People's Democracy

 HUMAN DEVELOPMENT REPORT 2003

Pushing Neo-Liberal Agenda

S K Mishra

EVER since the first Human Development Report (HDR) was launched in 1990, its signal contribution has been that it created enough pressure on the governments of less developed countries to pursue human development goals seriously. As an off-shoot of this development human development issues became central to intellectual discourse. In the past, HDR discretely avoided pushing right wing ideology of liberalisation, privatisation and globalisation.

The Human Development Report 2003 (HDR 2003) however makes a clear departure from the approach of the earlier Reports as it makes a guarded attempt to push neo-liberal agenda behind its apparent concern for human development.

The UN Millennium Declaration in 2000 provides the framework for HDR 2003. The Report lists 8 Millennium Development goals and 18 targets. The Millennium Development Compact presented in the Report provides a policy approach to achieving the Millennium development goals and targets.

In the list of Goals, eradication of extreme poverty and hunger figure as the first Goal. One may infer from this that the Report considers eradication of extreme poverty and hunger as the core issue. Along with poverty and hunger eradication six other goals related to different aspects of human development are listed. This may be taken as the HDR’s usual concern for human development. The last goal camouflaged as a development goal is essentially an attempt to push neo-liberal agenda. Innocuously worded it states, “Develop a global partnership for development.” Apparently there seems to the nothing wrong with this goal. But what this goal actually implies is creating an open, liberal, non-discriminating trading and financial system. If the world moves in this direction and if the less developed countries are made to pursue this goal under pressure, they will become far more vulnerable to imperialist exploitation of the developed countries.

According to HDR 2003, in the 1980s and much of the 1990s development efforts by international financial institutions and some developed countries were guided by the belief that market forces would lift all poor countries onto a path of self sustaining economic growth. “Globalisation was seen as the great new motor of economic progress.” Poor countries were expected to achieve economic growth as long as they pursued good governance, based on “precepts of macroeconomic stability, liberalisation of markets and privatisation of economic activity,” HDR 2003 admits that this optimistic vision could not be fulfilled and now hundreds of millions of poor people are thoroughly disillusioned with this approach. The Report nonetheless asserts this vision “has considerable merit for much of the world.” On globalisation the latest HDR’s position is questionable.

HDR 2003 says that “Despite protests against globalisation in recent years, world market forces have contributed to economic growth and poverty reduction--in China, India and dozens of other developing countries. Billions of people are enjoying higher living standards and longer lives as a result of global market forces and national policies that help harness those forces.” These observations are complete distortion of the reality. At least in India growth rate has been extremely modest during the globalisation phase and the claims that poverty has declined is travesty of truth. Attributing spectacular growth in China to globalisation is also incorrect.

HDR 2003 is however entirely oblivious to economic reversals in various countries due to globalisation. But it squarely blames poor governance rather than neo-liberal policies for the setbacks on the growth front. Undoubtedly in several less developed countries governance is not satisfactory but it does not fully explain the failure of these countries in registering high rate of growth and eradicating poverty and hunger.

Over the years less developed countries have been forced to open up to imported products that competed with those produced by their industries. Since indigenous industries were vulnerable to competition from much stronger counterpart industries in developed countries, this forced liberalisation had disastrous consequences. Jobs have systematically been destroyed in developing countries and the poor farmers have been pushed to brink of disaster as their products fail to compete with the highly subsidised goods from Europe and America. Moreover, the IMF’s insistence in developing countries reducing fiscal deficit has led to severe contraction in developmental public expenditure that would make job creation impossible even in the best of circumstances. Liberalisation has thus been followed by increased misery rather than growth and eradication of poverty and hunger.

Provision of primary education, basic health care, water and sanitation figure high in human development. HDR 2003 acknowledges market failure in respect of these social services as they are public goods. The Report states that the market prices of these social services alone do not capture their intrinsic values and social benefit. Therefore private provider of these services guided entirely by these prices would inadequately provide for them. Public financing in all these cases will take into account the social benefits rather then the private benefits reflected in the market prices. Thus the provision made by the public agencies in respect of these services will be far more efficient. Moreover, public financing ensures that basic social services are available equitably.

Interestingly HDR 2003 concedes all the reasons why public financing of the basic social services is necessary. Yet it attempts to give legitimacy to private finance in this sector. The Report asserts that too often public provision of social services is not the best solution when institutions are weak and accountability for the use of public resources is low. It also states the reasons why the role of the private sector has been growing over the years in education, health, water supply and hospital services. The factors cited for the growing role of the private sector are: lack of government resources, low quality public provision and pressure to liberalise the economy.

Indeed many governments of poor countries are strapped for cash and thus cannot provide social services effectively. This situation has arisen because these countries have been pressurised to give tax relief to the rich on the one hand and reduce fiscal deficit on the other. In attempting to pursue the neo-liberal fiscal reforms the less developed countries have reduced their expenditure on public services. The latest HDR’s inability to highlight this factor and its discreet silence on the role of the IMF and other international financial institutions in forcing implementation of neo-liberal policies on the poor countries as a result of which governments of many of these countries have been left with no resources to provide basic social services to the underprivileged sections of the society, clearly shows its reluctance to disapprove of the high handed approach of the international financial institutions. On the contrary, HDR is critical of the governments which fail to levy high tariffs to recoup costs. Nowhere it suggests that the tax-GDP ratio is to the raised to improve revenue mobilisation for meeting costs of the basic social services.   

Poor quality public provision of social services does provide scope for private provision. The private providers of social services adequately meet the requirements of the rich and also generate profits for themselves. The poor people obviously cannot afford to use services offered by the private provider. Therefore, failure of the state in arranging good quality social services needs corrective measures. Private provision though highly eulogised by those who have developed much fancy for the neo-liberal policies does not dismiss the case for public provision of these services.

HDR 2003 points out that the third factor that pushed private provision of social services is the pressure created by the donor countries on less developed countries for pursuing neo-liberal policies. The WTO’s General Agreement on Trade in Services also encourages private entry in social services.

The basic approach of HDR 2003 is thus clear. It does not consider neo-liberal ideology as the core issue. At the same time it does not conceal its approval of these policies. This basic policy issue apart, HDR 2003 forcefully presents eradication of extreme poverty and hunger as the core issue and makes an attempt to make it central to development effort.

 Lately the efforts of the international financial institutions and developed countries have been to make poor people invisible. This has already happened in developed countries where their number is small. Usually unorganised and scattered they do not operate even as a pressure group. Therefore, no longer at the policy making level, their interests are taken into account. In fact, for the decision makers they simply do not exist. In less developed countries, number of poor people being large, they are still very much visible and until the recent ascendancy of neo-liberal ideology, their interests could not be simply wished away at the decision making level in many countries. But lately with the onslaught of neo-liberal ideology, interests of the poor people are completely ignored and persistent attempts are being made be make the poor people invisible by falsifying the data in respect of incidence of poverty.

In country after country, right wing repressive regimes are implementing neo-liberal policies overlooking their disastrous consequences for the poor. Poor people are definitely a source of embarrassment to the rulers in both developed and less developed countries. But much more they are a potential threat to the system which has ensured all goodies to the rich, while common people, particularly the agricultural labour and urban proletariat, are steeped in dire poverty. In such a situation, attempt of HDR 2003 to project elimination of extreme poverty and hunger as a core issue is laudable.

Another important merit of HDR 2003 is its unequivocal rejection of resurrected trickle down approach. This approach was discredited during the 1960s and 1970s. Even now mythical trickle down does not inspire anybody’s confidence, yet the proponents of neo-liberal policy keep on repeating untiringly the falsehood that economic growth by itself is sufficient because its benefits will ultimately reach everyone in the society. HDR 2003 though underlines the importance of sustained economic growth for realising the goal of poverty eradication, it does not consider it sufficient for the purpose. Referring to ruthless growth ‘a concept used in earlier HDRs it argues that the possibility of economic growth bypassing the poor cannot be ruled out. HDR 2003 further emphasises that without substantial improvement in education and health economic growth cannot be sustained. The right wing regimes including one in India can benefit a lot in policy making if they decide to take this observation of the latest HDR seriously. More on the positive side one finds HDR 2003 recommending labour intensive manufacturing, more equitable land distribution, effective public distribution system and mobilising grass-root support for development. In support of its suggestion that involvement of people in development process is to be encouraged, it refers to many cases of which it finds that the record of West Bengal has been good in terms of participation’ representation and responsiveness. The impact of this grass-root level mobilisation has also been good, as it has resulted in improved growth, equity and human development. In contrast, Karnataka has failed in registering pro-poor growth because poor people participation was less effective.

These positive observation made in the latest HDR however must not create any doubts about its basic approach. The Report though does not advocate market fundamentalism in an undisguised form, it nonetheless pushes neo-liberal agenda while showing great concern for the well being of the underprivileged.