EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 8.4.2009 
SEC(2009) 445 
COMMISSION STAFF WORKING DOCUMENT 
 
accompanying the  
COMMUNICATION FROM THE CO MMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMI TTEE OF THE REGIONS 
 
Supporting developing countries in coping with the crisis 
  
Millennium Development Goals — Impac t of the Financial Crisis on 
Developing countries 
 
 
{COM(2009) 160 final} 
{SEC(2009) 442} {SEC(2009) 443} {SEC(2009) 444}
 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction .................................................................................................................. 3 
2. The Current Development Agenda .............................................................................. 5 
2.1. International commitments and init iatives in support of the MDGs............................ 5 
2.2. EU/European Commission suppor t to achieve the MDGs........................................... 7 
3. The Global Economic Context: overview of the recent multidimensional (food, fuel 
and now financial) crises a nd the global economic downturn ..................................... 9 
3.1. Impacts of the food and fuel crises and price volatility ............................................... 9 3.2. Impacts of the Financial Crisis................................................................................... 12 3.2.1. Direct impacts of the financial crisis.......................................................................... 12 3.2.2. Impacts of economic slowdown................................................................................. 13 3.3. Economic Vulnerability
............................................................................................. 18 
3.3.1. Typologies of vulnerability........................................................................................ 18 3.3.2. Recent crises: different impacts at country level ....................................................... 19 4. The “road ahead” - other key challenges up to 2015
................................................. 24 
4.1. Inequality................................................................................................................ .... 25 
4.2. Fragility................................................................................................................. ..... 28 
5. The Policy Response .................................................................................................. 30 
5.1. Domestic policy responses in developing countries .................................................. 30 
5.2. Responses from the international community............................................................ 31 5.2.1. Responses to the food crisis ....................................................................................... 31 5.2.2. Responses to the financial crisis ................................................................................ 33 6. Looking ahead to 2015
............................................................................................... 34 
6.1. The missing dimensions of the MDG framework...................................................... 35 6.2. Global challenges to global goals and targets............................................................ 37 7. Conclusions and key policy implications
................................................................... 37 
ANNEX 1........................................................................................................................ ......... 39 
ANNEX 2........................................................................................................................ ......... 49
 
EN 3   EN 1. INTRODUCTION  
This Staff Working Paper on the MDGs  analyses the situation and prospects for progress on 
development and the MDGs in particular in th e light of the current financial crisis. The 
objectives of the MDGs staff working paper ar e (1) to take stock of current initiatives 
undertaken by the international community to accelerate progress on the MDGs and (2) to 
reflect upon the challenges ahead  up to 2015 given the rapidly changing global context, and in 
particular the financial crisis.  
The MDGs garnered much support in 2008 with the Accra High Level Forum on aid 
effectiveness, the New York UN High Level Even t on 25 September, recommendations of the 
MDG Africa Steering Group and the adoption of the EU Agenda for Action on MDGs by the 
European Council in June 2008. A UN MDGs re view Summit is planned for September 2010. 
The background to this paper is  the EU Member States’ comm itment to increase official 
development assistance (ODA) over the coming years, which they confirmed at the Doha Conference (on Financing for Development to Review the Implementation of the Monterrey 
Consensus, 29 November - 2 December 2008). Th e broader context is implementation of the 
European Consensus on Development (2005).  
The analysis draws from the recent EU  Research paper “MDGs at Midpoint”
1 and focuses on 
the challenges posed by the effects of the recent food, en ergy and financial crises on 
developing countries, global governance and development policy . It identifies the most 
pressing needs to be met in order to accelerate progress on the MDGs in the lead up to the 
2010 Review summit and by 2015. It also looks at more structural issues where sustainable 
development, climate change and the ‘missi ng dimensions’ of the MDGs are discussed.
                                                 
1 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?” EU 
Research Paper by François Bourguignon (P aris School of Economics), et al, 2008, 
http://ec.europa.eu/development/icenter/repository/mdg_paper_final_20080916_en.pdf  . 
 
EN 4   EN The Millennium Development Goals (MDGs)  are a global monitoring framework to assess 
progress in reducing poverty and deprivation. A rare internati onal development consensus has 
been achieved around the MDGs. When they we re set in 2000/2001, the MDGs were based on 
1990 trends and were seen as realisable goals , given sufficient resources and commitment. 
Achieving them would secure a very basic level of wellbeing for almost a fifth of humanity. 
2008 was marked by an unprecedented degree of global action  on development. It also 
marked a turning point in the EU’s joint efforts  to eradicate poverty through sustainable 
development. Support for accelerating progress on the MDGs was bolstered at the Accra 
High-Level Meeting on Aid Effectiveness an d the New York UN High-Level Event on 25 
September and related new commitments, the r ecommendations of the MDG Africa Steering 
Group and the adoption of the EU Agenda fo r Action on MDGs (European Council, June 
2008). The EU’s commitments on the provision of  Official Developmen t Assistance (0.56% 
GNI by 2010, 0.7% by 2015) were dul y reaffirmed at the Doha Conference on Financing for 
Development in November 2008.  
Significant progress has been made on the MDGs , particularly in countries where 
governmental commitment is backed by strong  policies and public expenditure, such as 
Ghana and Vietnam. The world is on track  to halve poverty by 2015. 120 million people were 
lifted out of poverty between 2000 and 2005, meaning the share of people living in poverty 
fell by 2.4% per year. However, 1.4 billion people still live on less than $1.25 a day.2 
Globally, between 2000 and 2005: 
• 2 million lives were saved by reducing child mortality 
• 30 million additional children (age d 6-12 years) now go to school 
• 30 million additional families now have access to drinking water 
• Boys and girls attend primary school in equal numbers 
However, progress is uneven . The reduction in global poverty is largely due to rapid recent 
growth in the large Asian countri es: China, India, Indonesia, a nd Vietnam. The world is still 
off track on a number of targets, especially rela ting to child mortality, maternal mortality and 
water. There are strong disparities across regions and countries. Indeed, most developing 
countries are projected not  to meet most MDGs and Sub-Saharan Africa lags very much 
behind.3 
                                                 
2 The World Bank-defined poverty line of US $1 a day has recently been revised to US $1.25. 
Consequently, the number of people living in extreme poverty is now 1.4 billion people at 2005 Purchasing Power Parity. 
3 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?”, see 
footnote 1. 
 
EN 5   EN Progress on achieving the MDGs is shaped by the global economic environment, domestic 
policies, and for the poorest countries, how much  and how well aid is delivered and used. The 
challenges remain formidable . They include high and volat ile commodity prices and 
accelerating climate change, as well as the co ntinuing threats of chronic poverty, growing 
inequality, poor governance and the particular problems faced  by fragile and post-conflict 
states.  
The financial crisis  and economic slowdown  make this a precarious time for development. 
The prospects for achieving the MDGs face seri ous threat, as the global economic slowdown 
undermines progress in developing countries, re ducing per capita growth  rates and causing 
severe budget problems. Initial predictions that the developing countries would be insulated 
from the worst of the financial turbulence have proved over optimistic. The impact on low-
income countries is now expected to be high, es pecially in Sub-Saharan Africa. The crisis is 
projected to increase the fina ncing needs of low-income countries by US$ 25 billion in 2009.4 
The effects of the financial crisis are being felt  in emerging and developing countries alike, 
though the impacts vary significantly across re gions, countries and population groups. The 
effects are felt through several transmissi on channels, and include contagion from the 
financial crisis and from the impacts of global economic slowdown. Decreasing remittances, 
reduced foreign investment, and falling demand for goods and services are all expected to 
adversely affect developing economies and em erging markets. As well as compounding the 
development challenges faced by many countries, the effects of the financial crisis and 
economic slowdown may even put at risk the ga ins to date in rela tion to the Millennium 
Development Goals. 
2. THE CURRENT DEVELOPMENT AGENDA  
2.1. International commitments and init iatives in support of the MDGs 
In 2008 existing commitments were confirmed a nd major new steps were taken to assess 
progress on the MDGs (with high-level mee tings in Accra, New York, and Doha). 
On 1 July 2008, the recommendations of the MDG Africa Steering Group  were launched at 
the African Union Summit  in Egypt, setting out the pract ical steps, strategies and 
programmes needed to achieve the Millennium Development Goals. To accelerate progress, it 
is now critical to set nati onal policies and prioritise national resources for the MDGs. 
The G8 Summit of 7-9 July 2008 in Hokkaido , Japan, focused on a series of priorities 
including the world economy, high oil and food prices and the resulting food crisis, climate 
change, development and Africa. G8 Leaders pressed for the full implementation of the 
Financial Stability Forum (FSF) recommendations to strengthen the international financial 
system and to work towards the implementation of the OECD standards of transparency and 
information exchange for tax purposes. G8 lead ers also renewed their 2005 Gleneagles ODA 
commitments to increase development assistance  to Africa by US $25 billion a year by 2010.5  
                                                 
4 IMF ‘The Implications of the Global Financia l Crisis for Low-Income Countries’, Feb 2009. 
5 The Gleneagles Communiqué, G8, Geneagles, 2005. 
 
EN 6   EN Three forums on aid effectiveness  were held in Accra , Ghana, from August 30 to September 
4, 2008: the official Third High-Level Forum (H LF3) on Aid Effectiveness and two parallel 
forums organised by civil society.  
The HLF3 reviewed progress on implementing the Paris Declaration on Aid Effectiveness 
based on evidence collected by the Monitoring Su rvey undertaken in 54  countries. The Accra 
Agenda for Action (AAA) was adopted on 4 Se ptember 2008, following an extensive process 
of consultation.  
At the request of the UN Secretary General, a report on “ Delivering on the Global 
Partnerships for Achieving the MDGs”  was launched on 4 September 2008. It  describes 
progress on achieving MDG 8 (to de velop a global partnership fo r development) and related 
targets, in particular: 
(1) increasing ODA by US $18 billion a year to  meet the 2010 target set at the G-8 
Summit in Gleneagles in 2005;  
(2) re-commencing trade negotiations immedi ately based on the promise to give a 
development focus to trade negotiations;  
(3) improving access to essential quality medicine s, especially in the public sector, to 
make them available to the poor; 
(4) and accelerating the diffusion of new technologies for development and increasing 
investment in infrastructure , especially electricity.  
On 22 September 2008, a high-level meeting on Africa’s Development Needs  was held. It 
focused on “transforming the climate for business to accelerate private s ector-led growth and 
progress towards the MDGs”.  
On 25 September 2008, in New York at the UN High-Level Event on the MDGs, the focus 
was on implementing existing development co mmitments. The Event encouraged forward-
looking initiatives and urged count ries to join with the privat e sector and civil society to 
establish proposals that are deliverable and provide concrete  results. An estimated US $16 
billion in commitments was announced, includi ng $1.6 billion to bolster food security, $4.5 
billion for education and $3 billion to combat  malaria. The Secretary-General and the 
President of the General Assembly also called for a MDGs Review Summit in 2010 . 
The final Communiqué of G-20 Summit in Washington  (15 November 2009) makes an 
explicit reference (paragraph 14) to the n eed to achieve the MDGs in the developing 
countries, reaffirming the development a ssistance commitments made and urging both 
developed and emerging economies to underta ke commitments consistent with their 
capacities and roles in  the global economy.  
The Doha International Conferen ce on Financing for Development to Review the 
Implementation of the Monterrey Consensus, held from November 29 to December 2 2008, 
was another key opportunity to strengthen the commitments of countri es, intergovernmental 
agencies and the private sector to eradicat e poverty and accelerate pr ogress on the MDGs. The 
Doha Declaration on Financing for Developmen t reaffirmed the Monterrey Consensus and 
called for a United Nations Conference at the highe st level to examine the impact of the world 
financial and economic crisis on development.  
 
EN 7   EN The Doha Declaration maintained all the co mmitments made in Monterrey regarding the 
mechanisms needed to reach the MDGs, and the pledge of 0.7% of developed countries’ GNI 
for official development aid. The Doha Declara tion also explicitly recognises that promoting 
gender equality and women’s economic empowerment is essential in achieving equitable development.  
Climate change  and other environment-related issues  will clearly remain on top of the 
international development agenda for many years beyond 2015. Eradication of poverty in 
developing countries and tackling climate change  are inextricably linked. The MDGs will not 
be achieved if climate change and environmental degradation are not tackled. A strong partnership between developing a nd developed countries is needed  to address climate change. 
This includes support to countries to integr ate climate resilience and low carbon strategies 
into their development plans through assist ance for adaptation, clean energy and technology. 
The United Nations Climate Change Conference held in Poznań on December 13 2008 
stepped up international cooperation on a fu ture climate change arrangement, risk 
management and research and development of  new technologies. Africa and the European 
Union adopted an important joint declaration on climate change, which underlines the concerns of both continents as they tackle global warming and reiterates their common aim to 
reach an ambitious post-Kyoto international agreement in Copenhagen  in December 2009.  
2.2. EU/European Commission support to achieve the MDGs 
As stated in the European Consensus on Development
6 (2005), the primary and overarching 
objective of EU development coope ration is to eradicate poverty in  the context of sustainable 
development, including pursuit of the UN Mille nnium Development Goal s. The EU pursues 
this objective through a multidimensional agenda, combining aid, aid effectiveness and policy 
coherence for development. The EU’s share in global aid is increasing (60%, or € 46 billion, 
in 2007). Despite the new financial context, EU Member States confirmed in Doha (in 
December 2008), their pledge to increase aid flows in  line with the target, which is for the EU 
as a whole to reach 0.56% GNP by 2010 and 0.7% GNP by 2015. 
In recognition of the need for concrete new and better coordinated initiativ es in support of the 
MDGs and global poverty reduction, the European Council adopted an EU Agenda for 
Action on MDGs (June 2008)7 which represents a collective European offer to developing 
partners and to the international community. It sets a number of intermediate milestones to be 
reached by 2010 to meet the MDG targets by 2015. It also sets examples of EU action to form 
part of the commitments already made by the EU  and the expected outcome of increased EU 
aid in those sectors. The Agenda estimates the global external financing gaps per sector by 
2010 to achieve the MDGs in 2015, based on in ternational organisati ons’ data and on the 
work of the UNSG Africa MDGs Steering Group.  
                                                 
6 The European Consensus on Development, (December 2005), 
http://ec.europa.eu/development/icenter/repository/eu_consensus_en 
7 EU Agenda for Action on the MDGs (June 2008), 
http://register.consilium.europa.eu/pdf/en/08/st11/st11096.en08.pdf   
 
EN 8   EN Most Member States plan to use the EU Agenda  for Action as a positive tool to raise public 
awareness and enhance policy dial ogue in suppor t of the MDGs.8 By setting concrete targets 
and timelines for reaching the MDGs, the EU Ag enda also gives strong political impetus to 
increase coordination amongst EU donors. Most  Member States have planned specific 
initiatives to achieve the MDGs under the Age nda, particularly in the sectors of health, 
education, and water and sanitation. Gender eq uality and the empowerment of women is a 
crosscutting priority fo r most Member States. 
EU-Africa MDG Partnership 
The EU also has a specific partnership on MD Gs with Africa under the Action Plan adopted 
as part of the 2007 Joint Africa-EU Stra tegy which provides for various levels of 
cooperation.9 One of the eight Africa-EU Partnerships focuses on policy dialogue, 
cooperation and joint action to ac hieve the MDGs across Africa by 2015,  with concrete 
actions and goals for 2008 – 2010 being outlined in the First Action Plan. 
The EU and Aid Effectiveness 
Improved aid effectiveness contri butes to achieving the MDGs. In  particular, a clear division 
of labour among donors and alig nment with country  systems helps improve absorption 
capacity in partner countries , especially when scaling-up. The EU champions aid 
effectiveness through the Paris Declaration on Ai d Effectiveness (2005), the four additional 
EU commitments made in Paris, and the A ccra Agenda for Action (2008). The EU Common 
position for Accra singles out four areas to drive progress forward: division of labour, 
ownership and use of country systems, predicta bility of aid, and mu tual accountability for 
results, including revised conditionality. The EU Code of Conduct on complementarity and 
division of labour (2007) aims to reduce aid fragmentation.  
Policy Coherence for Development 
Closer and more widespread interdependence a nd interaction with deve loping countries offer 
new opportunities to promote sustainable de velopment, fight poverty and address common 
challenges — not just through development coope ration but also through other policies, by 
increasing their coherence with development objectives. European trade and agriculture 
policy, for example, can considerably influence the capacity of African countries to combat 
poverty and hunger. Cooperation on research a nd regulating intellectua l property rights can 
help developing countries combat HIV/AIDS. Through its Policy Coherence for Development 
approach (confirmed by the Eu ropean Council in June 2008) , the EU actively looks for 
synergy between its policies and development objectives. Twelve areas were identified in 
2005, including migration, security, environment,  research, trade, information society, 
transport, the social dimensi on of globalisation/ employment and decent work, agriculture, 
fisheries, climate, and energy policies, which ar e all particularly rele vant in the new global 
context.  
                                                 
8 From Member States replies to the 2009 Monterrey Questionnaire, which reports on progress in the 
context of the annual ‘Monterrey report’. 
9 Joint Progress Report on the implementation of th e Africa-EU Joint Strategy and its first Action Plan 
(2008-2010), http://www.africa-
union.org/root/au/Conferences/2008/november/au_eu/final%20documents/2008%2011%2021%20Joint
%20Progress%20Report%20Final%20clean.doc   
 
EN 9   EN The Commission issued the first comprehens ive EU Policy Coherence for Development 
Report10 in September 2007 and put forward recomme ndations on selected policies, such as 
security, migration, research and trade. The 2009 PCD Report is curr ently being prepared. 
3. THE GLOBAL ECONOMIC CONTEXT : OVERVIEW OF THE RECENT 
MULTIDIMENSIONAL (FOOD , FUEL AND NOW FINANCIAL ) CRISES AND THE 
GLOBAL ECONOMIC DOWNTURN  
The past two years have seen a succession of global crises (food, fuel, financial) which have 
affected advanced, emerging and developing countries alike. The specific multifaceted impact varies greatly between regions, countries and groups of population, depending on their degree 
of vulnerability to external economic shocks .  
These crises have the potential to seriously affect  development and the achievement of the 
MDGs.  A number of developing c ountries and population groups have been particularly 
severely hit by the combination of  these crises. There are now real concerns that the progress 
on development made in past years will be reversed.  
While the current focus is on the global financia l crisis and economic downturn, the effects of 
the global food crisis must not be overshadowe d. The two crises are in trinsically linked, and 
wreak devastating effects in developing countries. 
3.1. Impacts of the food and fuel  crises and price volatility 
2006-2008 saw unprecedented worldwide surges in  fuel and food prices. The long boom in 
commodity prices was the greatest for a century: exceptional both in its duration and in the range of commodities affected. It is estimated  that the escalation of food prices pushed 
between 130-155 million people into extreme poverty.
11 
Oil prices have risen steadily12 as demand grew in deve loped and emerging countries, 
including China and India. This was exacerbated by a slow supply response and by the fact that conventional resources can no longer sati sfy the demand, while alternatives are more 
expensive (oil sands) and/or mo re polluting (coal, oil sands).  Food prices also soared
13, 
reversing three decades of declining agricultural prices. 
High fuel costs resulting in hi gher agriculture costs are one of the many causes of the food 
crisis, along with falling food stocks and ri sing demand for maize in biofuel production.1415  
                                                 
10 EU Report on Policy Coherence for Development (September 2007), 
http://ec.europa.eu/development/icenter/repository/eu_report_policy_coherence_COM(2007)_545_final
_en.pdf   
11 World Bank, “Global Economic Prospects 2009: Co mmodities at the crossroads”, Washington D.C., 
December 2008. 
12 Crude oil prices peaked at $147/barrel in July 2008. 
13 The price of a number of commodities started to rise steadily in 2006, they increased dramatically in the 
second half of 2007 and peaked in the first months of 2008. 
14 World Bank, “Global Economic Prospects 2009: Co mmodities at the crossroads”, Washington D.C., 
December 2008. 
 
EN 10   EN In its May 2008 Communication16, the European Commission underlined that “ the food price 
inflation affected several commodities at the sa me time: cereals, meat , and dairy products all 
recorded two digit or even three digit increases in less than a year. The size and abruptness of the price surge have generated macro- economic imbalances across the world”.  
Developing countries and the most vulnerabl e populations within them have been hit 
disproportionately by th e food crisis. While growth in ma ny exporting developing countries 
was boosted by the increase of commodity prices  (including oil), it dampened growth in 
countries importing these products.. 
In many of these net-importing countries the surge in food prices has had severe adverse 
effects on poor households, and particularly  on the ones which are net buyers of food
17, both 
in urban and rural areas. As st ressed in the 2008 UN MDG Report, “poor people who do not 
produce their own food are the most severely hurt because a larger proportion of their 
expenditure is allocated to food. Higher food pri ces limit their ability to obtain not only food 
but also other essential goods and servic es, including education and health care”18. To that 
extent, the food crisis has contributed to shar p reversals in MDG progr ess on many fronts, in 
particular MDG 1 as the proportion of undernourished in all majo r developing regions in the 
world has now risen.19 
                                                                                                                                                         
15 The extent to which increasing demands for crops to produce biofuels could have contributed to the 
recent surge in food prices must be considered  with nuances. According to Commission's analyses, 
current EU biofuel production has little  impact on current global food prices, as biofuels use less than 1 
per cent of EU cereal production. On the other hand, the proactive policy pursued by the US has had a 
noticeable impact on the maize market, but so far has remained a relatively moderate contributor to high 
food prices in general (Source: European Commission, Communication on "Tackling the challenge of rising food prices Directions for EU action", COM(2008) 321 final, Brussels, 20 May 2008, p.4.) 
16 European Commission, Communication on “Tackling the ch allenge of rising food prices Directions for 
EU action”, COM(2008) 321 final, Brussels, 20 May 2008, http://ec.europa.eu/commission_barroso/president/pdf/20080521_document_en.pdf
  
17 A household is defined as a net food buyer when the value of food staples it produces is less than the 
value of food staples it consumes. Poor households tend to be net buyers of food, even in rural areas where agriculture and staple food production determine the principal livelihoods for many (Source: 
FAO, "The state of Food Insecurity in the World 2008 - High food prices and food security", 2008). 
18 United Nations, “The Millennium Developmen t Goals Report 2008”, New York, 2008. 
19 FAO, “The State of Food Insecur ity in the World 2008: High food pr ices and food security threats and 
opportunities”, Rome, 2008. 
 
EN 11   EN Diversity of food price impacts on poverty — Impact of food price increases in 2005-07 on 
$1/day poverty   
-4-2024681012
Bolivia
CambodiaMadagascar
Malawi
NicaraguaPakistan
Peru
VietnamZambia
Average$1/day poverty rate
Rur al Ur ban Total 
Source : World Bank Global Monitoring Report, 2008. 
The FAO estimates that soaring food prices re sulted in the highest single increase in hunger 
since 1990–92. Between 2003–2005 and 2007, high food pr ices contributed to swelling the 
number of undernourished pe ople by 75 million, bringing th e total number to 923 million.20  
Overall, the World Bank estimate s that rising food prices may have plunged an additional 100 
million people into deeper poverty and hunger, br eaking close to seven years of progress in 
poverty reduction.21 The increase in the number of poor is  only part of the emerging costs of 
the crisis. According to the World Bank, “the more profound conse quence is the impact of 
rising prices on households who were already poor struggling to meet their daily food and 
nutrient needs”22. For the poorer, the double shock of food and fuel price rises represents a 
threat to their basic survival. 
                                                 
20 FAO, see footnote 19. 
21 Ivanic M. & Martin W., “Implications of Higher  Global Food Prices for Poverty in Low-Income 
Countries”, Policy Research Working Paper 4594, WORLD BANK, Washington D.C., April 2008. 
22 World Bank, “Rising Food and fuel prices: Addressing the risks to future generations”, Washington 
D.C., October 2008. 
 
EN 12   EN This long commodity boom has finally come to  an end, with intern ational prices falling 
sharply during the second half of 2008 in res ponse notably to slower  growth, increased 
supplies and revised expectations. However, recent FAO data and analysis show that food prices fall less, or even not at all, on domestic markets in several developing countries and 
that food crises currently persist in 32 c ountries around the world, of which 20 in Africa
23. 
From a longer term perspective, World Ba nk's economic forecasts predict that food 
commodity prices are likely to remain much higher over the coming 20 years than during the 
1990s, partly because of higher energy prices a nd the influence of biofuel demand for food 
crops24. 
3.2. Impacts of the Financial Crisis 
Contrary to initial forecasts, which projected that the crisis would be limited to the most 
integrated economies in the world economy, it is  now widely recognis ed that developing 
countries are seriously hit by th e financial crisis and the en suing global economic slowdown. 
Even though the outbreak of the crisis was in  advanced economies, its effects will reach 
developing countries through various channels and in different ways. 
While most developing countries are still st ruggling with the effects of the unprecedented 
high surge in food and energy prices, the current fi nancial crisis threatens to exacerbate their 
situation and may reverse the progress made on the MDGs.  
Developing countries may be hit by the effect s of the crisis through two main transmission 
channels. 
3.2.1.  Direct impacts of the financial crisis 
The most integrated economies in emerging c ountries, such as Brazil and India, and some 
developing countries with rela tively developed financial market s (such as Paki stan, Nigeria, 
Thailand, South Africa, and the Philippines) have directly suffered from capital flight due to 
their direct exposure to the in ternational financial system. T ypically, countries that are the 
most integrated to the global financial system have also witnessed the steepest falls in their stock and bond markets, coupled with the sudden withdrawal of foreign capital and significant 
currency depreciation. 
For most other developing countries, the crisis  hits in quite different ways. They suffer 
contagion effects, such as the drying-up of cr edit, investment and private capital market 
flows. Tighter credit conditions and increased uncertainty are curbin g investment in both 
developed and developing countries in 2009. The World Bank estimates th at capital flows to 
developing countries will fall from $1 tri llion in 2007 to around $600 billion in 2009.
25 Given 
their scarce resources and very limited access to capital, the effects of credit drying up will 
certainly be damaging fo r developing countries. 
                                                 
23 FAO, "Early indications hint a smaller 2009 cereal drop", 12th February 2009, Rome, 
http://www.fao.org/news/story/en/item/10127/icode .  
24 World Bank, See footnote 11.  
25 World Bank, “Weathering the Storm: Economic polic y responses to the financial crisis”, Washington 
D.C., November 2008. 
 
EN 13   EN There is a risk that the global financial crisis leads to domestic financial crises in some 
developing countries if it exposes  existing structural weaknesses in their domestic financial 
systems. Countries with high domes tic credit growth rates in the pr ivate sector in recent years, 
such as Nigeria, Guinea Bi ssau and Angola for example, appear to be more at risk.26 
In the longer term, weak economies facing a reduction in private investment flows in a 
context of financing constraints,  decreasing prices and weaker global growth may be even less 
able to cope with internal economic weaknesses and development needs in the future, notably 
in infrastructure and network industries. Ugan da, for example, has es timated that FDI will 
decrease from 10% of its GDP to 4% of its GDP in 2009/2010.27 In Ethiopia, the Ethiopian 
Electric Power Corporation, which is the sole provider of electricity in the country, has 
indicated that its investment plans will be severely affected because of the crisis.28  
Although these contagion effects have important consequences for developing countries, they 
are only one of the ways in whic h the global financial crisis can affect de veloping countries. It 
seems that the more widespread and serious impacts of the financial crisis for developing 
countries will be due to the global economic slowdown. 
3.2.2.  Impacts of economic slowdown 
The world economy is entering the most severe  slowdown since the 19 30s, as the financial 
crisis in developed countri es has shaken markets worldwide. The economic recession 
following the financial crisis is leading to lower growth rates in developing countries, thus putting an end to the robust gr owth recorded by many from 2002-2007. 
                                                
 
26 M. Berndt, P. de Lima, B. Marchitto, “The impact  of the financial crisis on ACP countries”, opcit., 
pp.15 and 22. See also: World Bank, “Global financial crisis and implications for developing 
countries”, G 20 Finance Ministers’ Meeting, Sao Paulo, Brazil, November 2008, p.2; World Bank, 
“Weathering the storm: economic policy responses to the financial crisis”, opcit., p.6. 
27 Groupe de la Banque africaine de développement, “L’impact de la crise financière actuelle sur les 
économies africaines”, Conférence internationale su r le financement du développement, Doha, Qatar, 
29 novembre — 2 décembre 2008, p.3. 
28 N. McCulloch, “Voices from the South — The impact of the financial crisis on developing countries — 
Analysis two”, IDS, November 2008. 
 
EN 14   EN Growth rates (real GDP) in developed & developing countries 
 
Source : IMF, “World Economic Outlook Update”, January 2009. 
The global economic downturn will  have significant impacts in  developing countries, starting 
with lower growth rates. A growing number of  developing countries have already witnessed a 
significant deceleration in economic growth, wh ich in turn diminishes the prospects of 
achieving the MDGs. 
Growth prospects for 2009 are expected to va ry significantly across de veloping countries and 
regions. According to IMF forecasts,29 world GDP growth will be 3.4% in 2008 and 0.5% in 
2009. Growth in high-income countries is expected  to fall from 2.7% in 2007 to a contraction 
of -2% in 2009, while in the deve loping world growth is expected  to slow sharply to 3.3% in 
2009 from 6.3% in 2008 and 8.3% in 2007. Growth in Sub-Saharan Africa is expected to 
decline to 3.5% in 2009, compared to 6.9% in  2007, before rising again to 5% in 2010. 
Slower growth rates in deve loping countries are expected to seriously endanger the 
achievement of the MDGs and trap more peopl e into poverty. The World Bank estimates that 
a one percent drop in growth in developing countri es could trap another 20 million people into 
poverty. Recent estimates compiled by the World Ba nk show that slower growth will push 46 
million more people below the poverty line of US$1.25 a day while an extra 53 million people will stay trapped on less than US$2 a day. This is added to the 130-155 million people who were already pushed into poverty in 2008 as a result of soaring food and fuel prices. 
As the crisis turns into an unemployment crisis, the International Labour Organisation (ILO) 
for its part has warned that world unemploy ment in 2009 could increase by between 18 to 30 
million people in comparison to 2007, and by more  than 50 million if th e situation continues 
to deteriorate as a result of the current crisis . In the worst case scenario, 200 million workers, 
mostly in developing economies, co uld be pushed into extreme poverty.
30 In Asia, the loss of 
employment will be significant and more work ers will be pushed into vulnerable jobs in a 
region where formal wage employment is still very low.  
                                                 
29 IMF, “World Economic Outlook Update”, January 2009. 
30 ILO, Global Employment Trends 2009, Geneva, January 2009.  
 
EN 15   EN Furthermore the ILO expects the crisis to be more detrimental for women than men in most 
regions of the world and projects a female  unemployment rate ranging from 6.5 to 7.4 
percent, such that the number of unempl oyed women will rise between 10 and 22 million.31 
The ILO also highlights the risk of the rising incidence of informal employment, aggravating 
pre-existing challenges32, which will add to the pre-existing lack of adequate basic social 
protection for large shares of the population. 
As labour markets weaken in rich countries, remittance flows to developing countries are 
expected to decline. Forecasts of falling empl oyment in the developed world, especially in 
sectors with many migrant worker s (such as construction, retail  and catering) suggest that 
migration flows from developing countries ma y slow. Fewer economic migrants will go to 
developed countries in recession, which in turn  will lead to fewer remittances and probably 
lower volumes of remittances per migrant.33 Remittances are projected to stagnate in the 
second half of 2008, and shrink in 2009. 
An immediate consequence of the global econo mic slowdown is the contraction of world 
trade volumes, for the first time since the 1982 recession, as the global financial crisis has led to recession in high-income countries and a sharp slowdown across the developing world. 
Trend in global trade volumes 
-4-202468101214
1981 1985 1989 1993 1997 2001 2005 2009 
Source : WORLD BANK, “Global Economic Prospects 2009 — Commodities at the crossroads”, December 
2008 
This will lead to a sharp fall in  export revenues for countries whose exports to advanced and 
emerging economies  account for a significant share of thei r account balance, such as Mexico, 
Papua New Guinea, Bangladesh, Cambodia, Re public of Congo, Guyana and Seychelles. The 
decrease in export revenues is projected to be exacerbated by the fall in commodity prices, 
which have been plunging since mid-2008.34  
                                                 
31 ILO, Global Employment Trends for Women Report, March 2009. 
32 ILO, "The financial and economic crisis: A Decent Work response", Discussion paper for the 304th 
Governing Body Session of the ILO, March 2009. 
33 RATHA Dilip et al., “Outlook for remitta nce flows 2008-2010”,  WORLD BANK, 2008. 
34 Oil prices plummeted by more than 60% from their peak levels of July to November. The prices of 
other commodities, including basic grains, have also declined significantly. 
 
EN 16   EN 
 
Source : IMF, "The implications of the global financial crisis for low-income countries", March 2009. 
The fall in commodity prices will hurt primarily net exporters of primary commodities, 
notably oil and metal for which the price declines have been the sharpest, although countries 
that have accumulated sufficient public savi ngs from the commodity boom will be better 
placed to support their economies for some time. 
However, although the recent fall in commodity  prices has certainly eased inflationary 
pressure in developing countries, the recent declin es in food and fuel prices have not made the 
pressure and problems disappear. Commodity pri ces are expected to climb again and remain 
volatile in the medium term, partly due to th e underlying imbalances in commodity markets.35 
Thus, a constant structural problem that poor  and vulnerable countries must face is price 
volatility. Since many developing countries co ntinue to rely on earnings from exporting 
primary commodities, they remain particular ly vulnerable to high volatility in primary 
commodity prices.  
According to UNCTAD,36 volatility has negative effect s at both macroeconomic and 
microeconomic levels. In developing countries, particularly the poorest,  the problems created 
by commodity price volatility ar e aggravated since their ec onomies are less resilient to 
external shocks. The level and stability of co mmodity prices therefore remains an important 
policy issue, as the outlook for de veloping countries depends primar ily on future trends in the 
prices of their primary commodity exports. E ffective insurance mechan isms, together with 
sound macroeconomic policies and structural effo rts to increase agricult ural productivity and 
economic diversification, could be part of a long-term approach to this long-standing 
problem. 
                                                 
35 World Bank, see footnote 11. 
36 United Nations / UNCTAD, “Trade and development report 2008 — Commodity prices, capital flows 
and the financing for development”, New York/Geneva, 2008. 
 
EN 17   EN The EU Research Paper on the MDGs underlines the importance of insurance mechanisms : 
"Donors can play a part in smoothing the macro-ec onomic effects of fluctuations in the price 
of commodities and the terms of trade, thereb y reducing the ‘vulnerability’ of developing 
countries to exogenous shocks. The absence of  insurance has a remarkably strong negative 
effect on investment and grow th. Hence the payoff (in terms of economic growth and 
ultimately poverty reduction) to interventions related to risk coping  might well be 
underestimated ".37  
Given the projected decline in  export revenues, private fina ncial flows, remittances and 
reduced access to credit faced  by developing countries, Official Development Assistance  
(ODA) is more important than ever in mitiga ting the impacts of the crisis and achieving the 
MDGs.  
Projected trend in financial flows to developing countries  
 
Source : Cali, Massa, Willem Te Velde, “The Global Financial Crisis: financial flows to developing countries set 
to fall by one quarter”, ODI, November 2008 
                                                 
37 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?” see 
footnote 1. 
 
EN 18   EN The European Investment Bank (EIB) estimates that all economic sectors  will suffer from the 
reduced availability of funds and slowing grow th as a result of the crisis. For instance, 
tourism , which constitutes an important sour ce of income and employment in many 
developing countries (notably in  North, East and Southern Africa), might suffer from a major 
reduction of demand as consumers from advanced economies cut down on long-distance travel. "Tourism sensitive" countries in the Paci fic such as Fiji and Samoa, in the Caribbean 
such as Dominican Republic or Jamaica, or in Eastern and Southern Africa such as Uganda and Botswana are expected to see heavy declines  of tourism receipts. Another example is the 
financial sector, where forei gn bank ownership may no longer be a guarantee for stability. 
Therefore countries with a high share of foreign- owned banks could be more  at risk than those 
with few. 
Overall, instability (a succession of booms a nd slumps) and its effects in terms of curbing 
growth and fluctuating incomes has significant and long-term implications from a social 
perspective . It can retard progress on poverty reducti on, trigger social unrest and political 
instability and push people into poverty traps (poor people contracting health handicaps, 
children leaving school, workers dr opping out of the labour market…)
38, which impedes long-
term development prospects and the achievement  of the MDGs over and above the effects of 
the crisis itself and macroeconomic recovery.  
3.3. Economic Vulnerability  
The effects of the crises are likely to be fa r more damaging for low-income countries with 
high degrees of economic vulnerability because this  affects countries' ability  to cope with and 
recover from the negative consequences of  external shocks, risks and uncertainties. 
3.3.1.  Typologies of vulnerability 
A general definition of the concept of “vulne rability” is given by the UN Department of 
Economic and Social Affairs: “vulnerability can be seen as a state of high exposure to certain 
risks and uncertainties, in combin ation with a reduced ability to protect or defend oneself 
against those risks and un certainties and cope with their ne gative consequences. It exists at 
all levels and dimensions of society and fo rms an integral part of the human condition, 
affecting both individuals  and society as a whole”  (UN-DESA, 2003).39 This definition 
highlights three key dimensions inherent to th e concept of vulnerability: the shocks (size, 
frequency), exposure to these shocks; and the ab ility to cope with and recover from these 
shocks (or resilience). 
                                                 
38 See: P. Guillaumont, “An Economic Vulnerability Index: its design and use for international 
development policy”, opcit., pp.8-9; P. Guillaumont , “Macro-vulnerability in  Low-Income Countries 
and aid responses”, Annual World Bank Conference on Development Economics, 2006, pp.74 – 78. 
39 P. Hirby, “Is globalisation good for us? Introducing the concept of vulnerability”, Working Paper n°. 
129, Research Centre on Development and International Relations (DIR), Aalborg University, 2004, 
p.3. 
 
EN 19   EN The 1999 Economic Vulnerability Index (EVI) m easures the extent and dimensions of 
economic vulnerability of countries in a globa lised economy. It uses a composite indicator 
reflecting different aspects of countries’ expos ure and vulnerability to exogenous shocks due 
to their structural characteristics (size and location of the country, structure of its economy).40 
This criterion was designed for the purpose of elaboration of the list of Least Developed 
Countries (LDCs), in addition to the two othe r criteria (GDP per cap ita and Human Capital 
Index).41  
The succession of financial crises during th e second half of the 1990s underlined the 
vulnerability of emerging countries and led the IMF to develop its own vulnerability 
indicators. The fund monitors four groups of indi cators: (1) indicators re lated to external and 
domestic debts; (2) indicators re lated to reserve adequacy; (3) indicators related to financial 
soundness (to assess the strengths and weaknesses of countries’ financial sector) and; (4) 
corporate sector indicators (t o trace the exposure of compan ies to foreign exchange and 
interest rate). These vulnerability assessments are incorporated into the IMF’s consultations 
with its member countries.42 
3.3.2.  Recent crises: different impacts at country level 
Typology of vulnerable countries 
There are several key vulnerability  factors to consider to gain a better understanding of the 
differentiated impact of the current (and previous) crises and to identify the most potentially vulnerable countries.
43 However, specific impact and needs assessments should be carried out 
on a country basis to make sure the right response is provided at domestic level.  
1. The degree of exposure of countries’ banki ng systems to global financial markets. 
Countries with more sophisticated and in tegrated financial systems have been 
directly affected by the contagion effects a nd spill-overs of the financial turmoil as 
risk aversion spiked.  
2. The degree of relian ce on FDI, portfolio inflows and other private flows to finance 
current account deficits. Overall, inflows of  private capital to developing countries 
have increased significantly over recent y ears, including into Sub Saharan Africa, but 
they are currently reversing and they should further decrease as a result of the crisis. 
                                                 
40 The Economic Vulnerability Index (EVI) is a meas ure used by the United Nations to classify the 
development of the 192 member states. See: 
http://www.un.org/esa/policy/devp lan/profile/criteria.html#evi . 
41 See notably: P. Guillaumont, “An Economic Vulner ability Index: its design and use for international 
development policy”, UNU-WIDER, Research paper N°. 2008/99, November 2008, 
http://www.wider.unu.edu/publications/working-p apers/research-papers/2008/en_GB/rp2008-99 ; Lino 
Briguglio, Gordon Cordina, Nadia Farrugia, an d Stephanie Vella, “Economic vulnerability and 
resilience: concepts and measurements”, UNU-WIDER, Research Paper N°. 2008/55, 
http://www.wider.unu.edu/publications/working-p apers/research-papers/2008/en_GB/rp2008-55/ . 
42 More information on: http://www.imf.org/external/np/exr/facts/vul.htm . 
43 See D. Willem te Velde, “The global financial cris is and developing countries: which countries are at 
risk and what can be done?”, ODI Background Note, October 2008; World Bank, “Weathering the 
storm: economic policy responses to the financial crisis”, November 2008; IDS, “Voices from the South — The impact of the financial crisis on developing countries”, November 2008. 
 
EN 20   EN Domestic regulations on capital movements should also be taken into account when 
analysing the risks of private cap ital outflows at country level.  
3. Similarly, developing countries  that resort to commerci al lending to finance trade 
operations and investments might be affected  as international banks may not be able 
or willing to lend as much as they have in the past.44  
4. Trade features are another key factor to consider when analysing the impact of the 
crisis at country level. 
5. The level of dependency on remittances from  migrant workers is another relevant 
determinant of vulnerability, as fewer economic migrants will go to developed countries and remittances flows are expected  to decrease further in 2009 in response 
to the weakening of labour markets in rich countries.
45 Haiti, for example, where 
remittances represent almost 20% of GDP value, could be particularly at risk.46 The 
impact on flows to recipient countrie s will however depend significantly on 
exchange rates.  
                                                 
44 D. Willem te Velde, “The global financial crisis an d developing countries: which countries are at risk 
and what can be done?”, November 2008. 
45 See D. Ratha, S. Mohapatra and Z. XIU, “Outlook for remittances flows 2008-2010: growth expected to 
moderate significantly, but flows to remain resilient ”, Migration and Development Brief 8, World Bank, 
November 11, 2008. 
46 M. Berndt, P. de Lima, B. Marchitto, “The impact of the financial crisis on ACP countries”. 
 
EN 21   EN  
The table below gives a list of remitta nce-dependent countries (in US$ million).47 
 Region 2004 2005 2006 2007 2008e Share of 
GDP (2007)
Tajikistan ECA 252 467 1 019 1 691 1 750 45.5% 
Moldova ECA 705 920 1 182 1 498 1 550 38.3% 
Lesotho SSA 355 327 361 443 443 28.7% 
Honduras LAC 1 175 1 821 2 391 2 625 2 820 24.5% 
Lebanon MNA  5 591 4 924 5 202 5 769 6 000 24.4% 
Guyana LAC 153 201 218 278 278 23.5% 
Jordan MNA 2 330 2 500 2 883 3 434 3 434 22.7% 
Haiti LAC 932 985 1 063 1 222 1 300 20.0% 
Jamaica LAC 1 623 1 784 1 946 2 144 2 144 19.4% 
Kyrgyzstan ECA 189 322 481 715 715 19.0% 
El Salvador LAC 2 564 3 030 3 485 3 711 3 881 18.4% 
Nepal SAS 823 1 212 1 453 1 734 2 254 15.5% 
Armenia ECA 813 940 1 175 1 273 1 300 13.5% 
Nicaragua LAC 519 616 698 740 771 12.1% 
Philippines EAP 11 471 13 566 15 251 16 291 18 669 11.6% 
Guatemala LAC 2 627 3 067 3 700 4 254 4 472 10.6% 
Albania ECA 1 161 1 290 1 359 1 071 1 071 10.1% 
Bangladesh SAS 3 584 4 314 5 428 6 562 8 893 9.5% 
Sierra Leone SSA 25 2 50 148 150 9.4% 
Dominican Republic LAC 2 501 2 719 3 084 3 414 3 575 9.3% 
Cape Verde SSA 113 137 137 139 139 9.2% 
Morocco MNA 4 221 4 590 5 451 6 730 6 730 9.0% 
Senegal SSA 633 789 925 925 1 000 8.5% 
Togo SSA 179 193 229 229 229 8.4% 
Guinea-Bissau SSA 28 28 28 29 30 8.3% 
Sri Lanka SAS 1 590 1 991 2 185 2 527 2 720 8.1% 
Dominica LAC 23 25 25 26 30 8.0% 
Vietnam EAP 3 200 4 000 4 800 5 500 5 500 7.9% 
Uganda SSA 311 323 665 849 875 7.2% 
Note: Estimates based on data until October 2008.  
Source: World Bank (2008) based on IMF Balance of Payment Statistics 
                                                 
47 ODI, see footnote 43. 
 
EN 22   EN  
6. Policy and institutions are the main determinants of resilience to shocks, meaning the 
ability to cope with the adverse effects. Structural issues determine the extent to 
which developing countries are able to adjust  in the long run to external shocks. In 
particular, developing countries with stronger economic fundamentals and solid 
macroeconomic policy frameworks and instit utions are in a better position to deal 
with the negative impact of the crisis. Key factors such as the level of foreign exchange reserves, inflation rates, current  account and fiscal positions as well as 
gross public debt (expressed as % of GDP) s hould be carefully analysed on a country 
basis to assess the risk of the current cris is leading to a balance-of-payments crisis.
48  
Progress on economic fundamentals has been made  in many developing countries in recent 
years, notably thanks to bette r domestic economic policies, debt  relief efforts and high export 
revenues from the commodity boom, which enab led many countries to improve their net 
foreign position. But there are stark differenc es among countries and developing countries 
generally have less flexibility and policy space (in comparison with advanced economies and 
emerging markets), to take the necessary fisc al, and monetary (cou nter-cyclical) policy 
responses to the crises and mitigate their effects at domestic level.  
High commodity prices during previ ous crises also raised the cu rrent account deficits in many 
importing countries49 and reduced their ability to cope with the fall-out from the current 
financial crisis due to the policy responses taken (tax reductions, increased subsidies) to offset 
the effects of soaring prices on consumers and companies.50 Previous crises have exacerbated 
the vulnerability of many developing countries to the current global fi nancial turmoil and its 
economic implications. 
Various analyses aimed at identifying the potenti ally most vulnerable countries to the global 
economic and financial crisis ha ve already been undertaken by major institutions, including 
the World Bank51, the IMF52 and the ILO53.  
 
                                                 
48 See footnote 46. 
49 Current account deficits have raised to worrying le vels in many oil-importing countries (they exceed 
10% of GDP in about one-third of developing countries) (World Bank, “World Bank, “Global economic prospects 2009 — Commodities at the cross roads”, opcit.). 
50 For example, data from a recent IMF survey covering  161 countries show that nearly 57% of countries 
increased food subsidies while 22% reduced tax on fuels. Besides, almost one in five countries 
increased food subsidies while 22% increased fuel subsidies (World Ba nk, “Global financial crisis and 
implications for developing countries”, opcit., p.4.). 
51 WORLD BANK, "The global economic crisis – Assess ing vulnerability with a poverty lens", February 
2009 
52 IMF, "The implications of the global financia l crisis for low-income countries", March 2009 
53 ILO, see footnote 32.  
 
EN 23   EN Based on various analyses54, and bearing in mind the major expected negative effects of the 
crisis on developing co untries (i.e. lower growth rates, falling export re venues, declining 
external financial flows – including remittanc es and private investment flows, budgetary 
pressures), the Commission's assessment of the degree of vulnerability  and resilience of any 
country to the effects of  the crisis is based on the three following areas: 
(1) its dependence on export revenues and degree of integration into world trade 
(2) its dependence on external financial flows and transfers, in particular foreign direct 
investment and remittances 
(3) its capacity to react  in particular to adopt fiscal stimuli measures 
To measure the extent to which countries are vulnerable in each of these areas, eight criteria  
have been used. 
In addition to the macroeconomic dimension, sp ecific impact and needs assessments are also 
being carried out on a country basis and at th e country level, buildi ng upon recent analyses 
provided by European Commissi on delegations on the impact of the financial and economic 
crisis in their respective countri es. The aim is to better grasp the differentiated effects of the 
crisis on developing countries by confirming or completing the quantitative data with more 
qualitative information, notably on th e social and political effects. 
Preliminary analysis of these repor ts shows that as a number of countries are expected to have 
more difficulties in financing social services and pursuing reforms, some are facing growing 
risks of high unemploymen t and threats of increased political instability. 
                                                 
54 WB ("The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens"); ODI ("The global 
financial crisis and developing countries – What can the EU do?", January 2009); EIB ( The impact of 
the financial crisis on ACP countries", December 2008; ADB ( "Country Economic Monitoring Notes", 
February 2009);  
 
EN 24   EN 4. THE “ROAD AHEAD ” - OTHER KEY CHALLENGES UP TO 2015  
The series of crises (food, en ergy, the current financial cr isis and consequent economic 
downturn) will have an impact on developi ng countries’ performance on progress on MDGs. 
The succession of crises is also generatin g changes in global economic and political 
governance and in development agendas (aid po licies, institutions, resources) by default. 
Compounded by the financial crisis, two othe r challenges to achieving the MDGs by 2015 
appear particularly important to addr ess, namely inequality and fragility. 
 
EN 25   EN  
4.1. Inequality 
Although the MDGs do not directly  address inequality (except gender equality MDG 3), the 
Millennium Declaration upholds the principles of  equality (equal rights and opportunities) and 
solidarity (equity and social justice). Progr ess on achieving the MDGs is measured by 
aggregating and averaging change at national level.  National averages can obscure major 
inequalities  in wealth, gender, group identity and other factors. However, the MDGs are 
statements of international purpose rooted  in international consensus on universal 
entitlements, centred on global ju stice and human rights. These in clude the right to education, 
gender equality, survival and to a decent standard of living.  
Even before the series of recent cr ises, progress on the MDGs has been extremely uneven . 
Global income poverty (MDG 1) has fallen largel y due to rapid economic growth in China, 
India, Indonesia and Vietnam. However, in many countries pove rty reduction has been slow 
due to economic stagnation, slow  growth and/or inequality.55 
Growth is critical for poverty reduction but growth alone cannot  reduce poverty. Other 
aspects of development policies also matter.56 The World Development Report57 (2001) 
espoused the instrumental importan ce of inequality: that  high inequality is bad for growth and 
that high inequality is bad for poverty re duction, because it reduces  the amount by which 
poverty falls for each 1% of growth. There is ev idence that the impact of growth on poverty 
reduction is significantly lower when inequality is on the rise than when inequality is declining.
58  
However, since 1990, the majority of developing countries have experienced rising 
inequality . According to the EU Research  Paper on the MDGs (2008), “ Inequality has 
increased so much that it considerably we akened the poverty reduction impact of growth ”.59  
The least developed countries are today fart her away economically from the richest 
countries than ever before . Cross-country inequality in mean income, which has grown 
relentlessly over the last two hundred years, continues to wi den. The ratio of Purchasing 
Power Parity (PPP) GDP per capita in the 10 ri chest countries to PPP GDP per capita in the 
10 poorest increased from about 21 in 1960 to 34 in 1990, yet again to 47 in 2001 and to 50 in 2005.
60 With GDP expressed in market exchange rates, the ratios are much higher. Some 
countries have also seen a sharp drop in life expectancy, in most (but not all) cases as a result 
of HIV/AIDS. In Zambia life expectancy is just 37 years. It is questionable whether the 
processes of globalisation and ma rket integration that, along with new technologies, have 
been the sources of accelerated world economic  growth, can continue  without a concerted 
effort to deal with divergence and inequality.  
                                                 
55 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?”, see 
footnote 1.. 
56 Idem, see footnote 1. 
57 WORLD BANK, World Development Report 2000/2001: Attacking Poverty.  
58 Ravallion, Martin. Pro-Poor  Growth: A Primer (2004). 
59 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?”, see 
footnote 1. 
60 Dervis, K, Ideas for Development, Blog Oct 2007. 
 
EN 26   EN Progress on the MDGs is also highly uneven among population categories  and hides huge 
disparities and inequality within countries .  
There has been a clear trend over the la st two decades in rising inequality within countries .61 
Even countries with an impressive recent record on growth, such as India, have wide national 
disparities in human development indicators, such  as child and infant mortality. There are also 
marked gender inequalities . In India the death rate for chil dren aged 1-5 is 50% higher for 
girls than for boys62. Women and girls face structural in equality in nutrition, healthcare and 
status. These structural inequalities lead to massive underutilisation of women’s economic 
potential. Reducing inequality in the dist ribution of human development opportunities 
therefore instrumental in accel erate progress on the MDGs.  
As we near 2015, we need increasingly to focus on areas that are harder to reach and on 
chronic poverty . By 2015, if the international commun ity (donors and developing countries) 
achieves the MDGs targets, global poverty will only have been reduced by half.  
The location and geographical distribu tion of the poor is changing and the remaining half 
will be more difficult to address.  Tackling chronic poverty will  most probably remain a 
priority for internati onal partnerships after 2015. UNESCO estimates that , despite impressive 
national and regional progress in education and marked increases in enrolment rates, at least 
29 million children will still be out of school in 2015.63 
To some extent, household vulnerability is a product of macro-economic vulnerability 
(through macro-micro interactions). Economic cr ises in developing count ries often lead to 
cuts in government social spending, particular ly on essential servi ces such as primary 
healthcare, education a nd transport, as public revenues pl ummet. Misguided macroeconomic 
policy responses to crises can have dramatic  effects on human lives, as illustrated by the 
experience of Nicaragua in 1991, where a 400% de valuation in 1991 led to a 360% increase in 
prices, making a basic basket of consumption goods unaffordable on an average salary.64  
Public spending, in particular on social protection,  is regarded as playing a key role in 
promoting equity and in addressing chroni c poverty. Social protection measures should 
therefore be given a greater focus.65 Social protection policy recommendations may be 
particularly important to achieve  the MDGs in the current fina ncial crisis and global economic 
downturn. As the EU Research Paper on MDGs states “When the global economy is hit by 
major shocks, the poorest need to be protected from the consequences, whether these are 
fluctuations in income, high food and oil prices  or the emerging effect s of climate change” .66 
                                                 
61 Cornia, G.A., "Inequality, growth and poverty in an area of liberalization and globalization", Oxford 
University Press, 2004. 
62 United Nations Development Programme, Human Development Report: International cooperation at a 
crossroads: Aid, trade and security in an unequal world", 2005. 
63 UNESCO — EFA Global Monitoring Report 2009, Overcoming Inequality — Why Governance 
Matters. 
64 S. Fukuda-Parr, “The human impact of financial crisis on poor and disempowered people and 
countries”, UN General Assembly: Interactive Panel on  the Global Financial Crisis, October 2008, p.3. 
65 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?”, see 
footnote 1.  
66 Idem, see footnote 1. 
 
EN 27   EN Many developing countries lack robust social protection systems . The figure below 
illustrates the number of social protection prog rammes by type and country group on the basis 
of an unofficial survey of 144 developing countries.67 It shows that nineteen of 49 low-income 
countries and 49 of 95 middle-income countri es lack established social safety net 
programmes. Moreover, only about one-third of  low-income and middle-income countries 
benefit from some form of  cash transfer programme. 
Developing countries with social  protection programmes, out of 144  
 
Source : R. U. Mendoza, “Responding to the food, fuel and financial crisis of 2008: a cas e for pro-poor stabili zation policy”, 10 Janu ary 
2009, http://www.voxeu.org/inde x.php?q=node/2774   
The distributional impacts of external shocks within a given country are highly skewed among 
groups of population, depending on household wea lth, demographics, education attainment 
and location.68 Globally, poor and disempowered people/households (mostly female-
headed),  that already struggle to m eet their basic needs are the most vulnerable as they are 
generally less equipped to deal with economic instability and tend ther efore to resort to 
harmful coping strategies, such as pulling children out of school, eating less (or less 
nutritious) food, selling key productive assets or cont racting debts, with the risk of generating 
adverse long-term and potential ly inter-generational effects.69 But not all poor people are 
affected in the same proportion - some are sometimes protected from shocks by the same factors that reduced them to poverty in the fi rst place, such as geographic isolation and poor 
links with national and global markets. For in stance, a study on the 1998 economic crisis in 
Indonesia showed that the urban poor suffered th e most, while the ability of poor households 
living in rural areas to produce food helped th em cope with the consequences of high 
inflation.  
Case-by-case analyses  should therefore be conducted to design the right policy and financial 
responses to reduce the vulnerabi lity of certain developing c ountries and their populations to 
external shocks. 
                                                
 
67 Lustig, N., “Thought for Food: The Challenge of Co ping with Soaring Food Prices”, Centre for Global 
Development Working Paper, 2008. 
68 M. Ravallion, “Bailing out the world’s poorest”, Policy Research Working Paper n°4763, World Bank, 
October 2008, p.3. 
69 R. U. Mendoza, “Responding to the food, fuel and financial crisis of 2008: a case for pro-poor 
stabilization policy”, opcit. 
 
EN 28   EN Rising inequality and the need for tested reme dies to tackle chronic poverty in developing 
countries up to and beyond 2015 is an ongoing challenge. Howe ver the recent food, energy 
and financial crisis may be exacerbating inequality . 
Thus, the redistributive potential of policies for he alth, education and social protection is 
of major significance . Improved access for the poor to public services and assets (especially 
in the health and education sectors) and inco me transfer programmes to sustain the poorest 
families are essential to changing the structur e of opportunities and are key to reducing the 
intergenerational transmissi on of poverty and inequality.  
4.2. Fragility 
Many of the world’s poorest countries can be desc ribed as “situations of fragility” lacking the 
capacity or will to fulfil their basic functions, meet their obligations and responsibilities 
regarding service delivery, management of reso urces, rule of law, eq uitable access to power, 
security and safety of the populace and protec t and promote citizens’ rights and freedoms.70  
Recent reports and analysis show that the MDGs’ achievement gap is much larger in 
situations of fragility .71 Many fragile  counties still need to meet the very basic conditions of 
stability and establish a minimum institutiona l framework to begin reducing poverty and 
make headway on the MDGs.  Uneven progress on the variou s MDG indicators across regions 
and countries is partly explaine d by the distinction between frag ile and non-fragile countries.  
Fragility exacerbates poverty,  has disproportionate impacts on vulnerable groups and often 
leads to reversals in progress on the MDGs . The World Bank Global Monitoring Report 
(2007) reports that “ 27% of the extreme poor in developing countries live in fragile states”, 
and poverty reduction in these countries will re main out of reach unless “fragile states 
become less vulnerable to adverse shocks, and they increase their capac ity to absorb external 
funds and to mobilise internal resources ”.  
Moreover, negative spill- over effects from these countries — the trafficking of people, drugs, 
criminality and terrorism and the impact on inte rnational trade, development and stability — 
can be enormous. 
                                                 
70 COM(2007)643, “Towards an EU  response to situations of fragility — engaging in difficult 
environments for sustaina ble development, stability and peace”, October 2007, 
http://ec.europa.eu/development/icenter/repository/COM_2007_0643_EN.pdf. 
71 UN MDGs Report 2008, WB Global Monitoring Report 2008, Bourguignon report 2008 (see footnote 
1). 
 
EN 29   EN The causality between state fragility, state failure and vulnerability is complex and it is not 
easy to isolate what causes what.72 Fragility makes it difficult to implement proper 
development strategies and to achieve eq uitable and sustainable economic growth. 
Development work in fragile situations requir es sustained engagement and new, imaginative 
use of combined political, technical, financial and sometimes military resources, engaging with governments but also civi l society and non-state actors. 
Though fragile countries have very dissimila r conditions, they often share institutional 
instability, which undermines th e predictability, transparency  and accountability of public 
decision-making processes and the provision of  security and social services to the 
population.
73  
For all these reasons, the Commission i ssued a Communication on fragility in 200774. Follow 
up work is currently on-going in  particular through the elaborat ion of pilot countries' action 
plans and through work in colla boration with the World Bank on budget support in situations 
of fragility. 
As demonstrated recently, the financial crises can also strike economie s with relatively sound 
institutions and broadly successful policies but there is a growing consensus that the extent  of 
the effects is smaller in countries w ith better institutions and policies.75 Under-developed 
financial markets and fragile economies tend to magnify the effects of real shocks. 
An analysis of the various factors of vulnerability indicates that fragile countries are more 
exposed  to shocks  and they will tend to suffer from cyclical multi-dimensional crises more 
frequently .  
Countries in situations of frag ility often present structural ec onomic features that heighten 
their vulnerability. These include: (1) limite d or entirely lacking banking systems, (2) 
dependency on private financial flows with a high share of foreign-owned banks, (3) 
significantly limited capacity of absorption, (4) long-standing arrears and (5) limited 
governmental capability to collect ta xes to form a solid revenue base.76  
Strong institutions are the main determinants of a country’s resilience to exogenous shocks. 
Therefore fragile countries have a reduced capacity  to react to shocks. The financial crisis 
may swell the number of  fragile situations. 
                                                 
72 Guillaumont, P., "An economic vulnerability Index: Its design and use for international development 
policy", November 2008. 
73 Engberg-Pedersen et al., "Fragile situations: Curren t debates and central dilemmas", Danish Institute for 
International Studies, 2008. 
74 COM(2007) 643 final, 25/10/2007. 
75 Lessons from World Bank Research on Financial Crises , Development Research Group,  The World 
Bank Development Research Group, November 2008. 
76 Di John, J., “Retaining legitimacy in fragile states — Rebuilding the revenue base for sustainable peace, 
May 2007. 
 
EN 30   EN 5. THE POLICY RESPONSE  
5.1. Domestic policy responses in developing countries 
Domestic policies are crucial to accelerat e progress on the MDGs, take advantage of 
opportunities offered by the global economy and use aid as effectively as possible. One set of 
policies cannot fit all c ountries, and country specificity in  terms both of opportunities and 
constraints should be rec ognised and taken on board.77  
Weak governance  is one of the major obstacles to achieving the Millennium Development 
Goals. Without a reinforced commitment to  fully respecting human rights, democratic 
principles, rule of law and good governance, effort s to assist developing  countries and their 
populations affected by the global crisis will fall short. The principles of sound democratic 
governance hold that the state be responsive and accountable and shou ld facilitate civil 
society participation in efforts to allevi ate the impacts of the financial crisis. 
In response to rising food prices , some countries began to take  protective policy measures 
designed to reduce the impact of rising world f ood commodity prices on their own consumers. 
In the autumn of 2007, some exporting countries  made policy changes designed to discourage 
exports and keep domestic production within the country. The objective was to increase 
domestic food supplies and restra in increases in food prices.78 Early in 2008, importing 
countries also began to take protective policy measures to co mbat rising food prices. Their 
objective was to make high-cost imports av ailable to consumers at lower prices.79 However, 
export restrictions are short term  policy choices which lead to fu rther increase of world prices, 
to the detriment of other countri es, and also to the detriment of  domestic producers since they 
insulate them from world market signals and risk suppressing investme nt in the agriculture 
sector. 
Some countries responded by building on their existing social protection systems , reflecting 
a growing consensus on their importance. Howeve r there is still great room for improvement 
here. In Latin America, for example, cash transfer programmes cover more than 25% of the poor population in only 8 of the 26 count ries for which data is available.
80 In other regions, 
programme coverage is better — in Asia, the proportion of th e poor receiving some social 
protection benefits is about 57% . However, benefits there are also much more limited. An 
analysis of 31 Asian and Pacific countries found that about half of the countries had social 
protection expenditure totalling a mere 20% of the poverty line income or expenditure.81 
                                                 
77 “Millennium Development Goals at Midpoint: Where do we stand and where do we need to go?”, see 
footnote 1. 
78 The policies adopted include: elimination of export subsidies (e.g. China); rise in export taxes (e.g. 
Argentina, Russia, Indonesia, Malaysia, Kazakhstan a nd China); restrictions in export quantitative (e.g. 
Ukraine, India, Vietnam and Argentina); export bans for some products (e.g. India, Serbia, Ukraine, 
Egypt, Cambodia, Vietnam and Kazakhstan). 
79 The policies adopted include: reduced imported tari ffs (e.g. India, Indonesia, Serbia, Korea, Mongolia 
and Thailand); subsidising consum ers (e.g. Morocco and Venezuela). 
80 Lustig, N., see footnote 67. 
81 Wood, J., “A Social Protection Index for Asia”, 2009, Paper for presentation in the Association for 
Public Policy Analysis and Management Conferen ce on Asian Social Protection in Comparative 
Perspective, 7-9 January, 2009, National University of Singapore, Singapore. 
 
EN 31   EN There is a growing recognition that most soci al protection programmes across the world lack 
a clear mechanism to deal with the “new poor”,  pushed into poverty by the aggregate shocks. 
Policy adjustments are often made in an ad-hoc  fashion after the event, indicating that the 
“vulnerable near-poor” do not re ceive adequate social protection.  
In response to the financial crisis,  many developed and emerging c ountries have drafted fiscal 
stimulus packages to boost consumer and business demand.82  
The link between the global economic environmen t and the level and effectiveness of aid, 
coupled with national policies, is crucial to achieving the MDGs. Theref ore it is important to 
look not solely at new national po licies to respond to crises but also at the sustainability of 
policies addressing the MDGs. In some countries  the financial crisis may curb the planned 
expansion of basic services, for example.  
5.2. Responses from the international community 
5.2.1.  Responses to the food crisis 
The response to the food crisis was swift and coordinated. Immedi ate action to help the most 
severely hit countries was taken bo th at global and regional levels. 
At global level , important measures were taken by the United Nations specialised agencies, 
Funds and Programmes and Bretton Woods institutions. 
As early as December 2007, the UN Food and Agriculture Organisation  (FAO) launched 
the Initiative on Soaring Food Prices  to help the most severely affected countries. Through 
this initiative, almost $59 million were granted to governments to distribute seeds, fertiliser 
and other farming tools and supplies to sma llholder farmers. The FAO appealed for $1.7 
billion to support urgent activ ities under its Initiative unt il the end of 2009. In June 2008, 
world leaders held an emergency summit in Rome  to address the food crisis and pledged $22 
billion to the FAO. But most of what was pledged has not been forthcoming and the FAO 
estimates that $30 billion per y ear is needed to i nvest in the massive  task of boosting 
smallholder agriculture  on a global scale. 
During the annual meeting dedicated to the world food crisis in April 2008, the UN Board of 
Executives established a High-Level Task Force  (HLTF) on the Global F ood Security Crisis 
under the leadership of the UN Secretary General. The HLTF produced a Comprehensive 
Framework for Action  (CFA)83 calling for sustained growth in food availability through 
smallholder production, increased social prot ection systems, strengthened food security 
management systems, improved international food markets, and an intern ational consensus on 
sustainable biofuels. Immediate action includes measures to help vulnerable people now, as 
both consumers and producers of food; whil e longer-term action fo cuses on addressing 
underlying, structural issues to help build resilience and contribute to sustainable 
improvements in global food security and povert y reduction within the context of the MDGs. 
                                                 
82 On average, developed and developing countries are implementing stimulus packages ranging from 1 to 
2% of GDP. As an example, China has announced significant stimulus packages of US $586 billion. 
See footnote 28. 
83 UN High-level Task Force on th e Global Food Crisis, “Comprehen sive Framework For Action”, New 
York, July 2008. 
 
EN 32   EN In April 2008, ministers from 150 countries met in Washington D.C. to endorse the World 
Bank ’s New Deal on Global Food Policy . The New Deal embraces short, medium and long-
term responses, including safety nets such as school feeding, food for work, and conditional cash transfers; increased agricu ltural production; a better understanding of the impact of 
biofuels; and action on tr ade to reduce distorting s ubsidies and trade barrier s. Also as part of 
its Global Food Response Programme (GFRP) , the World Bank has created a new US$1.2 
billion rapid financing facility to speed assistan ce to the neediest countries. So far, the GFRP 
has approved and begun disbursing US$851 milli on in 27 countries. An additional US$309 
million is being earmarked for programmes in nine countries. 
In July 2008, G8 leaders adopted a Statement on Global Food Security  at the G8 Summit in 
Hokkaido (Japan), calling notably for " a fully coordinated res ponse and a comprehensive 
strategy " by the international community to  tackle the issue of food crisis
84.  
Building on these various international initiati ves, the international community launched in 
January 2009 at the Madrid Hi gh Level Meeting on "Food Secu rity for All conference" a 
consultation process leading to the creation of a Global Partnership for Agriculture and 
Food Security (GPAFS).  The Global Partnership aims at maintaining the issue of food 
insecurity high on the political agenda, coor dinating global food pric es and harmonising aid 
delivery at country level. It will also help developing c ountries prepare and implement 
national plans to tackle hunger and support agricultural development. 
At regional level , a number of significant initiatives we re taken to urgently tackle the food 
crisis, including by the Asian Development Bank, the African Development Bank and the European Commission. 
In April 2008, the Asian Development Bank  (ADB) published a report outlining its strategic 
response to the food crisis.
85 A month later, during its annua l meeting, the ADB provided up 
to $500 million in immediate budgetary support to the hardest-hit countries in Asia and the 
Pacific. In the medium to longer term, the ADB has decided to increase lending for 
agriculture and rural development to more than $2 billion in 2009. 
On 24 July 24 2008, the African Development Bank  established the African Food Crisis 
Response  (AFCR)86, a framework for accelerated support to  its Member States affected by 
high food prices. Adding $1 billion to its agricultural portfolio, th e objectives are threefold: to 
reduce the vulnerability of th e poor to high and unstable f ood prices; to support growth 
through increased agricultural pr oductivity, market participati on and strengthened government 
policies for sustainable agricultural developmen t; to increase capacity and lay the conditions 
for sustainable agricultural growth. 
                                                 
84 G8 Leaders Statement on Global Food Security, July 2008, Hokkaido (Japan), 
http://www.mofa.go.jp/policy/economy/summit/2008/doc/doc080709_04_en.html .  
85 Asian Development Bank, “Soaring Food Pri ces — Response to the crisis”, Manilla, 2008. 
86 Resolution B/BD/2008/14 Rev.1 –F/BD/2008/09/Rev. 1. 
 
EN 33   EN The European Commission, in its  Communication of May 200887, called for a three-pronged 
response including short-term development action focusing on humanitarian responses, 
medium-term action concentrating on safety nets , and longer-term acti on to boost agricultural 
production. 
In addition, following a proposal from the Commission88, the EU has created a € 1 billion 
Food Facility to help the poorest countries cope with high food prices.89 The Food Facility is 
providing support to farmers in the most affect ed developing countries through the supply of 
seed and fertilisers; help meet the basic food needs of the most vulnerable people; and support 
measures to ensure long-term agricultural  production. This time-bound initiative (2008-2010) 
is complementary to the existing Commission policies and financing instruments to support 
rural development, food secu rity and agricultural producti on in developing countries. 
5.2.2.  Responses to the financial crisis 
A distinction can be made betw een immediate responses to help  developing countries mitigate 
the impact of the financial crisis and longe r-term responses to reform the economic and 
financial architecture. Convinced that developmen t is part of the global solution to the crisis, 
the EU is ready to contribute to the international effort to  support developing countries. 
Immediate responses 
Most of the immediate responses  to the crisis are based on the financial rescue of some of 
the hardest-hit emerging and developing countries. 
For instance, in response to the liquid ity pressures on emerging markets, the IMF  has created 
a new facility, the Short-Term Liquidity Facility  (SLF), to provide major, up-front, quick-
disbursing and short-term  financing to eligible emerging c ountries with a good track record of 
sound economic policies. 
The World Bank  decided to increase its financial support up to US$100 billion over the next 
three years to help developing countries cope with falling revenue, investment and trade and to help them design supportive policies. In  December 2008, the World Bank launched its new 
Financial Crisis Response Fast-Track Facility  of US$2 billion to speed funds to the poorest 
countries, through an accelerated approval pr ocess for money from the US$42 billion IDA 15 
fund. These funds are to be used in priority for safety nets, infrastructure, education and 
health. Moreover, the World Bank recently urged developed countries to pledge 0.7% of their 
stimulus packages to a vulnerability fund to assist developing countries that cannot afford 
bailouts and deficits.
90 
                                                 
87 European Commission, “Tackling the challenge of rising food prices — Directions for EU action”, 
COM(2008) 321 final, Brussels, 8 May 2008, http://ec.europa.eu/commission_barroso/president/pdf/20080521_document_en.pdf
  
88 European Commission, “Proposal for a regulation of the European Parliament and of the Council 
establishing a facility for rapid response to soari ng food prices in developing countries”, COM(2008) 
450/5. 
89 The Food facility Regulation, adop ted on 16th December, published in the Official Journal n° L354 of 
31 December 2008 and therefore came into force on 1s t January 2009. 
90 “Zoellick Calls for ‘Vulnerability Fund’ Ahead of Davos Forum”, World Bank Press release, 30 
January 2009. 
 
EN 34   EN Longer-term responses  
Longer-term responses  to the financial crisis consist essentially of major initiatives to 
reform the international financial and economic architecture. Such ini tiatives are currently 
being discussed by international bodies, includi ng the G20 and the UN. Institutional reform 
was also the subject of discus sion at the Informal Meeting of Development Ministers in 
Prague on 29 January 2009. 
In November 2008, at the Washington summit, the G20 leaders made a number of 
commitments to address the global financial and economic crisis in a sustainable and 
inclusive way. While all leaders agreed that urgent action was required, the final summit 
declaration underscored that “a broader policy response is needed, based on closer 
macroeconomic cooperation, to restore grow th, avoid negative sp ill-overs and support 
emerging market economies  and developing countries”.91  
Following-up the Washington Summit, the sec ond G20 summit in London in early April 2009 
expressed its determination to lay the foundati on for a fair and sust ainable world economy 
and took a number of additional measures to strengthen coordination between countries in 
order to help restore global economic growth and reform financial markets . Commitments 
were taken to stabilise financial markets , avoid protectionism; reform the global financial 
markets;  and put the global economy on track for sustainable growth as well as ensuring a fair 
and sustainable recovery fo r all, including the vulnerab le in the poorest countries.  
At the UN Conference on Financing for Development  in Doha in November 2008, 
governments stressed the need to  comply with existing aid commitments to poor nations, even 
amid the current economic slowdown, and called for a UN High-level conference on the world 
financial and economic crisis and its impact on development . 
In November 2008, the President of the UN General Assembly  set up a High-level 
Taskforce of Experts , chaired by Nobel Prize economist Joseph Stiglitz, to undertake a 
comprehensive review of the global financia l system, including the major international 
economic institutions, and to suggest how to reform  the International Financial Institutions to 
enable them to adapt to new power shifts in th e world economy and respond better to new 
challenges. One recent initiative is the proposal that Africa be given a new seat on the World 
Bank Board. This reform would increase Sub–Sah aran Africa’s seats to  3 (out of 25) and 
increase the voting rights of developing countries to 44%.  
6. LOOKING AHEAD TO 2015   
Much remains to be done to achieve the MDGs between now and 2015. Ongoing challenges 
to the MDGs presented by growing inequali ty between and within countries and the 
challenges faced by conflict-affected and frag ile countries have been exacerbated by the 
current global economic crisis.  
                                                 
91 “Declaration of the Summit on Financial Markets and the World Economy”, Washington D.C., 15th 
November 2008. 
 
EN 35   EN A rare international development consensu s has been achieved around the MDGs using a 
clear framework and set of indicators as we ll as development language that has helped 
communication between donor and pa rtner countries. The MDGs pl ayed an essential political 
role in mobilising support for development assistance when aid disbursements were on a downward trend in many key OECD countries and remain a key focus of development policies.
92 However as we approach 2015 and some c ountries come closer to achieving their 
country targets for the MDGs, the focus may shif t to pockets of extreme poverty. Even if the 
MDGs are achieved in the next seven years, global poverty will only have been reduced by half and the remaining half will pose fresh challenges to the international development agenda. For low-growth poor countries and frag ile countries, 2015 may only be the beginning 
not the end of the road.  
Hence it is important to begin thinking about the MDGs in the lead up to and beyond 2015. 
Two issues in particular merit special attention: how to tack le chronic poverty persisting in 
2015 and how to sustain the MDG achievements.
93 Connected to both these issues is the 
widely recognised problem of da ta collection and analysis that  is currently already being 
explored by work on new monitoring frameworks, targets and indicators.94 Strengthening 
national statistical capacity is important in or der to make possible the timely provision of 
reliable statistics which are essential for the implementation and follow-up of the MDGs 
Indicators framework. 
In order to start a process of inclusive debate  at international level ahead of 2015, the scope 
and flexibility of the MDG framework can be carefully considered. Although there is general 
agreement that the MDG framework adds value to the international development agenda,95 its 
scope appears more questionable.96 In particular there is an ongoing debate on the “missing 
dimensions” of the MDG framework and on the gl obal challenges to global goals and targets 
6.1. The missing dimensions of the MDG framework 
The original purpose of the MDGs paradigm is  to measure and encourage sustainable pro-
poor development progress and do nor support for domestic efforts.97 However, while the 
structure of the MDGs has prov ed highly effective in improving public understanding of what 
sustainable pro-poor development mi ght look like in practice, it seems less useful as a tool for 
deciding what investments should  be given priority to achieve this development. This is 
mainly because the policy areas are not weighted  in any way and the general nature of some 
goals makes it hard to come up with targets and indicators that adequately capture the key aspects of the policy area. 
                                                
 
92 “MDGs at Midpoint: Where do we stand and where do we need to go? ” see footnote 1. 
93 Idem, see footnote 1. 
94 Sabina Alkire “The missing dimension of Poverty data”, Oxford Development Studies December 2007. 
95 See footnote 1 and Manning, R., “Using indicators to encourage development: lessons from the 
Millennium Development Goals”, January 2009. 
96 See footnote 102 and Chronic Poverty Research Centre, “A proposal to introduce social protection into 
the MDGs”. 
97 Manning, R., “Using indicators to encourage development: lessons from the Millennium Development 
Goals”, January 2009. 
 
EN 36   EN The selection of the goals has come under a ttack for neglecting im portant issues. Many 
advocates have criticised the absence of a goal and targets on rights, empowerment and good 
governance, which can be considered as some of the key issues to lift the poor out of 
poverty.98 Similar criticisms focus on the absence of other deve lopment challenges, like 
security issues, citizen partic ipation, food security, socio-ec onomic inequality and social 
exclusion.  
A number of proposals to raise awareness of th ese other aspects have already been made. The 
Chronic Poverty Report 2008-09, for example, iden tifies five chronic pover ty traps that must 
be addressed by the in ternational community99. The solution proposed is centred on an 
increased level of social protection and public se rvices. These are considered crucial to fully 
achieving the existing MDGs and to ensure th eir sustainability af ter 2015. Stemming from 
this idea, the Chronic Povert y Research Centre published a proposal to enhance the MDGs 
with a more explicit target (under MDG 1) rela ted to social protectio n. Social protection is 
seen as critical to protect the poor from sudde n shocks, such as food price rises, and in the 
longer term promotes investment in healthcar e and education, which increase prospects and 
life chances. Other examples include a series of papers from the Oxford Poverty and Human 
Development Initiative (OPHI) and from the Univ ersity of Bath, which suggest a defining 
poverty in a way that embraces further dimensions.100 
However, broadening the scope of the cu rrent MDGs, by adding more goals or more 
monitoring indicators ma y be counter-productive.101 Although the situation needs adjusting, it 
is unclear whether new targets would be th e best answer. The risk of increasing the 
complexity of an already complicated internat ional situation may be too high. Any addition to 
the MDG framework should be cautiously balanced against the risk of losing partner countries' commitment to let the MDGs featur e prominently in their national development 
agendas. 
Other issues relate to devel oping countries' perceptions of who ‘owns’ the MDGs and how 
they can be translated into na tional poverty reduction priorities.  National priorities are often 
corralled into MDG compliance, and the goals ar e often seen at countr y level as developed 
country constructs. Listening to the voices of de veloping countries may entail a stronger focus 
on clear local indicators that reflect the on- the-ground situation bringing into question the 
sweeping global targets. Increa sing developing country ‘ownersh ip’ of the MDGs is a major 
factor in accelerating progress up to and beyond 2015.  
                                                
 
98 Idem. 
99 The traps are: Social discrimination, Insecurity  and poor health, Poor work opportunities, Spatial 
disadvantage and Limited citizenship (from Chronic Poverty Research Centre, "The Chronic Poverty 
Report 2008-09 — Escaping poverty traps", July 2008). 
100 See footnote 97. 
101 See footnote 1 and 97. 
 
EN 37   EN  
6.2. Global challenges to global goals and targets 
A second relevant issue concerns global public  goods. These goods are public (i.e. non-rivalry 
in consumption and non-excludability of benefits),  extend to more than one set of countries or 
more than one geographic region and do not disc riminate against any population groups or 
generations (present and future).102 By their very nature, public goods are known to have large 
externalities and sweeping benefits. Examples are biodiversity, water and climate patterns. 
Global public goods are considered  preconditions for the developm ent of countries and their 
populations. Protecting and mana ging sustainably the natural resource base is key to 
successful poverty re duction strategies. 
The issue here is should more focus be placed on key global public goods, such as minimising 
the extent of climate change or providing greater security in the international development agenda? This is linked to the more general quest ion of whether any new goa ls should be set at 
developing country level or mo re explicitly at global level.
103 The aspects of development are 
gradually changing and, as barriers between count ries continue to lowe r, the influence of 
global factors seems likely to have a greater we ight in determining the progress of the poor. 
This suggests that the approach of considering a set of indica tors linked to absolute poverty 
needs also to be tested against a more “one -world” approach. The aim here would be to 
encourage policy makers in ever y country to give greater wei ght to tackling systemic global 
issues, of which absolute poverty would be onl y one. In this case, th e two main concerns 
would be whether such a macro framework would be negotiable and whether it might lead to 
poverty being under-weighted compar ed to other global issues.104  
Given the above, the current level of uncertainty  on these issues, and the EU’s prominent role 
internationally and in the development process of  partner countries, the EU might take a lead 
in launching an international de bate in the next couple of year s with the aim of exploring the 
various options for the deve lopment narrative after 2015.  
7. CONCLUSIONS AND KEY POLICY IMPLICATIONS  
The current financial turmoil and its repercu ssions on the world economy, combined with the 
effects of previous food and energy crises, ha ve revealed how much influence (whether 
positive or negative) the global economic cont ext can have on progress on the Millennium 
Development Goals (MDGs) and their sustainability.  
A clear conclusion is that develo ping countries are vulnerable to a host of fall-out effects from 
the past and current crises, either directly (in the food crisis) or  indirectly (as a result of the 
financial and fuel crises). The culmination of these negative effect s seems to exacerbate 
inequality and jeopardise progress made on the MDGs, pushing the 2015 goalposts even 
further.  
                                                 
102 I. Kaul, I. Grunberg, and A. Stern, “Global Public Goods: International Cooperation in the 21st 
Century”, Oxford University Press, 1999. 
103 See footnote 101. 
104 Idem. 
 
EN 38   EN The international development community has an  important role to play in ensuring that 
commitments to ODA are fulfilled, that aid is gi ven in a more coherent and effective manner 
and that there is true coherence with global trade and financial pol icies to ensure that the most 
vulnerable countries and their most vulnerable po pulations are not disproportionately affected. 
The EU is playing an important role on all th ree fronts. The gains ma de during 2008 in terms 
of global action on development must be mainta ined if the MDGs are to be achieved. Given 
the depth and intensity of the current crisis the period 2009-2015 will be one of even greater 
challenge for achieving progress on the MDGs. 
New issues are arising in discussions and ac tion since the Millennium Summit in 2000. It is 
clear that the MDGs have been useful to garn er support for development assistance, but they 
have their limitations. Debate on the usefulness , extension or differe ntiation of the MDGs 
seems to be expanding to encompass the global dimensions of poverty and the need for more 
national involvement and ownership. It will be important to ensure lead ing up to 2015 there is 
an internationally owned framework to take  action and development policy forward taking 
into account these issues and maintaining th e focus on helping the most vulnerable lift 
themselves out of or avoid debilitating poverty. 
The global dimension of new challenges that ove rlap strongly with development, such as 
global food security, access to energy or climat e change, must feature prominently in the 
development agenda. Although the MDGs are likely to be importa nt for the longer-term task 
of eradicating poverty beyond 2015, development policy is being challenged by a host of 
aspects brought sharply into focus by the financial crisis.  
 
EN 39   EN ANNEX 1   
State of play of progress on achieving the MDGs by 2015105 
The 2005 World Summit assessing progress on th e MDGs reported significant gains. From 
2000 to 2005 more than 120 million people have escaped poverty. About 2 million lives have 
been saved by reducing child mortality, 30 millio n additional families now have access to 
water, 30 million additional children now go to school, and boys and girls attend school in 
equal numbers in many countries where the gap used to be very wide. Recent UN assessments 
indicate the world seems on track to halv e global poverty by 2015, which is the first 
development goal. However, global progress ha s been highly uneven and mainly driven by 
the rapid growth and improvements in the gian t countries of Asia, including China, India, 
Indonesia and Vietnam. Other re gions in the world have perf ormed poorly, especially Sub-
Saharan Africa, which still lags behind on in come and non-income MDGs. Gender parity in 
primary and secondary school is the only goal - other than poverty reduction - for which developing countries seem to be on-track overall. The world is off-track on the other goals, 
most of all in the poorest regi ons in South Asia a nd Sub-Saharan Africa. The most off-track 
MDGs are child mortality and maternal health. 
GOAL 1 
Eradicate 
extreme 
poverty and hunger 
  In 1990 1.8 billion people lived in extreme poverty, equal 
to 41.7% of the world population. In 2005 the figure fell to 
1.4 billion, equal to 25.7% of the world population. These estimates take into consideration the new threshold of 
$1.25 per day (compared to the previous $1) recently 
established by the World Bank. The recent change to the threshold has had the obvious consequence of increasing 
the absolute
 number of people living below the poverty 
line, but it has had only a minor impact on the evaluation of trends
 in poverty and thus on achieving the MDGs.  
 Target 1.A:  
Halve, between 1990 and 2015, 
the proportion of people whose income is less than one dollar a day 
 In 1990 28.7% of the world population lived on less than 
$1 a day. In 2005 the percentage had fallen to 18.1%. 
More than 120 million people came out of poverty between 2000 and 2005, i.e. a 2.4% annual drop.  
The East Asia and Pacific region has made the most 
dramatic progress in reducing the number of people living on less than $1 per day—from 29.8% in 1990 to 9.1% in 
2005. China led this decrease, moving from 33% to 9.9%.  
Sub-Saharan Africa is the worst-performing region: the 
poverty rate rose from 46.7% in 1990 to 49.7% in 2000, 
dipping to 41.1% in 2005 and the absolute number of poor 
people increased by a third. However countries within the 
group fare differently: poverty fell by an annual rate of 
4.6% in Ghana between 1999 and 2006 but increased at an 
                                                 
105 The Millennium Development Goals and targets come from the Millennium Declaration, signed by 189 
countries in September 2000. In 2007, the MDG monitoring framework was revised to include four new 
targets agreed at the 2005 World Summit. The four  new targets are: Target 1.B Achieve full and 
productive employment and decent work for all,  including women and young people; Target 5.B 
Achieve, by 2015, universal access to reproductive health; Target 6.B Achiev e, by 2010, universal 
access to treatment for HIV/AIDS for all those who need it; Target  7.B Reduce biodiversity loss, 
achieving, by 2010, a significant reduction in the rate of loss. Moreover, the language has been 
modified in some cases for technical reasons, so  that the data can be more clearly reflected. 
 
EN 40   EN annual rate of 3.8% in Uganda between 2000 and 2003.  
 Target 1.B:  
Achieve full and productive 
employment and decent work 
for all, including women and young people  Between 55% and 75% of the working age population is 
employed in most regions.  
The two exceptions are Northe rn Africa and Western Asia, 
mainly because the employment: population ratio for 
women is less than 25% (more than 40 percentage points 
below the ratio for men).  
In Eastern Asia the ratio is 78% for men and 65% for 
women, but there is a striki ng difference in employment: 
population ratios of young people and the rest of the population. Although it escapes the high youth 
unemployment of other regions, Eastern Asia’s young 
people are working rather than investing in education for the future. 
A major issue is that half the world’s workforce is in 
unstable and insecure jobs: in developing regions 64% of working women and 57% of working men are own-
account and contributing family  workers. Here again the 
picture across countries is highly uneven: Zambia, Bolivia and Paraguay have experienced an increase
 in vulnerable 
workers of over 1% per year in the period 1990-2005, 
while Vietnam, Thailand and Namibia have recorded a 
decrease  of more than 1% per year over the same period. 
Moreover, jobs in most the developing countries provide 
little relief from poverty because the pay is too low. In 
sub-Saharan Africa, over half  the workers are “working 
poor”, meaning that, although they have a job, they live in 
a household where each member earns less than $1 a day. 
The global percentage of “w orking poor” (calculated over 
the total number of workers) has however fallen from 30.6% in 1997 to 20.4% in 2007.  
Full, secure and productive employment seems to remain a 
distant target. 
 Target 1.C:  
Halve, between 1990 and 2015, 
the proportion of people who 
suffer from hunger Fewer than 40% of the 77 countries with adequate data to 
monitor trends are on track to hit this MDG target.  
In particular progress on child malnutrition seem to be 
very slow in Southern Asia and Sub-Saharan Africa, where the percentage of und erweight children under the 
age of 5 in 2006 was still 46% and 28% respectively. A 
high-yield, drought-resistant and protein-rich variety of 
rice (NERICA) contributed to food security and improved 
nutrition in several countries in sub-Saharan Africa. But it didn’t suffice: the total pr evalence of undernourishment 
only fell from 20% in 1992 to 16% in 2004. 
Moreover the rise in food prices between 2006 and 2008 
put great pressure on many developing economies and 
threatened to unravel hard-won progress in fighting hunger 
and malnutrition. Almost 105 million people in the least developed countries have been added to the world’s poor 
since 2005 because of rising food prices. 
 
EN 41   EN Prices are now falling but are predicted to remain higher 
than in the past, with the crisis having long-lasting effects.  
Goal 2 
Achieve 
universal primary education
 Target 2.A: 
Ensure that, by 2015, children 
everywhere, boys and girls alike, will be able to complete a full course of primary schooling 
 
   Progress on this goal has been widespread. Overall the 
total net enrolment ratio in primary education in developing countries rose from 80% in 1991 to 88% in 
2006. In almost all regions it now exceeds 90%, with 
many countries close to ach ieving universal primary 
enrolment.  
Sub-Saharan Africa and South Asia are the two regions 
lagging behind, with a net enrolment ratio in primary school of 71% and 88% respectively. More than 70m 
primary school-age children are still not enrolled. But even 
in these regions, some countries have made substantial progress. Malawi, Uganda, Tanzania and Kenya have 
abolished school fees, enabling more than one million 
extra children in each country to enrol in primary school.  
However the good progress in access masks problems in 
completion of primary school. In half the countries with 
available data for 2004, less than 87% of pupils who started grade one reached the last grade. According to 
2006 data, attendance is higher in urban than in rural areas, 
but being poor is the key determinant: surveys in sub-
Saharan countries indicate that children from the poorest 
households are least likely to attend school, regardless of whether they live in urban or rural areas. 
Goal 3 
Promote 
gender 
equality and empower women
  The world seems till a long way off achieving gender 
equality. Progress in equal access to remunerative labour 
markets has been modest, except in low performing regions. This is compounded by lower welfare for women 
than for men. In many developing regions, women still 
lack property rights and access to credit.  
Overall, women occupy almost 40% of all paid jobs 
outside agriculture, compared to 35% in 1990. But almost 
two thirds of women in the developing world work in vulnerable jobs are self-employed or unpaid family 
workers. In Southern Asia and sub-Saharan Africa, this 
accounts for more than 80% of all jobs for women. 
Women are slowly gaining ground in political decision-
making, but progress is erratic and marked by huge 
regional differences. In January 2008, the global 
proportion of parliamentary seats held by women reached 
a high of nearly 18%. Women today occupy at least 30% of parliamentary seats in 20 countries, but none in Asia
. 
 Target 3.A:  
Eliminate gender disparity in 
primary and secondary 
education, preferably by 2005, and in all levels of education no later than 2015 All regions except Sub-Saharan Africa seem broadly on 
track to meet the gender par ity target by 2015, even if 
some countries in the regions still lag behind. In 2005 59 countries out of the 181 with  data available had already 
achieved gender parity in both primary and secondary 
education.  
Globally, for every 100 boys, 95 girls were enrolled in 
primary school in 2005. South Asia has made the most 
 
EN 42   EN progress, up from 77 to 93 girls every 100 boys between 
1991 and 2006. Latin Ameri ca & the Caribbean and East 
Asia and the Pacific have reached gender parity in secondary education and are cl ose in primary schooling. 
In rural areas and in poorest regions the disparity in 
girl:boy schooling is greater (the difference being respectively 4 and 3 percentage points, compared to just 2 
in urban areas and 1 in  the richest regions). 
Goal 4 
Reduce child 
mortality  Target 4.A:  
Reduce by two-thirds, between 
1990 and 2015, the under-five mortality rate
 The under-five mortality rate in developing countries 
slowly improved from 103 to 80 deaths per 1000 live births between 1990 and 2006, with 37% of deaths 
occurring in the first month of life. Therefore the goal is 
still some way off. 
With a child mortality rate of 157, Sub-Saharan Africa 
accounts for about half of the deaths of children under five 
in the developing world. The HIV/AIDS epidemic and civil conflicts have hampered the region’s progress in 
reducing child mortality. 
The developing regions closest to achieving the target are 
Northern Africa (down from 82 to 35), South-Eastern Asia 
(from 77 to 35) and Latin America & the Caribbean (from 
55 to 27). But even in these regions over half the countries 
are not on track.  
Goal 5 
Improve 
maternal health
 Target 5.A:  
Reduce by three quarters, 
between 1990 and 2015, the maternal mortality ratio
 Of all the MDGs the goal on maternal mortality has seen 
the least progress. Maternal mortality decreased by less than 1% a year between 1990  and 2005, from 480 to 450 
deaths per 100 000 live births. This is way below the 5.5% 
annual improvement needed  to reach the target.  
Pregnancy remains the main cause of death of girls aged 
15-19 in developing countries. In 2005 alone, more than 
500 000 women died during pregnancy, childbirth or in the six weeks after delivery. 99% of these deaths occurred in 
developing regions, with sub-Saharan Africa and Southern 
Asia accounting for 86% of them. In these regions maternal mortality rates have barely changed since 1990. 
In particular, in sub-Saharan Africa, a woman’s risk of 
dying from treatable or prev entable complications during 
pregnancy and childbirth over the course of her lifetime is 
1 in 22, compared to 1 in 7 300 in developed regions. 
In Malawi and Zimbabwe, maternal deaths have even 
increased in the past years as a consequence of HIV, 
conflict and deteriorating health systems.  
 Target 5.B:  
Achieve, by 2015, universal 
access to reproductive health  The proportion of deliveries attended by skilled healthcare 
personnel increased from 47% in  1990 to 61% in 2006. In 
the same period the proportion of women (15-49 years 
old) attended by skilled health personnel at least once during pregnancy rose from 54% to 74%.  
In almost all developing regions, adolescent fertility fell 
between 1990 and 2000 (from 67 to 55 births by women 15-19 years per 1000 women), then largely stagnated or 
increased marginally between 2000 and 2005 (from 55 to 
 
EN 43   EN 53 on average). 
Adolescent fertility remains especially high in sub-Saharan 
Africa (119 per 1000 women), where fertility remains high among all women of childbear ing age. Total fertility has 
declined substantially over the past two decades in many 
countries in Latin America and the Caribbean and South-Eastern Asia, yet adolescent fertility has fallen slowly and 
remains over 60 births per 1 000 women in these two 
regions.
  
The gap between women’s stated desires to delay or avoid 
having children and their actua l use of contraception also 
declined in most countries between 1995 and 2005. However, in sub-Saharan Africa, 24% of married women 
still have an unmet need for family planning, and the rise 
in contraceptive use has, on av erage, barely kept pace with 
the growing desire to delay or limit births.  
In all regions, this unmet need is highest in the poorest 
households. This is most pronounced in Latin America and the Caribbean, where 27% of the poorest households have 
an unmet need for family planning compared to 12% of 
the wealthiest households. In sub-Saharan Africa, unmet 
need is high — over 20% – even among the wealthiest 
households. 
Goal 6 
Combat 
HIV/AIDS, malaria and 
other diseases
 Target 6.A:  
Have halted by 2015 and begun 
to reverse the spread of HIV/AIDS 
 
 Improvements in prevention programmes are reducing the 
number of people newly infected with HIV down to 2.7 
million in 2007 from 3 million in 2001, and the expansion 
of antiretroviral treatment is reducing the number of people who die from AIDS (2 million in 2007 down from 
2.2 million in 2005). However, due to unmet treatment 
needs, AIDS remains among the leading causes of death globally and the primary cau se of death in Africa.  
With newly infected people surviving longer, the number 
of people living with HIV/AIDS has risen from 29.5 million in 2001 to 33 million in 2007, most in Sub-
Saharan Africa.  
Condom use and knowledge ab out HIV can help decrease 
the number of individuals who become infected with HIV. 
Between 1999 and 2004 condom use for females’ partners 
increased in all Sub-Saharan African countries with available data, with the only exception of Zimbabwe, 
where usage is estimated to have fallen from 11% to 10%. 
 Target 6.B:  
Achieve, by 2010, universal 
access to treatment for HIV/AIDS for all those who 
need it  The proportion of population living with HIV needing 
treatment and receiving antiretro viral therapy rose between 
2006 and 2007 from 22% to 31%, but it remains low.  
In almost every region, women represent a growing share 
of people living with HIV,  and 59% of all people affected  
in sub-Saharan Africa.  
The HIV prevalence rate for 15 -49 year olds was highest 
in Sub-Saharan Africa (5.7%) in 2007 and much higher 
than the average for all developing countries (0.9%).  
 
EN 44   EN Work in Cambodia has highlighted the importance of 
community-based action in combating HIV/AIDS. Since 
September 2003, the country has used a UNDP-developed package of participatory tec hniques known as Community 
Capacity Enhancement (CCE) and, although the country 
has one of the highest prevalence rates in Asia and the Pacific, it has now reversed the spread of the infection. 
 Target 6.C:  
Have halted by 2015 and begun 
to reverse the incidence of 
malaria and other major diseases
 According to UNDP data, malaria  takes a terrible toll in 
sub-Saharan Africa, which acco unts for 90% of all malaria 
deaths. There malaria accounts for 25% to 35% of all outpatient visits, 20% to 45% of hospital admissions and 
15% to 35% of hospital deaths. Joint efforts of the NMCP, 
UNDP and other partners achieved a notable decrease in malaria incidence rates by 30% in 11 Northern states, 
cutting morbidity by 55% and mortality by 52%.  
The number of insecticide-treated mosquito nets produced 
worldwide jumped from 30 million in 2004 to 95 million 
in 2007. All sub-Saharan African countries for which there 
are trend data showed increase s in insecticide-treated net 
use among children under five . 16 of these 20 countries 
have at least tripled coverage since around 2000. However, 
despite tremendous progress, th e use of insecticide-treated 
mosquito nets still falls short of global targets.
  
There has been less progress in treating malaria than in 
preventing it. In a subset of 22 sub-Saharan African 
countries, the proportion of children with a fever who 
received anti-malarial medi cine dropped from 41% in 
2000 to 34% in 2005. Similarly, treatment with the 
Artemisinin-based combination therapy (ACT) was 6% or 
less between 2004 and 2006 in a subset of 14 countries. 
Evidence suggests that large-scale expansion of prevention 
programmes and improved access to more effective anti-
malarial drugs can substantially reduce malaria cases and deaths. In South Africa docum ented cases and deaths fell 
by 80% between 2000 and 2006 after introducing ACT 
and improving mosquito control (including spraying with DDT). In Eritrea, more than a million mosquito nets were 
distributed between 2000-2006 and as a result recorded 
malaria cases and deaths plummeted by more than 70%. 
Progress on tuberculosis
 targets is mixed. In developing 
regions, the number of new tuberculosis cases per 100 000 
population (incidence rate) peaked in 2004, then fell by 
0.7% between 2005 and 2006. If these trends are sustained 
globally, the incidence of tuberculosis should be halted and reversed well before 2015.  Moreover the prevalence 
rate for tuberculosis (the number of existing cases per 
100 000 people) and the death rate are falling even faster.
 
Success in eradicating tuberc ulosis depends upon early 
detection of new cases and effective treatment. Between 
2005-2006 progress in detection slowed: the detection rate increased only marginally to 61%, short of the 65% 
benchmark for 2006 in the ‘Stop TB Partnership’ Global 
Plan and the ultimate target of 70%. 
 
EN 45   EN Africa, China and India collectively account for more than 
two thirds of undetected tuberculosis cases. Progress in 
improving the detection rate in China and India stalled in 2006. The detection rate in Africa — 46% in 2006 — is 
furthest from the target. 
Goal 7 
Ensure 
environmental sustainability
 Target 7.A: 
Integrate the principles of 
sustainable development into country policies and programmes and reverse the 
loss of environmental resources  Carbon dioxide emissions reached 28 billion metric tons in 
2005 and continued to rise, resulting in increased atmospheric concentrations of CO
2. Globally, emissions 
increased by 30% from 1990 to 2005, rising annually from 
2000 to 2005 faster than in the previous decade.  
From 1990 to 2005, changes in emissions ranged from a 
38% decline in countries of the Commonwealth of 
Independent States to an 82% increase in South-Eastern Asia. Per capita emissions remain the highest in the 
developed regions, about 12 metric tons of CO
2 per person 
per year, compared with about 3 metric tons in developing regions and 0.8 metric tons in sub-Saharan Africa. 
According to the World Bank, Europe & Central Asia, the 
Middle East & North Africa, and Sub-Saharan Africa have all exhibited a downward trend in adjusted net savings 
since 1995 and had negative adjusted net saving rates in 
2005. Adjusted net savings measures the saving rate in an 
economy after adjustments are made for educational 
expenditure, capital depreciation, natural resource depletion, and carbon dioxide and particulate emissions 
damage. A negative saving rate indicates that an economy 
is on an unsustainable future path of economic growth. Latin America and the Caribbean had a positive 2005 
adjusted net saving rate but also had declining adjusted net 
saving levels. In recent years, only the Asian regions seem to have both an upward trend in adjusted net savings and a 
positive saving rate. 
 Target 7.B:  
Reduce biodiversity loss, 
achieving, by 2010, a significant reduction in the rate of loss  In response to the loss of global biodiversity, the 
international community has encouraged land and marine protection. As a result, about 21 million km
2 of land and 
sea (out to 12 nautical miles) were protected by 2007. 
Deforestation continues to pose serious challenges, even 
though the net loss of forest area is slowing down. Thanks 
to increased forest planting, landscape restoration and to 
the natural expansion of forests, deforestation of about 13 
million hectares per year resulted in an estimated net 
decline of 7.3 million hectares of forest area per year over the period 2000-2005, compared to 8.9 million hectares 
annually in the previous deca de. The percentage of forest 
designated to protect soil and water resources has also increased from 8% in 1990 to 9% in 2005. 
The number of species threaten ed with extinction is rising 
rapidly and improved fisheries management is needed to 
reduce the depletion of fish stocks
. 
 Target 7.C: 
Halve, by 2015, the proportion Although there is not yet a global water  shortage, about 
2.8 billion people, representing more than 40% of the world’s population, live in river basins with some form of 
 
EN 46   EN of people without sustainable 
access to safe drinking water 
and basic sanitation  water scarcity. More than 1.2 billion live in conditions of 
physical water scarcity, which occurs when more than 
75% of the river flows are withdrawn. Another 1.6 billion people live in areas of economic water scarcity, where 
human, institutional and financial capital limit access to 
water, even though water in nature is available locally to meet human demands. 
According to the UN, currentl y, around one billion people 
lack access to safe drinking water. However since 1990, 
1.6 billion people have gained access to safe water and at 
this rate, the world is expected to meet the drinking water 
target (i.e. 89% of the population of developing regions use improved sources of drinking water by 2015). Progress 
has been most pronounced in Eastern Asia, where over 
400 million people have gained access to improved drinking water sources and coverage has grown by 20% 
since 1990. 
There are huge disparities among and within regions. For 
example, in North Africa 92%  of people use improved 
sources of drinking water, while in sub-Saharan Africa the 
proportion is only 58%. Likewise, in 2006, more than 8 
out 10 people without access to improved drinking water 
sources lived in rural areas.
 
Almost a quarter of the developing world’s population 
have no form of sanitation.  Far less progress has been 
made on this issue. For example, the percentage of the population in Sub-Saharan A frica with access to sanitation 
only rose from 26% in 1990 to 31% in 2006.   
The World Bank has estimated that meeting the water and 
sanitation MDG will require annual investment in the 
order of $30 billion, roughly double the current level. 
 Target 7.D:  
By 2020, to have achieved a 
significant improvement in the lives of at least 100 million slum dwellers  Typical slums in developing countries are unplanned 
informal settlements where a ccess to services is minimal 
to non-existent and where overcrowding is the norm. Slum 
conditions put residents at a higher risk of disease, 
mortality and misfortune. Slum dwellers represent more than one third of the growing urban population in 
developing countries — 72% in Africa — and by 2020 
their number is expected to swell to 1.4 billion. Improving their living conditions will require major investment.
 
Goal 8 
Develop a 
global partnership for development
 Target 8.A:  
Develop further an open, rule 
based, predictable, non-discriminatory trading and financial system. Includes a commitment to good 
governance, development and 
poverty reduction — both nationally and internationally  
 Target 8.B: The rise in ODA appears to have stalled: after rising 
during 2002–05, total net ODA from Development Assistance Committee (DAC) donors fell by 5% in real 
terms in 2006, and by 8.4% in 2007. Today total aid 
remains well below the United Nations target of 0.7% of the GNI of DAC donors, equal to just 0.28%.  
 
Denmark, Luxembourg, the Netherlands, Norway and 
Sweden were the only countries to reach or exceed the 
target in 2007.  
At the December 2005 WTO Hong Kong Ministerial 
 
EN 47   EN Address the special needs of 
the least developed countries. 
Includes: tariff and quota free 
access for least developed countries’ exports; enhanced programme of debt relief for HIPC and cancellation of official bilateral debt and more 
generous ODA for countries 
committed to poverty reduction  
 Target 8.C: 
Address the special needs of 
landlocked developing countries and small island developing States (through the 
Programme of Action for the 
Sustainable Development of Small Island Developing States and the outcome of the twenty second special session of the 
General Assembly)  
 Target 8.D: 
Deal comprehensively with the 
debt problems of developing countries through national and international measures in order to make debt sustainable in the 
long term. Official 
development assistance (ODA).  Conference a decision was taken to provide duty-free and 
quota-free (DFQF) market access for least developed 
countries (LDCs). Under the Everything But Arms (EBA) regime, the EU already grants  full DFQF treatment, with 
just some tariff rate quotas fo r sugar and rice, to be phased 
out in 2009. However globally there has been little progress in reducing the barriers to exports from 
developing to developed countries. Excluding arms and 
oil, the proportion of developing countries’ exports that have duty-free access to developed countries’ markets has 
remained largely unchanged since 2004 and it even fell 
slightly for the least developed countries. 
Developed countries’ total support to their own domestic 
agricultural sectors grew by some $65 billion between 
2000 and 2004, before being cut by $16 billion in 2006. Nevertheless, at $372 billion, this expenditure remains 
more than three times higher than the official development 
assistance of developed countries. Support provided by developed countries to their own agricultural sector 
continues even though developing countries have been 
encouraged to end all public support to their agriculture. 
This acts as a disincentive to agricultural production in 
developing regions and undermines official development assistance’s broad objective of supporting development. 
By the end of June 2008, 33 out of the 41 eligible 
countries had qualified for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative. Of these 33 
countries, 23 had reached their ‘completion point’, 
meaning that all the conditions for debt relief had been met and relief becomes irrevocable. Together, these countries 
had received committed debt re lief of $48.2 b illion in 2006 
present-value terms. Post-completion-point countries also received additional assistance of $21.2 billion under the 
Multilateral Debt Relief Initiative (MDRI), further 
reducing their debt service. Meanwhile, the value of exports from low-income ec onomies has increased by 
more than 65% since 2004, gi ving them more resources 
with which to service their diminished debt. For the average developing country, the burden of servicing 
external debt fell from almost 13% of export earnings in 
2000 to 7% in 2006.  
 Target 8.E:  
In cooperation with 
pharmaceutical companies, 
provide access to affordable essential drugs in developing countries.  In almost all developing regions, the availability of drugs 
is limited. It is better in the private sector than in the 
public sector, although still scarce. Surveys in about 30 developing countries indicate that the availability of 
selected drugs was only 35% in the public sector and 63% 
in the private sector. In a sample of six countries in Eastern, South-Eastern and Southern Asia, availability in 
the private sector was only 45%. 
Some pharmaceutical manufacturers have lowered their 
prices to public health systems in developing countries in 
line with the purchasing power of governments and 
households. However, the scarce availability of medicines in the public sector often forces patients to purchase 
medicines on the private mark et where prices are still 
higher: in the 33 developing countries for which data are 
 
EN 48   EN available, the lowest-priced generic medicines on the 
private market cost over six times international reference 
prices.  
 Target 8.F:  
In cooperation with the private 
sector, make available the benefits of new technologies, 
especially information and 
communication technologies  The total number of fixed and mobile telephone  
subscribers jumped from 530 million in 1990 to over 4 
billion by the end of 2006.  
In Africa, over 60 million new mobile subscribers were 
added in 2006, bringing to 22% the ratio of Africa’s 
population that had a mobile phone. Almost every country 
now has more mobile than fixed telephone subscribers. 
Internet  use is increasing rapidly, but the poorest regions 
lag behind. In developing countries, 11% of the population 
used the Internet in 2006, compared to 58% in developed countries and only 1% in the least developed countries. 
 
 
EN 49   EN  
ANNEX 2  
Follow up to the ‘EU Agenda for Action on the MDGs’ (June 2008) 
Analysis of the replies by EU  Member States to the annual  
Monterrey questionnaire 2009 
The EU Agenda for Action on the MDGs (Europ ean Council, 19/20 June 2008) is a collective 
offer by Europe to its development partners and the international community. This Agenda 
identifies specific milestones and points of actio n to help meet the MDGs within timeframes. 
The EU Agenda for Action on the MDGs was presented at the UN High-Level Event on the 
MDGs in New York (25 September, 2008) and is referred to by the UN Secretary General in 
the List of Donors’ Commitments on MDGs  released after th e High-Level Event. 
Summary of Responses to the Monterrey Questionnaire  
Many EU Member States are using the EU Agenda for Action on the MDGs, which is 
perceived as a positive tool to  raise public awareness and e nhance policy dialogue in support 
of the MDGs. In addition, by defining concrete targets and setting timelines for reaching the 
MDGs, the EU Agenda for Action on the MDGs al so serves as strong political impetus to 
increase coordination amongst EU  donors. Under this Agenda, most Member States have 
planned specific initiatives and actions to help  achieve the MDGs, particularly in the sectors 
of health and education as well as wate r and sanitation. Gender equality and the 
empowerment of women is a crosscutting priority for most EU Member States. 
Detail on the response s to the Monterrey Questionnaire by the EU Member States to the three 
MDG-related questions : 
• 17 out of 27 Member States said they plan to  make use of the EU Agenda for Action (AfA) 
to mobilise political support, enhance policy dialogue and coordination in support of 
the MDGs and raise public awa reness in support of the MDGs .  
For example, some Member States have prom oted the EU AfA through the organisation of 
seminars, workshops and other events aimed to raise public awareness in support of the 
MDGs. Various entities including parliaments,  NGOs, academics, schools and the media have 
been involved. The Commission and the UK have requested all country offices to support the 
use of the AfA at country level. Some Member St ates have set specific priorities within the 
framework of the EU AfA (Netherlands, Swed en) such as: fragile states, equal rights & 
opportunities for women, climate change, po licy coherence and aid, democracy and 
governance. Germany also sees the Agenda as an important tool in the EU Africa Strategy. 
• 23 out of 27 Member Stat es said they plan to take concrete action or initiatives between 
now and 2010 in support of MDG-related sectors .  
For example, almost all Member States gave examples of concrete initiatives already 
undertaken and that will be furt her strengthened in the next y ears, to support the achievement 
of the MDGs. The answers mainly focused on the health sector (expressly mentioned by 11 
 
EN 50   EN Member States), on improving water and sa nitation systems (expressly mentioned by 6 
Member States) and on the education sector (expressly mentioned by 7 Member States).  
Some more specific answers also highlighted maternal health (expressly mentioned by 4 
Member States), gender equality and wo men empowerment (expressly mentioned by 4 
Member States) and HIV/AIDS prevention, ca re and treatment (expressly mentioned by 4 
Member States). Two Member States cited environment, climate change and sustainability and one Member State identified countries in si tuations of fragility as a central focus. 
Many countries also highlighted their contribut ions to support intern ational programmes and 
institutions related to the achievement of th e MDGs, like the Global Fund to Fight AIDS, TB 
and Malaria, the GAVI Alliance, the Worl d Bank, various development NGOs, and UN 
organisations. 
• 24 out of 27 Member States said th ey intend to increas e their support to promote gender 
equality .  
Gender equality and the empowerment of women is a crosscutting priority for most Member 
States. In Poland, for instance, all projects co -financed by the Ministry of Foreign Affairs 
must have a positive impact on gender equality. A number of Member States have specific 
strategic commitments on gender. France, for exam ple, is setting up an experts’ network and 
new actions aimed at promoting women’s role in economic development, in particular in 
response to the food crisis. The UK has a Gende r Equality Action Plan. Germany is also 
developing an action plan on gender and has clear commitments on gender equality in its budget support. 
In addition to bilateral aid, many Member States support existing mechanisms within 
multilateral organisations (e.g. UNIFEM,  UNGEI, UNFPA, UNICEF, and UNHCR).