Sharing for Prosperity

17 April 2013

Minister Heikki Eidsvoll Holmås

Economic growth in itself will not end poverty. Stronger policies for fairer distribution are needed in a world where the 10% richest persons possess 84%, and the poorest half own only 1% of the assets.

At the same time, 15% of the world’s money is hidden in tax havens, and one-third of this amount comes from developing countries. It is not owned by governments, but by a few extremely rich individuals or companies who are not paying tax.

The new set of goals to follow the Millennium Development Goals (MDGs), the so-called post-2015 agenda, must address this fact. It is not true that economic growth on its own will end poverty. Without proper distributive policies, increased growth too often only leads to greater inequalities.

These disparities are increasing throughout the world. We have seen tremendous economic growth in Africa in the last decade. Sixteen sub-Saharan African countries are now rated as middle-income countries. But the number of poor people in these countries remains the same. This growth is mainly benefitting those who are already advantaged. In the future therefore, more emphasis must be put on transferring money from rich to poor people within countries, rather than between them.

Taxation is a key factor, and it is high up on the agenda of several donors. But tax systems must be underpinned by a tax policy that ensures that those with the most, be it individuals or companies, pay their fair share of tax. Too often the authorities in developing countries are eager to establish a tax authority, but are less eager to implement sound taxation policies. The power of the very rich is huge.

We need to be aware that redistribution of wealth and redistribution of power go hand-in-hand. Democracy—popular participation in decision-making, transparency in government revenue and the use of public funds, making governments accountable to all citizens and not only the elite—is crucial for the redistribution of power. Then the redistribution of wealth is much easier.

Creating strong platforms for dialogue between trade unions, employers and the government is equally important. Supporting civil society—trade unions, farmers’ movements, women’s empowerment organizations, human rights centres, etc.—will help to ensure home-grown strategies. Social security systems must be a part of the packet.

Fairer distribution within a country is important from a human rights perspective. But it is also important for security and economic reasons. Where there are major inequalities, there is likely to be instability, a risk of uprisings, and higher crime rates. Inequality is a threat to stable economic growth—or to put it differently, sharing wealth is a pre-condition for prosperity.

Another precondition for prosperity—and in fact for achieving the MDGs—is energy. The MDGs have many strengths and some weaknesses. One weakness is that the underlying causes of poverty and slow development have not been fully taken into account, and more effort has been put into achieving the indicators directly. For example, more importance has been attached to enrolment in schools than access to electricity, although access to electricity would improve the quality of the education provided, for example through modern technology, and make it possible for children to do their homework after dark. Moreover, it would release children—mainly girls—from the time-consuming duty of gathering firewood, so that they too can attend school.

Electricity is also crucial for health services, for small- and larger-scale industrial production, and for streetlights that make it safer for people to go out after dark. Universal access to energy should therefore be at the top of the new agenda, and with this in view, Norway hosted the global consultations on energy earlier this month, together with our partners Tanzania and Mexico.

Fair distribution of wealth and power is also a gender issue. Due to sound management of our oil resources, Norway has a large sovereign wealth fund. But our most precious resource is our human capital—men and women alike. We have calculated that if we had had the same low employment rate of women as the average OECD country, the loss to our GDP would have amounted to the equivalent of our whole sovereign wealth fund. Our investments in the education of girls and women and childcare have proved more valuable for society than our oil production.

Gender issues are essentially about human rights. But enhancing women’s rights also makes sense for economic, social, environmental and security reasons. For society to prosper, all human capital must be utilized. In other words, gender issues are not just women’s issues, they are crucial for men as well.

More than anything, we need to safeguard the right of women to decide when to have children and how many. Millions of young, undernourished girls, who have little knowledge of reproduction and are in the power of the men around them, get pregnant long before they are ready. This takes a severe toll on their health, and many do not recover properly before the next baby is on its way. The result is a bleak future for both the girls concerned and their children. How can we allow this to happen, when we know that proper reproductive health services would enable these girls to complete their education and decide on the future that they want?

Heikki Eidsvoll Holmås is Norway’s Minister of International Development

WIDERAngle newsletter
April 2013
ISSN 1238-9544