested in community health generates $7 to $10 dollars in economic value,” he said, and improving the health of children and reducing child mortality results in families having fewer children and investing more in their education.
Joining the United States as a major development lender and donor, China has expanded its footprint in the world with loans and aid to 140 countries, by one count exceeding $350 billion over a 14-year period.
In March, China announced a new aid agency, the International Development Cooperation Agency, to coordinate its overseas development efforts. Critics say China’s development outreach comes with fewer restrictions than those imposed by Western agencies regarding corruption, governance and human rights.
Part of the agency’s mandate is to promote China’s Belt and Road initiative, improving the infrastructure to promote Chinese trade, and extend China’s influence across Eurasia.
The Chinese say “their form of interaction, which is basically doing business…is preferable to the way Western institutions have engaged in the past,” said Matt Ferchen, a nonresident scholar at the Carnegie-Tsinghua Center for Global Policy. He said much of Chinese lending is in the form of commercial loans from state development banks, and the role of the new agency may be to coordinate Chinese overseas investments. China’s growing involvement in developing economies worries some, but Ferchen said the jury is still out on its impact.
He said the new Chinese aid arm, the International Development Cooperation Agency, is the result of a bureaucratic restructuring aimed at coordinating development projects across the various branches of Chinese government.
World Bank lending totaled nearly $59 billion last year, projects that ranged from infrastructure projects in transportation and energy to refugee resettlement and basic needs like health and education.
The World Bank’s Kim said all are important, and a focus on people is good for business.
One health sector official welcomes the approach.
“The biggest asset class that we have is our talent,” said Tanisha Carino, executive director of FasterCures, a nonprofit organization funded by the Milken Institute. She said nations view people as assets.
“We’re never going to unlock that potential for creativity, for the next generation innovation, for the next cure that we have in the marketplace,” she said.
These analysts said that a stable, prosperous world requires a focus on human needs and that the dividends will follow.